Exam 1: Ten Principles of Economics

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

Trade with any nation can be mutually beneficial.

In response to the deep economic downturn in the US in 2008 and 2009, the US

Which of the following is not generally regarded by economists as a legitimate reason for the government to intervene in a market?

Explain the concept of market failure.

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Market power refers to the

If Switzerland chooses to engage in trade, it

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

If Faith attends college, it will take her four years, during which time she will earn no income. She will pay $50,000 for tuition, $12,000 for room and board, and $5,000 for books. If she spends the four years working rather than attending college, she will pay $18,000 for room and board, pay no intuition, and buy no books. Based on this information, Faith's economic cost of attending college would be $67,000 if, over the four years, she could earn

Trade makes costs

Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?

What is another word for "marginal"?

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

The short-run tradeoff between inflation and unemployment implies that, in the short run,

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

Which of the following products would be considered scarce?

A marginal change is a

You go to the movieplex where movies ordinarily cost $9. You are intending to see a movie for which you have a $3 off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost?

Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial