10 Basic Principles of Economics Quiz

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12 Questions

People Face ______ Due to scarcity, individuals must make choices and trade-offs between competing alternatives.

Trade-offs

Gaining something requires giving up something else. 'there ain’t no such thing as a free ______'

lunch

Classic trade-off is between 'guns and ______'

butter

Another trade-off society faces are between efficiency and ______

equality

Efficiency refers to the size of the economic pie and equality refers to how the pie is divided into individual ______

slices

Opportunity Cost (The cost of something is what you give up to get it) - The cost of a decision is not only the explicit cost but also the value of the next best alternative that must be ______

forgone

College athletes who can earn millions if they drop out of school and play professional sports are well aware that their opportunity cost of attending college is very ______

high

Rational people – people who systematically and purposely do the best they can to achieve their objectives, given the available opportunities Economist use the term marginal change to describe the small incremental adjustment to the plan of ______

action

A rational decision maker takes an ______ if and only if the marginal benefit of the action exceeds the marginal cost

action

Understanding incentives is essential for predicting how people will ______

respond

Changes in costs or benefits influence behavior and ______

decision-making

Incentives are key in analyzing how ______ work

markets

Test your knowledge on the 10 fundamental principles related to how individuals make decisions in economics, such as facing trade-offs and understanding the concept of scarcity. Explore key principles derived from microeconomics that influence individual behaviors and choices.

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