7 Principles of Economics

Incentives are ______________

• A set of external motivators that help people make choices.

• Whatever you are giving up to do something.

• The tension caused by infinite wants and finite resources.

• The study of production, employment, prices, and policies on a nationwide scale

____________ are all the alternatives we give up whenever we choose one course of action over another.

• Opportunity Costs
• Trade Offs

Which of the following is an INCENTIVE?

• Wages for labor at a construction job sit

• Passing a certification exam as a job requirement

• Buying a candy bar during break

• A college receiving monetary bonuses for a high graduation rate

Opportunity cost can be defined as:

• The amount of money you paid for something

• The HIGHEST valued alternative that you give up for a good (the next best thing)

• The cost of giving up everything to obtain a good

• The LOWEST valued alternative that you give up for a good (the bad decisions)

Economic decision to use one more additional unit of a resource

• Thinking at the Margin

• Incentives Matter

• Trade Makes People Better Off

• Future Consequences Count

I only have an hour of free time today. If I study, I can't see my friends.

• Costs versus Benefits

• Thinking at the margin

• Incentives Matter

• Future Consequences Count

I thought it was a good idea to get a dog. I didn't know it would drive my neighbors crazy.

• Costs versus Benefits
• Scarcity Forces Tradeoffs
• Incentives Matter
• Future Consequences Count
  

Should I spend thousands of dollars on college? Would it be worth it?

• Markets Coordinate Trade

• Costs vs Benefits

• Trade Makes People Better Off

• Thinking at the Margin

Amateur investors banded together this week to squeeze Wall Street hedge funds by sending GameStop’s stock prices to dizzying heights.

• Costs vs Benefits

• Trade Makes People Better Off

• Future Consequences Count

• Markets Coordinate Trade

 I don't know how to fix my car, but I can pay a mechanic to do it.

• Future Consequences Count
• Incentives Matter
• Markets Coordinate Trade
• Trade Makes People Better Off