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Trade can make everyone better off because

Lindsay and Sydney both live in Minnesota. A new-car dealer in Minnesota bought a new car from the manufacturer for $18,000 and sold it to Lindsay for $22,000. Later that year, Lindsay sold the car to Sydney for $17,000. By how much did these transactions contribute to U.S. GDP for the year? (Recall that GDP measures the market value of final goods…)

Figure 2: Circular flow diagram   Refer to figure 2.  Olivia owns farmland, which she rents to a large agricultural company. Lucas buys fresh produce from that company at a grocery store. If the rental income Olivia receives is represented by a flow of dollars from Box A to Box C, then Lucas’s grocery purchase is represented by a flow of dollars from:

Brendan decides to spend two hours playing basketball rather than attending his classes. His opportunity cost of playing basketball is

Emma and Madelyn charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn does not affect their costs. From this information it follows that

Figure 1: Inflation rate in Peru and U.S. (1980 – 2009)   Refer to figure 1. What can be implied from the evolution of the inflation rates in Peru and the U.S. in the sample period shown? (Hint: Remember the principles of economics. What generates inflation?)

Just like models constructed in other areas of science, economic models

Markets are a good way to organize economic activity because

Senator Maki argues that replacing the income tax with a national sales tax would increase the level of output. Senator Miller objects that this policy would benefit the rich at the expense of the poor.

Figure 3: Production possibilities frontier   Refer to figure 3. Which of the following events would explain the shift of the production possibilities frontier from A to B?