Economics, 3rd Edition

QUESTIONS FOR REVIEW

1 

Give three examples of important trade-offs that you 

face in your life.

2 

What is the opportunity cost of going to a restaurant 

for a meal?

3 

Water is necessary for life. Is the marginal benefit of 

a glass of water large or small?

4 

Why should policymakers think about incentives?

5 

Why isn’t trade among countries like a game, with 

some winners and some losers?

6 

What does the ‘invisible hand’ of the marketplace do?

7 

Explain the two main causes of market failure and 

give an example of each.

8 

What are the two subfields into which economics is 

divided? Explain what each subfield studies.