Exam 1: Ten Principles of Economics

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that

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

The combination of President Obama's strategies and the Federal Reserve's reaction to the deep economic downturn in the US in 2008 and 2009

Max and Maddy charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn does not affect their costs. From this information it follows that

Senator Jackson argues that replacing the federal income tax with a national sales tax would increase the level of output. Senator Feldman objects that this policy would benefit the rich at the expense of the poor.

A marginal change is a small incremental adjustment to an existing plan of action.

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Which of the following statements about markets is most accurate?

What are the two basic types of economies?

One effect of the government-imposed seat belt law in the U.S. has been

For which of the following individuals would the opportunity cost of going to college be highest?

The term refers to a small incremental adjustment to an existing plan of action.

Explain the concept of externality and give an example.

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

What does the "invisible hand" refers to?

Variations in the standard of living across countries are due almost entirely to differences in each nation's total output of goods and services.

Scenario 1-1 You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $8.00 on a ticket and $4.50 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 10 points. -Refer to Scenario 1-1. What is your opportunity cost of studying economics?

A marginal change is a