Ch. 1 Microeconomics Homework

T/F Resources are limited in both wealthy and poor societies

True

T/F The collection and use of data to test economic theory is called empirical economics

True

T/F The phrase "there's no such thing as a free lunch" is a common way of expressing the concept of efficient markets

True

T/F The price is increasing as quantity increases, the slope of the line representing different prices and their corresponding quantities will be positive

True

T/F The process of analyzing the additional costs or benefits which arise from a decision is known as marginalism

True

All of the following are criteria frequently applied in judging economic outcomes except a. Profitability b. Stability c. Efficiency d. Growth

A

Economics is best defined as the study of a. Choices made by people faced with scarcity b. How consumers make purchasing decisions c. Inflation, unemployment, and economic growth d. Final decision making

A

One of the scarce resources that constrain our behavior is time. Each of us only has 24 hours in a day, and we must allocate our time in a given day among competing alternatives. How do you go about allocating your time in a given day among competing alternatives? How do you go about weighing the alternatives? a. As more and more time is spent on one activity, the opportunity cost of the activity in terms of other activities rises b. As more and more time is spent on one activity, the opportunity cost of that activity in terms of other activities falls c. As less and less time is spent on one activity, the opportunity cost of that activity in terms of other activities rises d. B and C only

A

The best alt. given up when we make a decision is called ____ of that decision a. Opportunity cost b. Rational cost c. Marginal cost d. Dollar cost

A

The importance of the ceteris paribus assumption when using models is that: a. It allows researchers to isolate the effect of one event on another without the influence of outside variables b. It converts normative analysis into positive c. It eliminates the need for abstraction or simplification d. It allows researcher to analyze the effect of all potential influences on a particular event

A

When graphing two variables, the point at which the graph intersects the horizontal axis is called the a. X-intercept b. Origin c. Y-intercept d. Equilibrium point

A

Which of the following is a macroeconomics question? a. Should we have a constitutional amendment to balance the federal budget? b. Should the government prevent the merger of two large firms? c. Why does a firm decide to enter a particular market? d. Should the government put a tax on alcohol in an attempt to reduce highway fatalities?

A

You own the video game Grand Theft Auto V. The opportunity cost of playing this game for the second time a. Is the value of the alternative use of the time you spend of playing this game b. Is zero c. Is one-half cost of the game, as this is the second time you have played it d. Cannot be calculated

A

Determine whether the following is covered by microeconomics or macroeconomics a. Number of employees in the steel industry b. Changes in the aggregate price level (inflation) c. The price of gasoline d. The unemployment rate

A- Micro B- Macro C- Micro D- Macro

Explain whether each of the following is an example of a macro or micro concern a. The Federal Aviation Administration is considering increasing the number of takeoff and landing slots available at Ronal Reagan Washington National Airport b. The president has proposed increasing the marginal tax rate for people whose annual earnings exceed $275,000 and lowering the marginal tax rate for those who earn less than $275,000 c. Walmart announced that it will increase its starting wage for employees to $10/hour by Feb 2016 d. Congress extends the maximum duration for the collection of unemployment benefits from 26-52 weeks

A-Micro B-Macro C-Micro D-Macro

Indicate whether the following statements are examples of positive economic analysis or normative economic analysis a. A devaluation of the U.S. dollar would increase exports from the United States b. Increasing the federal tax on gasoline would cause shipping costs in the United States to increase c. Florida should devote all revenues from its state lottery to improving public education d. Eliminating the trade embargo with Cuba would increase the number of Cuban cigars available in the United States e. As a public safety measure, the state of Texas should not pass legislation that allows people with concealed handgun permits to carry concealed weapons on college campuses

A-Positive B-Postive C-Nomative D-Positive E-Normative

All of the following are examples of topics examined in macroeconomics except a. Aggregate unemployment b. Household income c. The overall price level in the economy d. National output

B

An efficient market is a market which a. Profits are always very high and persistent b. Profit opportunities are eliminated almost instantaneously c. Opportunity costs are zero d. Everyone always gets what they want

B

The study of economics a. Is very narrow endeavor b. Is way of analyzing decision-making processes caused by scarcity c. Focuses on how a business should function d. Is concerned with proving that capitalism is better than socialism

B

Which field of economics deals primarily with the problems faced by low-income countries? a. Public economics b. Economic development c. Industrial organization d. Comparative economic systems

B

Which of the following statements uses the concept of equity to argue against the legalization of casino gambling? a. Legalized casino gambling will generate additional revenue, which the state can use for gambling addiction programs b. Legalized casino gambling places an unfair burden on nongamblers, who must now tolerate the increased traffic that the activity necessarily produces c. If gamblers are able to gamble at less cost and nongamblers receive the benefits of additional tax revenue, then it is an equitable activity d. All the above

B

"Statistics tell us that ice cream sales increase during the summer months. It is also the case that reported burglaries increase during the same period. We can conclude, therefore, that increased ice cream sales cause an increase in burglaries." The conclusion of this statement: a. Is a normative analysis b. Commits the fallacy of composition c. Falls victim to "post hoc, ergo propter hoc." d. All of the above e. None of the above

C

Does the "richest man in the world" face scarcity, or does scarcity only affect those with more limited incomes and lower net worth? a. Bill Gates does not face scarcity because he is a billionaire b. He faces scarcity because his resources are unlimited c. Bill Gates faces scarcity because resources are limited d. The "richest man in the world" does not face scarcity because he has more money than others

C

People who eat kale on a regular basis are more likely to exercise every day than people who do not eat kale. Therefore, exercising daily causes people to eat kale. Explain the pitfall of this statement. a. It is an example of the post hoc fallacy b. It is an example of the coincidental fallacy c. It confuses correlation and causation d. It is an example of the fallacy of composition

C

The Industrial Revolution refers to the rise of the modern factory system in ________ during the late eighteenth and early nineteenth centuries. a. Germany b. The United States c. England d. Germany

C

The field of economics that deals primarily with the factors that determine wage rates, employment, and unemployment is called: a. Microeconomics b. Macroeconomics c. Labor economics d. Public economics

C

Which of the following is a microeconomics question? a. Should the government attempt to influence the interest rate to lower inflation? b. Should Congress and the president take action to reduce global warming? c. Is it sensible for a government to subsidize tobacco production? d. Why do some countries grow faster than others?

C

Opportunity cost is... a. The cost of production that cannot be recaptured b. The additional cost incurred from the consumption of one more unit of output c. The total cost incurred from the consumption of additional output d. The cost involved when choosing between alternatives

D

To analyze the relationship between two variables while holding the values of other variables unchanged is a device known as a. Ockham's razor b. Caveat emptor c. Post hoc, ergo propter hoc d. Ceteris paribus

D

Which of the following is not an opportunity cost of attending college? a. The tuition you pay b. The income you could have earned c. The alternative uses of time you spend studying d. The cost of the food that you consume while attending college

D

Which of the following is not listed in the book as a reason to study economics? a. To understand society and global affairs b. To learn a way of thinking c. To be an informed citizen d. To learn how to make lots of money

D

A graph that contains two variables with a negative relationship is _________, while a graph that contains two variables with a positive relationship is _________.

Downward sloping; upward sloping

T/F Macroeconomics deal with the function of individual industries and the behavior of firms and households

False

T/F On a time series graph, time is measured along the vertical scale

False

T/F Opportunity costs are another name for marginal costs

False

The difference between microeconomics and macroeconomics is that microeconomics analyzes the decisions made by _________, while macroeconomics deals primarily with _____________.

Households and firms; the economy as a whole

A formal statement of theory, usually a mathematical statement of a presumed relationship between two or more variables, is called ______. A ________ can change over time or across observations.

Model; variable

The most common method for graphing the relationship between two variables is by drawing two __________ lines, where the __________ is a horizontal line and the __________ is a vertical line

Perpendicular lines; x-axis; y-axis

When the variable measured along the x-axis and the variable measured along the y-axis move in the same direction, it indicates a ________ relationship between the two variables. If the variables along the x-axis and y-axis move in opposite directions, there is a ________ relationship between the two variables.

Positive; negative