What does "there is no such thing as a free lunch" mean?

everything incurs an opportunity cost, so nothing is free

What does it mean to say that free markets are efficient?

Buyers and sellers trade until both are satisfied

What does Adam Smith’s idea of an “invisible hand” represent?

Markets coordinate trade without government involvement

Which of the following terms describes an entrepreneur?

Self-confident, Risk taker, Strategist, Innovator

What is an opportunity cost?

The value of the next best alternative

What is the law of unintended consequences?

Actions often have unforeseen effects

What does it mean to maximize utility?

to gain the most satisfaction possible

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Economics - Unit I Test Review

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Questions 12

Answers

1
What does "there is no such thing as a free lunch" mean?
everything incurs an opportunity cost, so nothing is free
there is free lunch, but not everyone gets it
the market will not allow anything to be free
sometimes incentives are not enough
2
Which of these terms is most closely related to trade-offs?
margin
incentives
markets
scarcity
3
What does it mean to say that free markets are efficient?
Information is communicated around the world
Buyers and sellers trade until both are satisfied
Everyone is assured of getting basic necessities
Decisions are made quickly with little confusion
4
What does Adam Smith’s idea of an “invisible hand” represent?
The economic role of governments
The divine oversight of human affairs
The concern of people for one another
Markets coordinate trade without government involvement
5
Which of the following terms describes an entrepreneur?
Self-confident
Risk taker
Strategist
Innovator
6
What is an opportunity cost?
The value of the next best alternative
The choice you decided to take
Choosing to do it all
Not making a choice
7
Water, oil and coal are all examples of what economic resource?
Capital
Land
Entrepreneurship
Labor
8
Opportunity costs can include...
Experiences
All of the above
Time
Money
9
Which of the following is NOT a factor of production?
Land
Labor
Money
Capital
10
What is the law of unintended consequences?
Economic booms are always followed by downturns
Actions often have unforeseen effects
Markets are always influenced by emotional factors
Attempts to intervene always backfire
11
Microeconomics studies...
Individuals / Households
Globalization
Taxes
The economy as a whole
12
What does it mean to maximize utility?
to strengthen national infrastructure
to gain the most satisfaction possible
to strengthen the skills of a workforce
to become as efficient as possible

Economics - Unit I Test Review Flashcards | StudBud