Deck 1: Essay

Question 1

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Answer 1

$42,000

Question 2

The term ------ refers to a small incremental adjustment to an existing plan of action.

Answer 2

No,because the marginal cost ($70)exceeds the marginal benefit ($60).

Question 3

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?

Answer 3

$70

Question 4

Economics is the study of ------ .

Question 5

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job.If you go to the movies,you will spend $7 on a ticket and $5 on popcorn.If you choose to work,you will earn $10 an hour.
Refer to Scenario 1-2.What is your opportunity cost of working?

Question 6

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?

Question 7

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 company's marginal cost?

Question 8

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?

Question 9

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?

Question 10

What is another word for "marginal"?

Question 11

Scenario 1-1
You have the afternoon free.You have a choice between going to the movies with a friend or studying economics for three hours.If you go to the movies,you will spend $8.00 on a ticket and $4.50 on popcorn.If you choose to study economics for three hours,you will raise your exam grade by 10 points.
Refer to Scenario 1-1.What is your opportunity cost of going to the movies?

Question 12

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.A customer is willing to pay $60 for the 701^th calculator.Should the company produce and sell it? Explain.

Question 13

Scenario 1-4 You have the afternoon free.You have a choice between going to the movies with a friend or studying economics for three hours.If you go to the movies,you will spend $12.00 on a ticket and $4.75 on popcorn.If you choose to study economics for three hours,you will raise your exam grade by 15 points.
Refer to Scenario 1-4.What is your opportunity cost of studying economics?

Question 14

Scenario 1-1
You have the afternoon free.You have a choice between going to the movies with a friend or studying economics for three hours.If you go to the movies,you will spend $8.00 on a ticket and $4.50 on popcorn.If you choose to study economics for three hours,you will raise your exam grade by 10 points.
Refer to Scenario 1-1.What is your opportunity cost of studying economics?

Question 15

Give an example of a trade-off faced by society.

Question 16

The term ------ refers to the size of the economic pie,and the term ------ refers to how the pie is divided.

Question 17

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 company's average cost?

Question 18

Scenario 1-4 You have the afternoon free.You have a choice between going to the movies with a friend or studying economics for three hours.If you go to the movies,you will spend $12.00 on a ticket and $4.75 on popcorn.If you choose to study economics for three hours,you will raise your exam grade by 15 points.
Refer to Scenario 1-4.What is your opportunity cost of going to the movies?

Question 19

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 going to the movies?

Question 20

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job.If you go to the movies,you will spend $7 on a ticket and $5 on popcorn.If you choose to work,you will earn $10 an hour.
Refer to Scenario 1-2.What is your opportunity cost of going to the movies?

Question 21

What do prices reflect in a market economy?

Question 22

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?

Question 23

Melinda quits her job at a bank,which pays $30,000 a year,to enroll in a two-year graduate program.Her annual school expenses are $22,000 for tuition and fees and $2,000 for books.What is her opportunity cost of attending the two-year graduate program?

Question 24

What does the "invisible hand" refers to?

Question 25

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 marginal cost?

Question 26

Rational people make decisions "at the margin" by comparing ------.

Question 27

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.A customer is willing to pay $60 for the 601^st heart rate monitor.Should the company produce and sell it? Explain.

Question 28

What are the two possible causes of market failure?

Question 29

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

Question 30

Invisible hand is a term used by the economist ------ to describe how the decisions of households and firms lead to desirable market outcomes.

Question 31

Economists use the term ------ to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Question 32

What does the term "marginal change" mean?

Question 33

What are the two basic types of economies?

Question 34

What is the main difference between a centrally planned economy and a market economy?

Question 35

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 minimum price that would induce this company to produce the 601^st heart rate monitor?

Question 36

In a centrally-planned economy,economic activity is guided by ------.

Question 37

Invisible hand is a term used by the economist ------ in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations.

Question 38

Explain the concept of externality and give an example.

Question 39

Explain how trade with other countries is beneficial.

Question 40

Tracy quits her job,which pays $25,000 a year,to finish her college degree.Her annual college expenses are $12,000 for tuition and fees and $1,000 for books.What is her opportunity cost of attending college for the year?

Question 41

Economists use the term ------ to refer to fluctuations in economic activity,such as employment and production.

Question 42

Give an example of government intervention that is intended to improve equality.

Question 43

What are the two short-run effects of increasing the quantity of nation's money?

Question 44

Economists use the term ------ to refer to an increase in the overall level of prices in the economy.

Question 45

How does the study of economics depend upon the phenomenon of scarcity?

Question 46

Suppose that in Germany total annual output is worth $600 million and people work 40 million hours.In France total annual output is worth $700 million and people work 50 million hours.In which country do people enjoy a higher standard of living?

Question 47

Consider two countries,Muria and Zenya.In Muria total annual output is worth $800 million and people work 40 million hours.In Zenya total annual output is worth $900 million and people work 50 million hours.In which country is productivity higher?

Question 48

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

Question 49

Give an example of government intervention that is intended to reduce an externality.

Question 50

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.

Question 51

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Question 52

In the short run,an increase in the money supply is likely to lead to ------ inflation and ------ unemployment.

Question 53

Explain the concept of market failure.