Making Choices

Which of the 11 principles in Chapter 1 is illustrated in each statement? Note, answer should include the principle # and the name of the principle.

1. People in Europe drive smaller cars than in the United States because the price of gasoline is higher.
2. You decide to take only three instead of four classes this semester due to your busy work schedule. ________________________________________________________________________________
3. If you take the babysitting job on Friday night, then you will be unable to go to the party with your friends. ________________________________________________________________________________
4. Jack and Jane are roommates. Jack makes breakfast for both of them each day, and Jane makes dinner for both of them each day. _________________________________________________________________
5. In most cases, the open checkout lanes at the grocery store all have the same number of customers waiting to pay for their items.__________________________________________________
6. The U.S. government's regulation of air pollution has improved the quality of the air over the years. ____________________________________________________________________________________________________
7. The government lowers the income tax rate and, as a result, consumers increase their spending on goods and services.___________________________________________________________________________________________

Introduction and Chapter 1 Key Terms

Write out the definitions for the following terms.

Economy

Economics

Market economy

Invisible hand

Microeconomics

Market failure

Recession

Macroeconomics

Economic growth

Individual choice

Resource

Scarce

Opportunity cost

Trade-off

Marginal decisions

Marginal analysis

Incentive

Interaction

Trade

Gains from trade

Specialization

Equilibrium

Efficient

Equity