Exam 1: Ten Principles of Economics.

A) power of a single person or small group to influence market prices.
B) ability of a person or small group to successfully market new products.
C) power of the government to regulate a market.
D) importance of a certain market in relation to the overall economy.

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A) an increase in the number of unskilled jobs available.
B) a decrease in the number of unskilled jobs available.
C) a decrease in the number of workers wanting unskilled jobs.
D) None of the above is correct.

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A) is a basic principle regarding individual decisionmaking.
B) amounts to a denial of one of the basic principles regarding interactions among people.
C) supports the idea that the "invisible hand" should guide economic activity.
D) was promoted by the economist Adam Smith in a well-known 1776 book.

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A) slow growth of U.S. productivity during the 1990s.
B) slow growth of the quantity of money in the U.S. in the 1990s.
C) low levels of government spending in the U.S. in the 1980s and 1990s.
D) the eight-year presidency of William Jefferson Clinton during the 1990s.

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A) is an unlimited resource.
B) is a scarce resource.
C) is not a productive resource.
D) has no opportunity cost.

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A) Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
B) Government policies usually improve upon both equality and efficiency.
C) As long as the economic pie continually gets larger, no one will have to go hungry.
D) Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.

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A) Chilean bus drivers likely have a higher standard of living than Colombian bus drivers.
B) Colombian bus drivers likely have a higher standard of living than Chilean bus drivers.
C) Chilean and Colombian bus drivers likely have the same standard of living.
D) Chilean and Colombian bus drivers likely have a higher standard of living than US bus drivers.

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A) a period of rising productivity in the economy.
B) a period of rising income in the economy.
C) an increase in the overall level of output in the economy.
D) an increase in the overall level of prices in the economy.

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A) absolute fairness
B) equal distribution
C) minimum waste
D) equitable outcome

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A) society faces a tradeoff between unemployment and inflation, but only in the short run.
B) society faces a tradeoff between unemployment and inflation, but only in the long run.
C) society faces a tradeoff between unemployment and inflation, both in the short run and in the long run.
D) no tradeoff exists between unemployment and inflation, either in the short run or in the long run.

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A) ignores marginal changes and focuses instead on "the big picture."
B) ignores the likely effects of government policies when he or she makes choices.
C) takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
D) takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.

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A) Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway.
B) To compute opportunity costs, you should subtract benefits from costs.
C) Opportunity costs and the idea of trade-offs are not closely related.
D) Rational people should compare various options without considering opportunity costs.

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A) requiring property owners to pay property taxes.
B) providing police and courts.
C) forcing people to own property.
D) providing public parks and recreation facilities.

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A) the marginal benefit of the action exceeds the marginal cost of the action.
B) the marginal cost of the action exceeds the marginal benefit of the action.
C) the marginal cost of the action is zero.
D) the opportunity cost of the action is zero.

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A) increases in productivity in the economy
B) the influence of positive externalities on the economy
C) lack of property rights in the economy
D) growth in the quantity of money in the economy

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A) rent the room because the marginal benefit exceeds the marginal cost.
B) rent the room because the marginal benefit exceeds the average cost.
C) not rent the room because the marginal benefit is less than the marginal cost.
D) not rent the room because the marginal benefit is less than the average cost.

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