Quiz Revision - Week 1 (AO1)

Question 1

What are the four principles to individual choice?

Answer 1

1. Choices , 2. Opportunity Cost , 3. Marginal Decisions , 3. Incentives & Exploits

Question 2

Why are choices necessary?

Answer 2

Because resources are scarce ; not enough to utilize for all wants and purposes.

Question 3

What other factors besides monetization must be considered?

Answer 3

Giving up an opportunity for a larger benefit, when making a decision (opportunity of use / activity)

Question 4

What is investigated in the margin of an activity?

Answer 4

The trade-off between costs and benefits of pursuing something, whether it is profitable to do more or less of that activity.

Question 5

Why do people exploit opportunities to make themselves better off?

Answer 5

People respond to incentives, which influence their behavior and decision making for ‘rewards’, this can be through the form of policies.

Question 6

What are the four principles highlighting the interaction of individualism in choice?

Answer 6

1. Gains from Trade (specialist skills) , 2. Equilibrium Between the Markets , 3. Efficiency of An Economy (equity) , 4. Government Intervention in Society’s Welfare

Question 7

How can trade potential be maximized for personal gain?

Answer 7

The specialization of a persons’ skills can lead to increasing the output of each task, and furthering consumption.

Question 8

How can positive responses to incentives improve the economy?

Answer 8

Because people respond to incentives and avoid punishment, markets move towards a state of equilibrium. An economic situation where individualism poses no benefit.

Question 9

Why should resources be used efficiently to achieve society’s goals?

Answer 9

An efficient economy utilizes all opportunities for an individuals’ gain, without making others worse off (achieving societal equity).

Question 10

When would Government intervention be required to improve societal welfare?

Answer 10

In the case of market failure, often a result of people’s pursuit of self-interest as markets cannot achieve efficiency or successfully function in an equitable manner.

Question 11

What are the three principles surrounding ‘Economy-wide Interactions’?

Answer 11

1. Spending sustains economic income , 2. Overall Spending Inflates Economy , 3. Economic Growth and Potential