Chapter 1 - What is Economics?

When a nation's total output increases over time, the nation is experiencing

• economic growth

• a decrease in gross domestic product

• economic interdependence

• an expansion of the possibilities curve

Match up the description with the proper principle of economics:

Voluntarily exchanging goods/services to make ourselves better off

• Trade

• Future Consequences

• Cost-Benefit Analysis

• Markets

Match up the description with the proper principle of economics:

Listing out the pros and cons of a potential decision

• Trade

• Future Consequences

• Cost-Benefit Analysis

• Markets

Match up the description with the proper principle of economics:

Companies paying people to work

• Trade

• Incentives Matter

• Cost-Benefit Analysis

• Markets

Match up the description with the proper principle of economics:

The choice of not graduating high school and it effecting your job opportunities later

• Future Consequences

• Incentives Matter

• Cost-Benefit Analysis

• Markets

Match up the description with the proper principle of economics:

Places where buyers and sellers come together

• Trade

• Future Consequences

• Cost-Benefit Analysis

• Markets

Fred goes to the mall with $100. He is torn between two items to spend his money on. He can either buy new headphones or he can buy some shoes that are on sale. Fred cannot buy both since they are almost exactly $100 each. Fred decides that he would rather have headphones than the shoes because he likes blowing out his ear drums. What is Fred’s opportunity cost?

• The shoes

• The headphones

• Saving $100

• No opportunity costs occur, this is a win-win situation

Why do economists say "There is no such thing as a free lunch"?

• Everything is expensive and inflation makes it worse

• Every decision we make involves trade offs and opportunity cost

• Economists want people to know that they must work in order to survive in the world

• Economists hate lunch

Why is a PPF's curve typically bowed outwards?

• Decreasing opportunity costs

• Proportional opportunity costs

• Resources are not always perfectly exchangable

• No opportunity costs

What does point "X" represent on the PPF?

• Inefficiency/Under-utilization

• Efficiency

• Scarcity

• A letter