Exam 1: First Principles

The principle that people will exploit opportunities to do what is best for others is the basis of all predictions by economists about individual behavior.

One day, Martha wakes up and in frustration yells, "Decisions, decisions, decisions! Why do I have to make decisions about everything?" Martha's frustrations stem from the fact that:

Although freshwater is very abundant in most places, it is scarce because:

Which of the following is NOT true?

The cost of leaving the skating championship before it ends is _____, while the cost of staying for the entire match is _____.

Specialization and trade usually lead to:

Which of the following methods of discouraging speeding is likely to be MOST effective because people usually exploit opportunities to make themselves better off?

In equilibrium there will be no further opportunities for gains from trade.

The most efficient way to dispose of industrial waste is to dump it in a nearby river or parcel of land. Why is this illegal?

Which is NOT an example of a resource?

After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting weights. This statement best represents this economic concept:

A key theme fundamental to all of economics is that:

Although for smokers the marginal benefit from smoking may exceed the marginal cost of smoking, the negative effects of second-hand smoke may increase the marginal costs of smoking to society to a point where it exceeds that marginal benefit to society. This is an example of:

Which book illustrates the advantages of specialization using an eighteenth-century pin factory?

If the market for corn is in equilibrium:

Which of these is one of the four principles of individual choice?

You decide to join the economics club, but this means you can't join the accounting club because it meets at the same time. This statement best represents this economic concept:

Which of the following methods of encouraging recycling is likely to be MOST effective because people usually exploit opportunities to make themselves better off?

Mr. Freezee operates a fleet of ice cream trucks that drive around neighborhoods selling ice cream. He is trying to decide whether he should buy another ice cream truck to add to his fleet. He determines that one more truck will add $750 to his revenue but that the truck will also increase his costs by $1,000. Based on marginal analysis, Mr. Freezee decides:

By early 2008 the U.S. economy was in a significant downturn. The unemployment rate began to increase, and home prices began to fall. Congress passed a stimulus package that gave tax rebates to virtually every person who paid taxes in 2007. Which of the 12 principles is described by this package?