Economics Unit 1

Incentives matter

• only in a free market system.

• only when people are greedy and selfish.

• only in the private sector.

• to all human beings regardless of environment.

People respond predictably to

• positive incentives, but not negative incentives.

• neither positive or negative incentives.

• both positive and negative incentives.

• negative incentives, but not positive incentives.

The basic principles of economics are

• not applicabale to every day life

• important only to professional economists.

• reflective of common sense.

• complex and difficult to understand.

Which of the following is true?

• If the intentions behind a policy are good, it will always work.

• If someone gains from an economic activity, then someone else must lose.

• If something is provided free by the government, it will not consume valuable scarce resources.

• Changes in personal costs and benefits predictably influence the choices of people.

The basic economic problem is deciding how to make the best use of

• unlimited resources to satisfy limited wants.

• limited resources to satisfy limited wants.

• unlimited resources to satisfy unlimited wants.

• limited resources to satisfy virtually unlimited wants.

The basic task of economics is to

• report on unemployment numbers.

• predict the future movements of the stock market.

• explain government taxation and spending..

• explain the choices made by people, businesses, and governments.

The expression, "There's no such thing as a free lunch," implies that

• everything has a cost.

• the person consuming a good must always pay for it.

• no one has time for a good lunch anymore.

• everyone has to pay for his own lunch.

The expression "There's no such thing as a free lunch" means

• if one person gains, someone else must lose.

• you cannot have a free lunch at the expense of someone else.

• each person must pay for exactly what he or she receives.

• when scarce resources are used to produce one good they are unavailable to produce others.

Which of the following actions has an opportunity cost?

• all of the answers

• Taking a morning run

• Enjoying a beautiful rainbow

• Buying a smartphone

Which of the following are scarce?

• time for recreation

• information

• clean air

• all of the answers