Intro to Vocab Quiz

What is the main idea of the "Scarcity Forces Tradeoffs" principle?

• People always get what they want

• Limited resources require people to make choices

• There is no need to make decisions about resources

• Scarcity is not a concern in economics

Why do economists say “there is no such thing as a free lunch”?

• Because lunch is never actually free

• Because eating lunch always has health consequences

• Because even if something is free for one person, someone else pays for it

• Because lunches are only free in schools

According to the "Costs Versus Benefits" principle, people make decisions by:

• Choosing whatever costs the least

• Weighing the expected costs against the expected benefits

• Always choosing the most expensive option

• Following what others decide to do

What does a cost-benefit analysis help people determine?

• How to make money quickly

• Whether the benefits of a choice outweigh the costs

• How to avoid making tradeoffs

• Whether to follow economic laws

Which of the following is an example of "Thinking at the Margin"?

• Deciding to buy a house instead of renting

• Choosing between buying a new or used car

• Deciding whether to study for one more hour or go to sleep

• Picking a career based on lifelong earnings

What is an incentive?

• A form of punishment

• Something that motivates a person to take a certain action

• A cost that prevents people from making decisions

• A law that forces people to behave in a certain way

Why do people trade rather than making everything themselves?

• Trade allows people to focus on what they do best

• It is illegal to make things for yourself

• People do not want to work hard

• Trade always results in financial gain

Which example best illustrates the "Markets Coordinate Trade" principle?

• A government agency setting prices for groceries

• A supermarket stocking fresh produce from different countries

• A school requiring students to take an economics class

• A family growing all of its own food

What does the "Future Consequences Count" principle suggest about decision-making?

• Only short-term effects should be considered

• People should ignore unintended consequences

• Decisions made today can have long-term effects

• There is no way to predict the future, so decisions should be made randomly

What unintended consequence did Vermont’s billboard law create?

• Businesses stopped advertising altogether

• Businesses built sculptures to attract attention instead

• Businesses moved to other states

• People stopped traveling through Vermont