Exam 1: Ten Principles of Economics

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?

Public policies

An example of a firm with market power is a

Ashley eats two bananas during a particular day. The marginal benefit she enjoys from eating the second banana

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

The decisions of firms and households are guided by prices and self-interest in a

Which of the following principles is not one of the four principles of individual decisionmaking?

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

The adage, "There is no such thing as a free lunch," means

For markets to work well, there must be

Economists use the term to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Yvette buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street, intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Yvette purchased. As a result of the city's announced plan, Yvette is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and sell the house as it is for $250,000. She should

It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then

A direct or positive relationship exists between a country's

Rational people make decisions at the margin by

When the United States trades with China,

Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

The invisible hand ensures that economic prosperity is distributed equally.

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of