Exam 1: Ten Principles of Economics

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Dale is a guitar teacher and Terrence is a tile layer. If Dale teaches Terrence's daughter to play the guitar in exchange for Terrence tiling Dale's kitchen floor,

Which of the following statements about market economies is correct?

The principle that "people face tradeoffs" applies to

When computing the opportunity cost of attending a basketball game you should include

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

The "invisible hand" refers to

For most students, the earnings they give up to attend college are

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

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours. In France total annual output is worth $700 million and people work 50 million hours. In which country do people enjoy a higher standard of living?

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Rational people make decisions at the margin by

Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.

Economists are particularly adept at understanding that people respond to

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

A rational decisionmaker

Scenario 1-4 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 $12.00 on a ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 15 points. -What is another word for "marginal"?

When society requires that firms reduce pollution, there is

Suppose after graduating from college you get a job working at a bank earning $30,000 per year. After two years of working at the bank earning the same salary, you have an opportunity to enroll in a one-year graduate program that would require you to quit your job at the bank. Which of the following should not be included in a calculation of your opportunity cost?