Lesson 1: 7 Principles of Economics

What do economists study in relation to limited resources?

• How to create more resources

• How to eliminate wants and needs

• How people choose to fulfill their unlimited wants and needs

• How to ignore limited resources

What is a key concept in economics due to the limitation of resources?

• Unlimited wants and needs

• Resource abundance

• Resource scarcity

• Resource creation

What does the phrase "There Ain’t No Such Thing As A Free Lunch" suggest about economic choices?

• Economic choices are free of cost

• Economic choices involve no tradeoffs

• Economic choices always involve tradeoffs

• Economic choices are unlimited

In a cost-benefit analysis, what is listed out before making a choice?

• Only the costs

• Only the benefits

• Both the costs and benefits

• Only the resources

What do costs represent in a decision-making process?

• The benefits you gain

• The time you save

• The money you save

• The resources you spend

What is the main focus of the costs versus benefits principle?

• The time spent

• The resources saved

• The benefits outweighing the costs

• The costs outweighing the benefits

What is an incentive?

• Something that motivates a person to act in a certain way

• A punishment for bad behavior

• A random event

• A type of food

What is the effect of incentives on behavior?

• They motivate behavior whether we realize it or not

• They have no effect on behavior

• They only affect animals

• They are only used in sports

Which of the following is an example of trade?

• You trade 10 cents for a pencil.

• You give a pencil for free.

• You borrow a pencil.

• You find a pencil.