Exam 1: The Big Ideas

The opportunity cost of a choice is:

Modern economic understanding allows us to avoid economic booms and busts, although political constraints prevent the needed policies from being implemented.

Greater emphasis on self-sufficiency and trading less with foreign countries would increase incomes and living standards in the United States.

A marginal change is a small incremental adjustment to an existing plan of action.

A grocery store is running a "buy-one-get-another-at-one-half-off" promotion on a dozen doughnuts. So the first dozen is $6 and the second would be $3. A person would buy the second dozen if their marginal benefit from the second dozen doughnuts is:

Adam Smith sought to explain the concept of aligning self-interest with the promotion of society's overall interest by:

An automobile gets 40 miles per gallon, and a gallon of fuel costs $4.00. What is the marginal fuel cost for a typical mile of driving with this vehicle?

When people spend more money without an increase in the supply of goods, prices:

In the opening story, the payment to captains of prisoner transport ships for each convict who arrived in Australia instead of for each convict who boarded the ship:

Which statement explains why the Federal Reserve has a tough job?

The Great Depression:

Which of the following best characterizes rich countries?

Recall Chapter 1's opening story about the British sea captains and the convicted felons. Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain, an economist suggested:

The opportunity cost of attending college includes tuition, room and board, cost of meals, and the lost opportunity to make money at a job.

The central bank of the United States is known as the:

Define opportunity cost. What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

People in developing countries are more vulnerable to illness and disease than people in developed countries mainly because they lack the ability to pay for preventative interventions.

On June 13, 2011, writer Sebastian Anthony at Extreme Tech wrote, "During the two days that the Les Paul [Google] doodle was online, those 740 million visitors spent 26 seconds more on the Google home page than normal. That's a total of almost 10.7 million man-hours spent playing with the Les Paul Google Doodle. Assuming the average Google user earns $25/hour, the doodle cost companies around the world $268 million in lost productivity." Mr. Anthony's mistake is overestimating opportunity costs. He is doing this by assuming that:

How do self-interested businesses benefit society?

In 1950, GDP per capita in South Korea was ______ GDP per capita in North Korea.