CH1

In the US, higher income tax rates on rich people could be justified on the basis of

equity for society

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

government actions that distort prices

When the government redistributes income from the wealthy to the poor,

people work less and produce fewer goods and services

The opportunity cost of going to college is

the value of the best opportunity a student gives up to attend college

Taxes adversely affect the allocation of resources in society because

they distort prices and thus the decisions of households and firms

In a market economy, prices reflect the

Cost and value of good to society

Which of the following is the best statement about markets?

Markets are usually a good way to organize economic activity

Which of the following is most likely to generate an externality

Taxes that are collected to pay for public schools

After much consideration, you have chosen Cancun over Ft. Lauderdale for spring break. For this decision to change, which of the following must occur?

The marginal benefit of Ft. Lauderdale must increase

Which is the most accurate statement about trade?

Trade can make every nation better off.

An example of a monopoly would be

an electric company in Delight, Arkansas

A rational decision maker takes an action only if the

marginal benefit is greater than the marginal cost

Economics deals primarily with the concept of

scarcity

In a market economy decisions are guided by individual self-interest. Hence, there is

still the ability to achieve desirable economic well-being for society as a whole