Exam 1: Ten Principles of Economics

Monica has spent $120,000 purchasing and repairing an old cabin,which she expects to sell for $130,000.She discovers that she needs an additional repair,which will cost $20,000.She can sell the cabin as it is now for $115,000.What should she do?

In the short run,what does the tenth principle of economics illustrate?

If education produces external benefits for society,what might NOT be an appropriate policy for society to establish regarding education?

What is the income of a typical worker in a country most closely linked to?

If the average income of an Australian is higher than the average income of a Russian,what is the most likely reason?

Carol has spent $2000 purchasing and repairing an old car,which she expects to sell for $2400.She discovers that she needs an additional repair,which will cost $400.She can sell the car as it is now for $2000.What should she do?

Which term refers to a single entity that has the ability to influence market prices?

What is the best way to measure the opportunity cost of gasoline?

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided NOT to take the job?

In what economy are the decisions of firms and households guided by profit and self-interest?

What is market power?

What happens when society requires that firms reduce pollution?

One tradeoff society faces is between efficiency and equity.Define each term.If the Canadian government redistributes income from the rich to the poor,explain how this action affects equity as well as efficiency in the economy.

What has been the result of laws requiring that drivers wear seat belts?

Equity means everyone in the economy should receive an equal share of the goods and services produced.

In Canada,incomes have historically grown about 2% per year.At this rate,how long will it take for incomes to double?

What could policymakers do to raise productivity?

Trade allows each person to specialize in the activities he or she does best,thus increasing each individual's productivity.

What might a government do to enact a policy to increase living standards?

A rational decision maker takes an action if and only if the marginal cost exceeds the marginal benefit.