Quiz on Ten Principles of Economics

What does the word "economy" originate from?

• Latin word for money

• Greek word for "one who manages a household"

• Roman word for wealth

• French word for trade

Economics is the study of how society manages its:

• Money

• People

• Scarce resources

• Government

What does scarcity mean in economics?

• Unlimited resources are available

• Society has limited resources

• People never need to make choices

• Only poor people face trade-offs

Which of the following is NOT a principle of how people make decisions?

• People face trade-offs

• The cost of something is what you give up to get it

• Trade does not benefit people

• People respond to incentives

"There is no such thing as a free lunch" illustrates which economic principle?

• People respond to incentives

• People face trade-offs

• Rational people think at the margin

• The role of government in the economy

The opportunity cost of going to college includes:

• The cost of tuition and books

• The income you give up by not working

• Both A and B

• Only tuition fees

Rational people think at the:

• Aggregate level

• Emotional level

• Margin

• National level

When do people respond to incentives?

• When the benefits outweigh the costs

• Only when the government tells them to

• When they have no other options

• None of the above

Trade can make everyone:

• Worse off

• Better off

• Equally wealthy

• Less productive

A market economy is an economy that allocates resources through:

• Government control

• Decentralized decisions of firms and households

• Central planning

• The banking system