Chapter 1 Homework

Percent Change formala

(new value-original value)/original value X 100

In your economics​ class, you scored a 70 on the first​ quiz, a 80 on the second​ quiz, and an 82 on the third quiz. Your average quiz grade is ____________ On the fourth​ quiz, you scored an 82. Did the fourth quiz raise your​ average? a. yes b. no

- 77.3 - A

Economists often are interested in percentage change from one period to the next. The percentage rate of change of gross domestic product​ (GDP) is an important macroeconomic variable. If in 2010 GDP was​ $11,150 billion​ dollars, and GDP increased to ​$11,425 billion in​ 2011, what is the growth rate of the U.S. economy in​ 2011? _________%

2.5%

opportunity cost is A. the highest valued alternative that must be given up to engage in an activity. B. when consumers and firms use all available information as they act to achieve their goals. C. the idea that because of​ scarcity, producing more of one good or service means producing less of another good or service. D. when unlimited wants exceed the limited resources available to fulfill those wants.

A

​Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions: A. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced? B. ​One, what goods and services will be produced in foreign​ countries? Two, who will produce the goods and​ services? Three, who will receive the goods and services​ produced? C. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair? D. ​One, what goods and services will be produced​ domestically? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair?

A

Economists assume that people are rational in the sense that: a. they do not respond to economic incentives b. they use all available information as they take actions intended to achieve their goals c. they generally make the correct choices d. they make decisions based on total, rather than marginal, variables

B

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when: A. marginal benefit is maximized. B. marginal benefit equals marginal cost. C. marginal cost is zero. D. marginal benefit is greater than marginal cost.

B

If the government wanted to encourage home​ ownership, it​ could: a. tax homeowners based on asset values b. make mortgage interest tax deductible c. add a 10% surcharge on every home purchase d. none of the above

B

Macroeconomics is A. the study of firms as a group with special emphasis on how these firms interact with one another. B. the study of the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. C. the study of​ "large" (greater than​ $100,000) economic transactions in the economy. D. the study of how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices.

B

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives: A. pollution is likely to increase. B. the policies are consistent with economic incentives. C. the policies are futile because where the environment is​ concerned, it has been repeatedly shown that firms do not respond to economic incentives. D. the policies are likely to be more successful than policies that cost firms​ more, but they do not recognize economic incentives.

B

Which of the following covers the study of topics such as inflation or​ unemployment? A. Microeconomics B. Macroeconomics C. Both microeconomics and macroeconomics give equal emphasis to these problems. D. None of the above.

B

Which of the following shows a positive linear ​relationship? A. y equals negative 20 plus StartRoot x EndRoot B. y equals negative 20 plus 5.8 x C. y equals StartFraction 79 Over x EndFraction D. y equals 79 minus 4.7 x

B

Any model is based on making assumptions because: A. models have to be simplified to be useful. B. we cannot analyze an economic issue unless we reduce its complexity. C. both a and b. D. neither a nor b.

C

Economists assume that people behave: a. in regular patterns b. irrationally c. rationally d. none of the above

C

Equity is: A. an exactly equal distribution of income. B. always achieved by the market. C. the fair distribution of economic benefits. D. when poorer​ people's income is growing more rapidly than more wealthy​ people's income.

C

Firms choose how to produce the goods and services they sell. In many​ cases, firms face a​ trade-off between using more workers or using more machines. For​ example: A. a local service station has to choose whether to provide car repair services using more diagnostic computers to support their auto mechanics and fewer tools to support their auto mechanics or more tools to support their auto mechanics and fewer diagnostic computers to support their auto mechanics. B. movie studios have to choose whether to produce animated films using more highly skilled animators to draw them by hand or fewer highly skilled animators and more​ low-skill animators. C. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines. D. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer machines and more workers and a production method in China that uses more machines and fewer workers.

C

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls: A. economics. B. the market. C. scarcity. D. rationality.

C

When we graph the relationship between two​ variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing​ so, however, can lead to incorrect conclusions. Reasons for drawing incorrect conclusions about cause and effect include A. an omitted variable. B. reverse causality. C. both a and b. D. none of the above.

C

A hypothesis in an economic model is: A. tested before it can be accepted​ (or not​ rejected). B. a statement that may be either correct or incorrect about an economic variable. C. usually about a causal relationship. D. all of the above.

D

Economics is a social science because A. it is based on studying the actions of individuals. B. it applies the scientific method to the study of the interactions among individuals. C. it considers human behaviorlong dashparticularly ​decision-making behavior. D. all of the above.

D

Microeconomics is the study of A. firms as individual units excluding how these firms interact with one another. B. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. C. ​"small" (less than​ $100,000) economic transactions in the economy. D. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices.

D

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational? A. Microsoft's choice was​ rational: the price will maximize profit. B. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption. C. Microsoft's choice cannot be​ rational: the price is clearly more than most people are willing and able to pay. D. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.

D

revenue =

Price x Quantity

__________________ occurs when a good or service is produced at the lowest possible cost. _________________ occurs when production is in accordance with consumer preferences.

Productive efficiency, Allocative efficiency

A market is a group of _________________ of a good or service and the institution or arrangement by which they come together to trade.

buyers and sellers

Societies organize their economies in two main ways to answer the three questions of​ what, how, and who. A society can have a __________________ economy in which the government decides how economic resources will be allocated. Or a society can have a ______________ economy in which the decisions of households and firms interacting in markets allocate economic resources.

centrally planned, market

___________,_____________, and __________________ decide(s) what goods and services will be produced.

consumers, firms. and government

When demand increases...

demand curve shifts right

__________________ is the study of the choices people make to attain their goals, given their scarce resources.

economics

In the United​ States, who receives the goods and services produced depends largely on _______________

how income is distributed

One of the basic principles of economics is that people respond to:

incentives

A ______________ economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.

mixed

The diagram to the right illustrates a supply curve. As with all supply ​curves, this​ curve's slope is ___________

positive

___________ is concerned with what is​, and _________________ is concerned with what ought to be. Economics is about ________________​, which measures the costs and benefits of different courses of action.

positive analysis, normative analysis, positive analysis