Chapter 1: Ten Principles of Economics

Question 1

Factors that affect the peoples decisions include:

Answer 1

1. People face trade offs (a compromise that involves giving up something in return for getting something else)
2. The cost of something (giving up something to achieve something else)
   3.Thinking at the margin (thinking about you next step forward)
3. Incentives (something that encourages or motivates one to do something)

Question 2

opportunity cost can be also referred to as

Answer 2

potential gain

Question 3

The either-or-decision is

Answer 3

how we allocate our scarce resources

Question 4

either-or-decision means we chose

Answer 4

a decision based on which ever choice has it benefits> its cost

Question 5

how can we calculate opportunity cost?

Answer 5

salary foregone+the money you spend on something

Question 6

small incremental adjustments to a plan of action

Answer 6

Marginal changes

Question 7

the benefit or making marginal (additional) change

Answer 7

Marginal benefit ex.drinking an extra bear

Question 8

the cost of making a marginal (additional) change

Answer 8

Marginal Cost ex.giving up a slice of pizza

Question 9

The study of how an individual/society gets the best value of using their limited limited (scarce) resources

Answer 9

Economics

Question 10

limited resources is also known as

Answer 10

scarcity

Question 11

to make the best decision on how we use our limited (scarce) resources, we compare

Answer 11

the costs and benefits

Question 12

How do people interact with each other in the economy?

Answer 12

1. Trades can improve ones life
   2.Markets influence economic activity
   3.Governments to help improve markets

Question 13

where a market left on its own fails to maximize the economic benefits of resources effectively is known as

Answer 13

Market Failure

Question 14

the impact of a persons actions on the well being of another person is referred to as ex.pollution

Answer 14

Externality

Question 15

a tradeoff we face as a society is

Answer 15

efficiency (society is getting the maximum benefits from its scarce resources) and equity(the benefits of those resources are distributed fairly among society) and

Question 16

an opportunity cost is an opportunity ______

Answer 16

lost

Question 17

people who systemically and purposefully doe the best they can to achieve their objectives

Answer 17

rational people

Question 18

The collapse of communism occurred in the

Answer 18

Soviet Union and Eastern Europe

Question 19

property rights are

Answer 19

the ability of an individual to own and have control over scarce resources

Question 20

reasons for a govt to intervene in economy

Answer 20

to promote efficiency and equity

Question 21

another possible cause for market failure is..

Answer 21

market power

Question 22

the higher productivity, the higher ______

Answer 22

standard of life in a nation

Question 23

too boost living standards, policy makers need to

Answer 23

raise productivity by ensuring workers are well educated, and have the tools needed to produce the goods and services