Exam 1: Ten Principles of Economics

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

The relatively low inflation experienced in the United States in the 1990s is attributable to

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

Which of the following can policy do?

Which of these activities will most likely result in an external benefit?

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

What are the two basic types of economies?

The self-interest of the participants in an economy is guided into promoting general economic self-interest by

Economics is the study of how society allocates its unlimited resources.

In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

Which of the following is an important cause of inflation in an economy?

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

With careful planning, we can usually get something that we like without having to give up something else that we like.

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

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

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

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

Which of the following firms is likely to have the greatest market power?