Exam 1: Ten Principles of Economics

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?

The phrase "no such thing as a free lunch" means

The mainstream view among economists is that

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

Market failure is the ability of a single person to have a substantial influence on market prices.

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

When government policies are enacted,

Which of the following is a subject that economists study?

Which of the following claims is consistent with the views of mainstream economists?

John is an athlete. He has $120 to spend and wants to buy either a heart rate monitor or new running shoes. Both the heart rate monitor and running shoes cost $120, so he can only buy one. This illustrates the principle that

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

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal

In the 1990s, inflation in the United States was

One of the 20th century's worst episodes of inflation occurred in

Economists use the term to refer to the ability of a single person or a small group) to have a substantial influence on market prices.

What is the most important factor that explains differences in living standards across countries?

You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by