ECO 201 chapter 1-2

The word "economy" comes from Greek word "oikonomos", which means

"one who manages a household."

The government has just passed a law requiring that all residents earn the same annual income regardless of work effort. This law is likely to

Decrease efficiency but increase equality.

The adage, " There is no such thing as a free lunch," is used to illustrate the principle that

People face tradeoffs.

The phenomenon of scarcity stems from the fact that

Resources are limited

When computing the opportunity cost of attending a concert you should include a. the price you pay for the ticket and the value of your time. b. the price you pay for the ticket, but not the value of your time. c. the value of your time, but not the price you pay for the ticket. d. neither the price of the ticket nor the value of your time.

a. the price you pay for the ticket and the value of your time.

Mallory decides to spend three hours working overtime rather than watching a video with her friends. she earns $8 an hour. Her opportunity cost of working is a. the $24 she earns working. b. the $24 minus the enjoyment she would have received from watching the video. c. the enjoyment she would have received had she watched the video. d. nothing, since she would have received less than $24 of enjoyment from the video.

c. the enjoyment she would have recieved has she watched the video.