Exam 1: Ten Principles of Economics

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

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

Scenario 1-6 It costs a company $30,000 to produce 600 heart rate monitors. The company's cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. -Refer to Scenario 1-6. What is the company's average cost?

Give an example of a trade-off faced by society.

During the early 1920s in Germany, prices

Market power and externalities are two possible causes of market failure.

Inflation increases the value of money.

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

To raise productivity, policymakers could

Cole is refinishing an antique china cabinet and has already spent $180 on the restoration. He expects to be able to sell the cabinet for $360. Cole discovers that he needs to do an additional $200 worth of work to make the cabinet worth $360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $100. What should Cole do?

Economists study how people make decisions.

If an electric power plant does not bear the entire cost of the pollution it emits, it will

The mainstream view among economists is that

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.

Scenario 1-3 It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators. -Refer to Scenario 1-3. What is the company's marginal cost?

A society allocates its scarce resources to various jobs. These scarce resources include

The principle that trade can make everyone better off applies to

Give an example of government intervention that is intended to reduce an externality.

A rational decision maker takes an action if and only if