TCI Ch 1 Review

What is economics?

• The study of how people choose between limited wants with unlimited resources

• The study of how people choose between unlimited wants with limited resources

• C.R.E.A.M.

• the branch of knowledge concerned with the production, consumption, and transfer of wealth.

Which of the following is true of the scarcity-forces-tradeoffs principle?

• Resources necessary to fulfill our desires are scarce.

• Limited resources force us to make different choices.

• We must make choices about what we want the most.

• All of the above

What is a marginal benefit?

• two choices with equivalent benefits

• what you gain by adding one more unit

• the benefit of one thing over another

• the benefit of a cost when you make a choice

Which of the following is NOT an example of a market?

• Etsy

• Inspire School of Arts and Sciences

• Schubert's Ice Cream

• Massa Organics

The metaphor of the invisible hand explains how

• government regulation and interference greatly benefits the economy.

• the economy runs efficiently with or without government interference.

•  a person's self-interested actions contribute to an unhealthy economy.

• an individual's pursuit for self-interest promotes society's well-being.

A market that operates with limited government interference results in

• an efficient market that serves everybody's interests.

• a corrupt and inefficient market that benefits sellers.

• a consumer centered market that often costs sellers.

• a collapsed market of very inconsistent transactions.

Which statement is the best example of thinking at the margin?

• Cora decides to volunteer this summer instead of working for pay.

• Jacob has six shirts and is trying to decide whether to buy a seventh.

• Bliss observes that the average cost of shoes is higher than last year.

• Aaliyah wants to buy a car but decides she cannot afford the insurance.

Which scenario would be an example of the law of diminishing marginal utility?

• eating the last slice of an extra-large pizza with all the toppings

• a homeless person picking a dollar bill up from the sidewalk

• drinking your first glass of apple juice after a strenuous workout

• putting on a warm coat when it's cold outside

The opportunity cost of a decision is

• the loss of all the other options you could have chosen.

• the benefit you receive from making that decision.

• the value of the best thing you gave up to get what you want.

• the loss of the chance to make that decision a different way.