econ chapter 1

Suppose you find $20. If you choose to use the $20 to go to the football game, your opportunity cost of going to the game is

$20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game

Which of the following activities is most likely to produce an externality?

A student has a party in her dorm room

Which of the following products would be least capable of producing an externality?

Food

Which of the following statements is true about a market economy?

Market participants act as if guided by an "invisible hand" to produce outcomes that promote general economic well-being

Which of the following situations describes the greatest market power?

Microsoft's impact on the price of desktop operating systems

Trade-offs are required because wants are unlimited and resources are

Scarce

In the short run,

a decrease in inflation temporarily increases unemployment

Foreign trade

allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home

trade off

buying a new car. going to college. watching a football game on Saturday afternoon. taking a nap.

A rational person

does not act unless the action produces marginal benefits that exceed marginal costs

High and persistent inflation is caused by

governments increasing the quantity of money too much

Raising taxes and increasing welfare payments

improves equality at the expense of efficiency

Productivity can be increased by

improving the education of workers

Economics

is the study of how society manages its scarce resources

Because people respond to incentives, we would expect that if the average salary of accountants increases by 50 percent while the average salary of teachers increases by 20 percent,

students will shift majors from education to accounting

Which of the following is not part of the opportunity cost of going on vacation?

the money you spent on food

Workers in the United States enjoy a high standard of living because

workers in the United States are highly productive