Economics Unit 1 Lesson 1

What is the primary focus of microeconomics?

• The study of national economies and global economic systems

• The study of individual markets and the behavior of consumers and firms

• The study of government policies and their impact on the economy

• The study of economic history and development

Which principle suggests that people respond to incentives in predictable ways?

• Scarcity-forces-tradeoffs principle

• Incentives-matter principle

• No-free-lunch principle

• Future-consequences-count principle

What does the term "ceteris paribus" mean in economics?

• All variables are changing

• All other things being equal

• The invisible hand guides the market

• There is no such thing as a free lunch

Which of the following is an example of a tradeoff?

• Choosing to study for an exam instead of going to a movie

• Receiving a free lunch at school

• Finding a $20 bill on the street

• Winning a lottery

What is the main focus of a cost-benefit analysis?

• To determine the total cost of a project

• To compare the costs and benefits of a decision

• To calculate the profit of a business

• To assess the environmental impact of an action

Which of the following best describes the "law of unintended consequences"?

• Actions always lead to expected outcomes

• Actions can have effects that are not anticipated

• All economic models are accurate

• Markets always function perfectly

What does the "thinking-at-the-margin" principle involve?

• Making decisions based on total costs and benefits

• Making decisions based on additional costs and benefits

• Ignoring marginal changes in decision-making

• Focusing on long-term consequences only

Which of the following is a characteristic of a positive economic statement?

• It is based on opinions and values

• It can be tested and validated

• It prescribes what should be done

• It is always optimistic

What is the primary concern of macroeconomics?

• The study of individual consumer behavior

• The study of the economy as a whole

• The study of small businesses

• The study of economic history

Which principle states that trade can make everyone better off?

• Scarcity-forces-tradeoffs principle

• Trade-makes-people-better-off principle

• Markets-coordinate-trade principle

• Costs-versus-benefits principle