Quiz 2.2

Question 1

Principle 2

Answer 1

Cost of something is what you give to get

Question 2

Principle 3

Answer 2

Rational people think at the margin

Question 3

Principle 4

Answer 3

People respond to incentives

Question 4

Principle 5

Answer 4

Trade can make everyone better off

Question 5

Principle 6

Answer 5

Markets Are Usually a Good Way to
Organize Economic Activity

Question 6

Principle 7

Answer 6

Government can sometimes improve market outcomes

Question 7

Opportunity cost

Answer 7

Value of what you gave up

Question 8

Rational people

Answer 8

People who do the best they can and are sensible to achieve a goal

Question 9

Think at the margin

Answer 9

Choosing the most benefit

Question 10

Incentives

Answer 10

Something that makes a person act
(Ex: deadlines)

Question 11

Principle 4 bullet point

Answer 11

Prices influence the economy and scarce resources

Question 12

Principle 5 bullet point

Answer 12

•Allows people to specialize in activities they do best
•Buy a variety of goods at a lower cost

Question 13

Principle 6 bullet point

Answer 13

Distributes resources through decentralized decisions.
Not always successful.

Question 14

Property rights

Answer 14

Ability to own control over scarce resources

Question 15

Cause of market failure

Answer 15

1. Externality
2. Market power

Question 16

Externality

Answer 16

Impact of action to the well being of bystanders

Question 17

Market power

Answer 17

Ability to have influence over prices

Question 18

Principle 1

Answer 18

People face trade-offs

Question 19

Principle 1 bullet points

Answer 19

•Give to get (trade)
•efficiency: get maximum from
scarcity
•equality: distributed uniformly

Question 20

Market failure

Answer 20

Market left on its own fail to allocate resources efficiently