Exam 1: Five Foundations of Economics

It can be said that voluntary trade will not occur unless all parties involved believe that they will be better off after trading than they were before.Considering that the supply of goods and services does not change in trade and only changes hands,how is it possible that each party improves? Shouldn't one party benefit at the expense of another?

Distinguish between a direct incentive and an indirect incentive.

An activity's marginal benefit is ________ at the optimal quantity.

Which of the following is a macroeconomic question?

When Noah's parent tells him not to study economics because it is a pointless discipline,why is he or she INCORRECT?

Macroeconomics would be concerned with

Coastal regions have stronger commercial fishing economies because they have a ________ in the production of seafood.

Due to the fact that firms concern themselves primarily with earning profits,a common complaint is that they often damage the environment in the process.More recently,markets have been set up so that firms can actually reduce their costs and profit more by damaging the environment less and selling their "right to pollute" to other companies.Discuss how this serves as a positive incentive for a firm to act in an environmentally responsible manner.What would be a way to discourage firms from polluting through the use of negative incentives?

If school teachers are offered more pay to teach year-round school instead of nine-month school,then will they respond to the incentive?

A teacher asks a student to research the details of a question that the teacher couldn't answer completely.The student responds,"What will you give me if I do it?" Use economic reasoning to analyze the response.

What is NOT a possible opportunity cost of attending a four-year college following high school graduation?

Actions and activities are discouraged with

In a growing number of cities,stores are required either not to make available plastic or paper bags or to do so only for an additional fee.If this fee can be refunded when someone recycles the bag,the refund acts as a(n)________ incentive.

What creates comparative advantage?

The U.S.federal government imposes a tariff on cheaper steel arriving from other countries.When producers make the decision to purchase domestic steel,what must first occur?

A double coincidence of wants means that

A dangerous habit among those who own cell phones is driving while talking or texting.Although a great deal has been done to inform drivers of the risks of doing multiple tasks while driving,this informational campaign has been ineffective in the face of increased ownership of cell phones.If you were a policymaker,what types of negative incentives would you suggest to discourage individuals from driving,talking,and texting at the same time?

Microeconomics is the study of

Decision makers engage in marginal thinking by

Actions and activities are encouraged with which type of incentive?