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Exam 1: Ten Principles of Economics

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Question 21

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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,

A) an increase in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
B) an increase in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.
C) a decrease in the number of visits people want to make and an increase in the number of visits health care providers want to provide.
D) a decrease in the number of visits people want to make and a decrease in the number of visits health care providers want to provide.

E) B) and C)
F) A) and B)

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Question 22

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

A) True
B) False

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Question 23

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To improve living standards, policymakers should

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?

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.

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.

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

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.

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?

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

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

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?

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?

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

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?

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

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

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

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.

Communist countries worked under the premise that