Questions for Review without Answers
Chapter 1. The Paradigm of Economics
I. The Nature of Man
1) What are the major characteristics of homo economicus?
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2) Define utility.
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II. Decisions of Individuals and Firms
3) Define incentives.
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4) Why do incentives matter?
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5) Define trade-offs.
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6) Why are all choices trade-offs?
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7) Compare absolute and relative scarcity.
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8) What are the consequences of relative scarcity?
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9) Can you give an example of a free lunch?
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10) Distinguish opportunity costs and normal costs.
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11) Define marginal utility.
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12) Explain the law of diminishing marginal utility and describe how it determines buying decisions.
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13) The law of diminishing utility is the economic value and price theory. Can you explain why?
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14) Define marginal cost and explain the law of diminishing returns.
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III. The Individual and the Public
15) Define efficiency.
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16) Explain the relationship between individual interest and the public interest.
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IV. The Economy
17) Which magnitudes does the self-regulating market determine?
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18) Define equilibrium.
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