Question

Page(s) 9-10 1.2. What are five foundations of economics? Place the events in order to describe the unintended consequences of a government-created incentive. Start by clicking the first item in the sequence or dragging it here Drag the items below into the box above in the correct order, starting with the first item in the sequence. People begin breeding cobras to turn in, which is easier than hunting them. Some bred cobras escape. A certain area has a problem with cobras, which are poisonous. The government announces a reward for every captured cobra turned in. The area has more free cobras than before.

Answer 1

The five foundations of economics relate to basic principles such as supply and demand and how government policies affect them. An example of an unintended consequence of a government policy is the 'cobra effect,' where a bounty on cobras led to increased breeding and ultimately more cobras.

Step-by-step explanation:

The five foundations of economics are often not explicitly listed as a simple group of five, but from the provided context, we can infer that they relate to understanding how economic agents respond and how government policies can affect those responses. Some foundational principles of economics include the laws of supply and demand, government interaction with markets, and the recognition of unintended consequences of economic policies.

An example of unintended consequences is illustrated in the sequence of events around a government-created incentive to reduce the population of cobras. This can be ordered as follows:

1. A certain area has a problem with cobras, which are poisonous.
2. The government announces a reward for every captured cobra turned in.
3. People begin breeding cobras to turn in, which is easier than hunting them.
4. Some bred cobras escape.
5. The area has more free cobras than before.

This is an example of how economic policies can sometimes lead to results that are the opposite of what was intended. The creation of a financial incentive led to behavior that ultimately exacerbated the initial problem, thereby demonstrating the government policy's unintended consequences on market outcomes.

Answer 2

Answer: Please refer to Explanation.

Step-by-step explanation:

1. The five (5) principles of Economics are,

a) Incentives

- Divided into 2, groups being positive and Negative, Incentives help in the decision process as they push a person to do something. An example of a negative incentive, is not commiting crime for fear of going to jail.

b) Tradeoffs

- This means that for everything we do, we had to give up something to do it. In other words there is no such thing as a free lunch.

c) Opportunity Cost

- This is what you would have gained had you picked the next best alternative to a decision. The trick therefore, is to pick a decision that has a lower Opportunity Cost than the decision picked.

d) Marginal Thinking.

- This rationalizes the decision making mechanism of people. It posits that humans evaluate courses of actions individually to ascertain if their costs outweigh their benefits before picking them.

e) Trade Creates Value

- Trade is the buying and selling of goods and services. It is a very basic principle at the heart of Economics that trade creates value because people are both able to get what they need to function better.

2. Arranging the events in chronological order.

- A certain area has a problem with cobras, which are poisonous.

- The government announces a reward for every captured cobra turned in.

- People begin breeding cobras to turn in, which is easier than hunting them.

- Some bred cobras escape.

- The area has more free cobras than before.

This shows that sometimes incentives may not work to the benefit of Society.