Exam 1: Ten Principles of Economics

The government enforces property rights by

Invisible hand is a term used by the economist to describe how the decisions of households and firms lead to desirable market outcomes.

What does the "invisible hand" refers to?

The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

A rational decisionmaker takes an action if and only if

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

In an economy in which decisions are guided by prices and individual self-interest, there is

Economics is the study of ______.

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

Use the following Scenario to answer the question scenario 1-5 : Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour. -Refer to Scenario 1-5. What is your opportunity cost of going to the movies?

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

When the government redistributes income from the wealthy to the poor,

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is

What is the main difference between a centrally planned economy and a market economy?

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

The study of how society manages its scarce resources is most closely associated with which field of study?

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

In the early 1980s, U.S. economic policy was directed toward reducing inflation. What would you have expected to observe during this short period of time?

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?