Name:___________________________
Period:_____________
The 10 Principles of Economics Worksheet
1. Describe some of the tradeoffs faced by the following:
a. a family trying to decide to buy a new car
b. a professor deciding how much to prepare or class
c. a company executive deciding on opening a new factory or not
2. You are trying to decide whether or not to take a vacation to Bora Bora. Most of the costs
for the vacation can be measured in Euros (airfare, hotel, forgone wages), but the
benefits of the vacation are psychological. How can you compare the benefits to the
costs?
3. You win 1 million Euros in the lottery. You have the choice of spending all of the money
right away, or putting the money away in a bank for one year with a 10% interest rate.
What is the opportunity cost of spending the million Euros right away?
4. Explain whether each of the following government actions is motivated by a concern
about equity or about efficiency and why you think that.
a. regulating cable TV prices
b. providing poor people with vouchers to help them by food
c. prohibiting smoking in public places
d. breaking up a business monopoly
e. instituting laws against drunk driving
5. Please explain the phrase “rational people think at the margin”
6. Explain what market failure is, and describe its 2 main causes.