Exam 1: Ten Principles of Economics

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

A rational decision maker takes an action only if the

Something that induces a person to act is called

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 minimum price the company will charge for the 701th calculator?

When a single person or small group) has the ability to influence market prices, there is

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

The marginal benefit Susie gets from purchasing a third pair of gloves is

A species of snakes became extinct due to pollution in a river where the snakes once lived. This is an example of

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

President Gerald Ford referred to inflation as

How does the study of economics depend upon the phenomenon of scarcity?

The basic principles of economics suggest that

The term "productivity"

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

Low rates of inflation are generally associated with

To say people respond to incentives means that people may alter their decisions when the costs and benefits of an action change.

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

The business cycle refers to fluctuations in economic activity such as employment and production.

Government policies designed to equalize the distribution of economic well-being include i) the welfare system Ii) unemployment insurance Iii) progressive income tax

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.