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Questions and Answers
What is the primary focus of economics?
People do not face any trade-offs when making decisions.
False
What is the opportunity cost of attending a lecture?
Time, energy, tuition, and potential working hours or enjoyment with others.
The principle that states 'The cost of something is what you give up to get it' is known as the principle of __________.
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Match the following concepts with their definitions:
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Which principle states that 'Rational people think at the margin'?
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An increase in equity always leads to an increase in efficiency.
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What is the main objective of rational people in economics?
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What primarily determines a country's standard of living?
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Inflation occurs when there is a decrease in the overall level of prices in the economy.
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What is the term used for the irregular fluctuations in economic activity?
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A country's __________ reflects the quantity of goods and services produced from each hour of a worker's time.
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Match the following terms with their definitions:
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Which factor may NOT directly affect a country's productivity?
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Policy advisers focus on normative statements to help improve economic conditions.
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What condition must be met for a rational person to make a decision according to the principles discussed?
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What is the short-run tradeoff that society faces between two economic factors?
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Trade is designed to benefit only one party involved.
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What does the 'invisible hand' refer to in economic terms?
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The principle that emphasizes that 'markets are usually a good way to organize economic activity' is known as ______.
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Match the following economic principles with their corresponding descriptions:
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What is a potential outcome when a market fails to allocate resources efficiently?
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Free markets eliminate the need for government intervention entirely.
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What role do incentives play in human economic behavior?
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What does the principle of comparative advantage state?
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A perfectly competitive market allows buyers and sellers to set the prices directly.
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What is the relationship described by the law of demand?
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In competitive markets, buyers and sellers are known as ______.
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Which of the following factors does NOT shift the demand curve?
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Match the following concepts with their descriptions:
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What is represented by the supply curve?
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The equation for Catherine's individual demand curve is Qd = ______.
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What occurs when the quantity supplied is greater than the quantity demanded?
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Equilibrium price is the price at which quantity demanded exceeds quantity supplied.
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What does elasticity measure in economics?
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When demand is inelastic, total revenue (TR) ___ when price increases.
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Match the type of elasticity with its description:
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If income elasticity of demand is less than 0, the good is classified as which type?
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A perfectly elastic demand means that consumers will purchase any quantity at any price.
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What is the formula for total revenue?
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