Exam 1: Ten Principles of Economics

Lisa buys a 1982 BMW,which she plans to restore and sell.She anticipates that the cost of the car and the repairs will be $11,000 and that she can sell it for $20,000.After she has spent $11,000,she discovers she needs to replace the engine,which will cost $5000.She can sell the car without the new engine for $14,000.What should Lisa do?

Scarcity means that there is less of a good or resource available than people wish to have.

To what extent does the invisible hand model of a market ensure equity and efficiency?

Why is the opportunity cost of gasoline in Canada higher than in the United States when measured by "Minutes Worked per Kilometre Driven"?

Equity refers to how the pie is divided,and efficiency refers to the size of the economic pie.

Tim has spent $2500 purchasing and repairing a Hummer,which he expects to sell for $3500.He discovers that he needs an additional repair,which will cost $1100.He can sell the Hummer as it is now for $900.What should he do?

What is an increase in the overall level of prices in an economy called?

What is the opportunity cost of an item?

What is NOT a characteristic of markets?

What is almost always the cause of large or persistent inflation?

Productivity is the primary determinant of a country's living standards.

Suppose that the average income of a Kenyan is higher than the average income of a South African.What might you conclude?

Robert spends an hour studying instead of going hiking.What is the opportunity cost to him of studying?

What is the opportunity cost of going to university?

A furniture maker currently produces 100 tables per week and sells them for a profit.She is considering expanding her operation in order to make more tables.Should she expand?

A typical worker in Italy can produce 24 units of product in an eight-hour day,where a typical worker in Poland produces 25 units of product in a 10-hour day.What can we conclude?

What does inflation cause?

To improve living standards,what should policymakers do?

Which concept best defines efficiency?

What does NOT result when seat belt laws alter a driver's cost-benefit calculation?