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Exam 1: Ten Principles of Economics

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Question 21

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Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

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Question 22

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

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Under what conditions might government intervention in a market economy improve the economy's performance?

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

Communist countries worked under the premise that

Economists use the term ______ to refer to the ability of a single person (or a small group) to have a substantial influence on market prices.

Equality refers to how the pie is divided, and efficiency refers to the size of the economic pie.

The opportunity cost of working one hour is the sum of the values you would have received from all other activities you could have done in that hour.

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

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.

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of

Scenario 1-5 Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour. -Refer to Scenario 1-5. What is your opportunity cost of working?

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 701^th calculator?

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?

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

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

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

The overriding reason why households and societies face many decisions is that

To improve living standards, policymakers should

If the government were to intervene in a market economy and fix the price of visiting a health care provider below the market price, then we would expect, relative to the market outcome,