1. Describe some of the trade-offs faced by each of the following: A) a family deciding whether to buy a new car B) a member of Congress deciding how much to spend on national parks

2. You are trying to decide whether to take a vacation. Most of the costs of the vacation (plane, hotel, and forgone wages) are measured in dollars, but the benefits of the vacation are psychological. How can you compare the benefits to the costs?

3. What does it mean to think at the margin?

4. A new law reformed the government's antipoverty programs and limited many welfare recipients to only two years of benefits. a. How does this change affect the incentives for working? b. How might this change represent a trade-off:

5. Your roommate is a better cook than you are, but you can clean more quickly than your roommate can. If your roommate did all the cooking and you did all the cleaning, would your chores take you more or less time than if you divided each task evenly? Give a similar example of how specialization and trade can make two countries both better off.

6. What does the invisible hand of the marketplace do?

7. Explain whether the following government activities are motivated by a concern about equality or efficiency. In the case of efficiency, discuss? A) Regulating cable TV prices B) Providing some poor people with vouchers that will be used to buy food. C)Prohibiting smoking in public places

8. In what ways is your standard of living different from that of your parents or grandparents when they were your age? Why have these changes occurred?

9. What is inflation and how does it affect the economy?