Chapter 1 Mult. choice

Raising taxes and increasing welfare payments

D. improves equality and the price of efficiency.

A rational person does not act unless

D. the action produces marginal benefits that exceed marginal costs.

Foreign trade

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

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

B. a student having a party in her dorm room.

Economics is the study of how

B. society manages its scarce resources

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

C. $20. plus the value of the time spent at the game.

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

C. Scarce

Which of the following involve a trade-off?

E. All of the above

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

E. Food