30 Questions
What is the most significant cost of going to college according to the text?
Opportunity cost
Which of the following is NOT mentioned as a problem with calculating the cost of going to college?
Ignoring the monetary costs
What does the opportunity cost of an item represent?
What you give up to acquire the item
Principle No. 3 mentioned in the text refers to which concept?
Thinking at the margin
When discussing decisions during exams, what are economists referring to when they mention 'marginal changes'?
Incremental adjustments to existing plans
What is emphasized as a key aspect of decision-making in the context of exams, according to the text?
Optimizing the use of time
What is one goal of studying economics mentioned in the text?
To determine when government policy is justifiable
Which factor primarily explains the differences in living standards among countries?
Productivity levels
According to Principle No. 8, what is a key determinant of a country's standard of living?
The ability to produce goods and services efficiently
How does the text describe the relationship between productivity and living standards?
They are highly positively correlated
What is the key consideration mentioned in the text when evaluating how a policy will affect living standards?
How it influences productivity
Principle No. 9 suggests that prices rise when:
The government prints too much money
What does the circular-flow diagram illustrate?
Economic transactions between households and businesses
Why is a more complex circular-flow model suggested?
To better represent the interactions in the economy
What does the production possibilities frontier graph show?
The possible combinations of output an economy can produce
If an economy allocates all its resources to the sugar industry, what can it produce?
3000 sugar and no pizza
How are the two endpoints of the production possibilities frontier defined?
By full resource allocation to a specific industry
Why is the circular-flow diagram considered useful despite its simplicity?
It shows how different parts of the economy fit together
What is the main benefit of trade for countries and families?
Allowing specialization and enjoyment of various goods and services
In a market economy, who makes the decisions that were traditionally made by central planners?
Both firms and households
What does the term 'invisible hand' refer to in economics?
Market forces that guide self-interested individuals to promote the social interest
What do economists refer to as 'market failure'?
When a market fails to allocate resources efficiently
Which statement best describes a market economy?
Decisions are made by millions of firms and households based on self-interest
Why might a government intervene in the economy according to the text?
To promote efficiency and equity
What does 'margin' mean in the context of the text?
Edge
Why might one be tempted to conclude that the airline should never sell a ticket for less than $500?
Because the average cost per seat is $500.
Why does the text suggest that the airline should sell a ticket to a standby passenger willing to pay $300 even though the average cost per seat is $500?
Because the marginal cost of adding one more passenger is low.
What does 'Principle No. 4: People Respond To Incentives' suggest about how people make decisions?
They make decisions by comparing costs and benefits.
In the context of the text, what happens when the price of apples rises?
People buy fewer apples.
Why do people change their behavior according to 'Principle No. 4' in the text?
Because they respond to incentives by comparing costs and benefits.
Explore how countries and families benefit from the ability to trade with one another, allowing specialization and enjoyment of various goods and services. Learn about market economy systems where millions of firms and households make decisions instead of central planners.
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