Exam 1: Ten Principles of Economics

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 going to the movies?

Which of the following is an example of an externality?

The "invisible hand" refers to

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

What are the two reasons for the government to intervene in a market?

The opportunity cost of going to college is

A certain state legislature is considering an increase in the state gasoline tax. Representative Campbell argues that an increase in the gasoline tax would harm low-income drivers disproportionately. Representative Richards responds by saying that low-income drivers own smaller cars that use less gasoline, and that low-income drivers therefore would not be harmed disproportionately.

Suppose that in Brazil total annual output is worth $600 million and people work 30 million hours. In Peru total annual output is worth $800 million and people work 50 million hours. Productivity is higher

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 average cost?

In a particular country in 1999, the average worker had to work 20 hours to produce 55 units of output. In that same country in 2009, the average worker needed to work 28 hours to produce 77 units of output. In that country, the productivity of the average worker

Which of these activities will most likely impose an external cost?

Economics is the study of

Tuition is the single-largest cost of attending college for most students.

Incomes of U.S. households in the 1970s and 1980s

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Market economies are distinguished from other types of economies largely on the basis of

Which of the following principles is not one of the four principles of individual decisionmaking?

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

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

Olivia was accepted by Northwestern and by another university. She is trying to decide where to go. Which of the following should influence her decision?