GCSE Economics: The Undercover Economist Strikes Back Quiz

Test Your Understanding of Key Concepts from Tim Harford's 'The Undercover Economist Strikes Back'

Section 1: Scarcity and Trade-offs

1. According to Harford, what is the fundamental economic problem faced by individuals and societies?
   • a) How to maximize profits
   • b) How to allocate scarce resources among competing uses
   • c) How to reduce inequality
   • d) How to achieve economic growth
2. Provide an example from the book where Harford illustrates the concept of trade-offs.

Section 2: Marginal Thinking and The Price Mechanism

1. What does Harford mean by 'marginal' thinking, and how does it apply to decision making?
2. Explain how the price mechanism helps allocate resources efficiently, using an example from the book.

Section 3: Information Asymmetry and Incentives

1. Define information asymmetry and provide an example from the book where it leads to market failure.
2. According to Harford, how can incentives be used to align the interests of different parties? Give an example.

Section 4: Game Theory and Strategic Thinking

1. What is game theory, and how does Harford use it to analyze economic situations?
2. Describe a scenario from the book where game theory helps explain the behavior of individuals or firms.

Section 5: Externalities and The Role of Government

1. Define externalities and provide an example of a negative externality discussed in the book.
2. What roles does Harford suggest for government intervention in addressing market failures like externalities?

Answers should draw directly from concepts and examples in Tim Harford's 'The Undercover Economist Strikes Back' to demonstrate understanding of the key economic principles covered in the book.