Unit 1 Assignment: Principles of Economics Matching Exercise
Each scenario below practices one of the 10 principles of economics. Match the principles to the appropriate scenario listed and justify your answer. Each principle will only be used once.
1. People face tradeoffs.<
2. The cost of something is what you give up to get it.< 3. Rational people think at the margin.<
4. People respond to incentives.
5. Trade can make everyone better off.<
6. Markets are usually a good way to organize economic activity.< 7. Governments can sometimes improve market outcomes.< 8. A country’s standard of living depends on its ability to produce goods and services. 9. Prices rise when the government prints too much money. 10. Society faces a short-run tradeoff between inflation and unemployment.
Even though generally more expensive, energy efficient appliances and vehicles sell better with a rebate or tax credit. *
People respond to incentives. This is my answer because many people think they are saving money in the long run. by their power bill being lower plus they can get a rebate or tax credit which means more money in the pocket. *
Airlines will charge a fee for each additional suitcase you may want to take with you on a trip. * Rational people think at the margin people think about whether it’s worth the price to continue getting what they really want like coke versus the Shasta cola is it worth paying the three extra dollars
At a restaurant, when ordering an entrée, you get to choose two side dishes from a group of five side dishes. * People face tradeoff this would be a tradeoff because you are given a few things to select from and you don’t get all five items.
Instead of growing your own food and making other necessities you decide to specialize in a particular profession and purchase things,...
References: * Study buddy with Tammy Timmons though her and I worked together our explanations should be different
* Mankiw, N. G. (2012). Principles of macroeconomics. (6th ed.). Mason, OH: South-Western Cengage Learning.
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