Thinking Like an Economist

Which statement is the best example of thinking at the margin?

• John has six shirts and is trying to decide whether to buy a seventh.

• Mary observes that the average cost of shoes is higher than last year.

• David decides to volunteer this summer instead of working for pay.

• Jane wants to buy a car but decides she cannot afford the insurance.

Markets coordinate trade. Which of the following is not a market?

• an online auction site

• a large appliance store

• a high school classroom

• a neighborhood yard sale

Match each of the actions to their future consequences.

• Qualifying for a higher-paying job

• Pursuing a career of your choice

• Receiving a lower score on a test

• Skipping out on eating breakfast

• Enjoying a higher sense of job satisfaction

• Failing to Recycle plastic bottles

• Lack of energy to start the day

• Earning a college degree

• Increased pollution in our landfills/oceans

• Choosing to play video games instead of studying

Consumers (buyers) have ​ (a)   ​ for goods/services while producers (sellers) have a​ (b)   of goods/services.

• demand
• supply

Scarcity forces trade-offs. What does this mean?

• Limited resources (time, money, materials, etc...) force us to make choices and give up alternatives

• We have to trade with other people for what we want/need.

• People's behavior is predictable when given incentives

• All things must come to an end at some point.

Which of the following is not an example of how trade makes us better off?

• Mexico and the United States exchange agricultural products with each other.

• Sally and Josie traded different books with each other after reading them.

• A hungry person pays for a cheeseburger in the drive-thru during their lunch break

• A tariff (tax on imports) is placed on Korean cars to make them more expensive for Americans to buy.

Economists assume people choose something when its expected costs are less than its...

• working life

• chief competitors

• anticipated benefits

• required maintenance

If Johnny studies one extra hour for his test, he can get a B instead of a C. What is Johnny's incentive to study?

• Getting a better grade on the test.

• Passing the test

• Spending time doing something else he enjoys

• Disappointing Johnny's teacher and family