Term
| You choose to shop at the local discount store rather than paying a higher price for the same merchandise at the local department store. |
|
Definition
| Principle #4: People usually respond to incentives, Exploiting opportunities to make themselves better off. |
|
|
Term
| On your spring break, your budget is limited to $35 a day. |
|
Definition
| Principle #1: Choices are necessary because resources are scarce. |
|
|
Term
| The student union provides a website on which departing students can sell items such as used books, appliances, and furniture rather than give them away to their roommates as they formerly did. |
|
Definition
| Principle #6: Markets move toward equilibrium. |
|
|
Term
| After a hurricane did lots of damage to a city, homeowners wanted to purchase more materials and hire more workers than were available in the city. As s result, prices for goods and services rose dramatically across the board. |
|
Definition
| Principle #11: Overall spending sometimes gets out of line with the economy's productive capacity. |
|
|
Term
| You buy a used textbook from your roommate. Your roommate uses the money to buy songs on itunes. |
|
Definition
| Principle #10: One person's spending is another person's income. |
|
|
Term
| You decide how many cups of coffee to have when studying the night before an exam by considering how much work you can do by having another cup of coffee vs. how jittery it will make you feel. |
|
Definition
| Principle # "How Much" is a decision at the margin. |
|
|
Term
| There is limited lab space available to do the project required for chemistry. The lab supervisor assigns lab time to each student based on when that student is able to come. |
|
Definition
| Principle #7: Resources should be used efficiently to achieve society's goals. |
|
|
Term
| You realize that you can graduate a semester early by forgoing a semester of study abroad. |
|
Definition
| Principle #2: The true cost of something is its opportunity cost. |
|
|
Term
| At the student union, there is a bulletin board where you can advertise things to sell, such as bicycles. Once you have adjusted for differences in quality, all the bikes sell for about the same price. |
|
Definition
| Principle #6: Markets move towards an equilibrium. |
|
|
Term
| You are better at performing lab experiments and your lab partner is better at writing lab reports. So the two of you agree that you will do all the experiments and she will write up all the reports. |
|
Definition
| Principle #5: There are gains from trade. |
|
|
Term
| State governments mandate that it is illegal to drive without passing a driving exam. |
|
Definition
| Principle #9: When markets don't achieve efficiency, government intervention can improve society's welfare. |
|
|
Term
| Your parents' after-tax income has increased because of a tax cut passed by Congress. They therefore increase your allowance, which you spend on a spring break vacation. |
|
Definition
| Principle #12: Government policies can change spending. |
|
|
