Exam 1: Ten Principles of Economics: How People Make Decisions

Stephen is restoring a car and has already spent $4,000 on the restoration.He expects to be able to sell the car for $5800.Stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers.He could also sell the car now,without completing the additional work,for $3,800.What should he do?

Consider Paul's decision to go to college.If he goes to college,he will spend $90,000 on tuition,$15,000 on room and board,and $7,000 on books.If he does not go to college,he will earn $22,000 working at a construction job and he will spend $11,000 on room and board.Paul's cost of going to college is

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.He has decided to take the job.For him,the marginal

Senator Jackson argues that replacing the federal income tax with a national sales tax would increase the level of output.Senator Feldman objects that this policy would benefit the rich at the expense of the poor.

You have eaten two bowls of ice cream at Sundae School Ice Cream store.You consider eating a third.As a rational consumer you should make your choice by comparing

Michael is a college student.He can either buy a textbook for $100 or save up for a road trip he wants to take during the summer.This illustrates the principle that

Kyle is planning to take a roadtrip.After he makes his plans,he has to make some unexpected auto repairs.Also,he sees the price of gas has gone up.Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

Following the implementation of laws requiring automobiles to have seat belts,which of the following occurred?

Olivia was accepted by Northwestern and by another university.She is trying to decide where to go.Which of the following should influence her decision?

When society gets the most it can from its scarce resources,then the outcome is called

Candice is planning her activities for a hot summer day.She would like to go to the local swimming pool and see the latest blockbuster movie,but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity.This illustrates the basic principle that

Suppose the state of Wyoming passes a law that increases the tax on cigarettes.As a result,smokers who live in Wyoming start purchasing their cigarettes in surrounding states.Which of the following principles does this best illustrate?

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Which of the following is not an example of a group responding to an incentive?

Efficiency

It costs a company $35,000 to produce 500 graphing calculators.The company's cost will be $35,080 if it produces an additional graphing calculator.If the company produces 501 graphing calculators then

It costs a furniture company $8,750 to produce 25 tables.The company's total cost will be $9,125 if it produces a 26^th table.If the company produces 26 tables,then

The balance between maximizing a society's income and an equal distribution of that income is an illustration of

U.S.laws requiring that drivers wear seat belts have resulted in