Crash Course Economics: Introduction

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Questions and Answers

Explain how the concept of opportunity cost applies to a student deciding whether to attend a Crash Course Economics video or study for an exam.

The opportunity cost is the value of whichever option the student forgoes. If they watch the video, the opportunity cost is the potential benefit of studying such as a higher exam score. If they study, the opportunity cost is the knowledge or entertainment gained from the video.

Describe a scenario where a business decision could be analyzed from both a microeconomic and macroeconomic perspective.

A company deciding whether to expand production. Microeconomics focuses on the company's costs, revenues, and profit maximization. Macroeconomics considers the impact of this decision on the nation's overall output, employment, and economic growth.

How might understanding economic incentives help a government design a more effective policy to reduce pollution?

The government could implement policies that reward companies for reducing emissions (positive incentive) or penalize those who exceed pollution limits (negative incentive). By aligning the incentives of businesses with the desired environmental outcome, the policy is more likely to succeed.

Explain why scarcity is a fundamental concept in economics and provide an example of how it affects a consumer's decision.

Scarcity is the condition of limited resources and unlimited wants, forcing choices. For example, a consumer might have to choose between buying a new phone or going on vacation, as their budget (a limited resource) cannot cover both. Signup and view all the answers

Describe a potential trade-off a government faces when deciding how to allocate its budget between defense spending and education.

Increased defense spending may lead to decreased funds for education, potentially resulting in fewer educational resources, lower teacher salaries, or reduced access to schooling. Conversely, increased education funding might mean less investment in national defense, affecting military readiness or technological advancement. Signup and view all the answers

Using the example of traffic fatalities, explain how society implicitly weighs the benefits and costs of an activity.

While traffic fatalities are undesirable, society accepts a certain level of risk because the benefits of driving (convenience, speed, mobility) outweigh the cost of eliminating all fatalities, which would require measures that are too restrictive or costly. Signup and view all the answers

How can poorly designed incentives lead to unintended consequences, as illustrated by the rat bounty program in Vietnam?

The rat bounty program incentivized people to catch rats, but also to breed them so they can get more bounty. This lead to a population increase, the opposite of what they wanted. Signup and view all the answers

Explain how the decisions of individuals, companies, and governments all fall under the umbrella of economics.

Economics is the study of choices made in the face of scarcity. Individuals decide how to spend their time/money, companies decide what to produce/how to produce it, and governments decide how to allocate resources/create policies. All are economic decisions. Signup and view all the answers

Differentiate between microeconomics and macroeconomics by providing an example question each might address related to climate change.

Microeconomics might explore: What is the most cost-effective way for a company to reduce its carbon footprint? Macroeconomics might explore: What impact will government regulations on carbon emissions have on the nation's GDP? Signup and view all the answers

Describe how a policy maker might use economic theory to guide public policy decisions.

A policymaker can use economic theory to predict the likely outcomes of different policy options, evaluate their potential costs and benefits, and design policies that are more likely to achieve their intended goals. They may also use economic theory to study the effects of existing policies and identify areas for improvement. Signup and view all the answers

Flashcards

Economics

The study of people and the choices they make given limited resources.

Opportunity Cost

The value of the next best alternative when a decision is made.