1. What is scarcity? Why is scarcity central to the study of economics?
2. Why does scarcity imply that every society and individual must face trade-offs?
3. What is the difference between efficiency and equity? Why do government policymakers often face a trade-off between efficiency and equity?
4. Why do economists use models?
5. What are the five steps economists use to arrive at a useful economic model? Describe each step in detail.
6. What is the difference between normative analysis and positive analysis? Is economics concerned mainly with normative or positive analysis? Explain.
7. Suppose an economist develops an economic model and finds that “it works great in theory, but it fails in practice.” What should the economist do?
8. What are the differences between graphs using one variable, two variables, and more than two variables?
9. What is the use of positive and negative relationships in determining cause and effect?