Chapter 1 Homework

The opportunity cost of planning a vacation with friends is __________ units of pleasure and the opportunity cost of cleaning the room is __________ taking up an economic crash course volunteering at the local old age home planning a vacation with your friends . Suppose you​ have a two week spring break. Considering the time it takes for each​ activity, if your parents​ allow you to take one vacation with your​ friends, which of the​ following is a feasible and optimized​ bundle left for you to​ choose? A. Taking up an economic crash course and cleaning the room. B. Taking up an economic crash course and volunteering at the old age home. C. Planning another vacation with your friends. D. Taking up an economic crash​ course, cleaning the​ room, and volunteering at the old age home.

+45, Planning a vacation with your friends. B. Taking up an economic crash course and volunteering at the old age home.

Which of the following does not support the concept of an economic​ agent? ​(Check all that apply​.) A. All economic agents are individuals. B. Their decisions do not have an effect on the economy of a country. C. Groups are considered as a single decision maker. D. They make decisions by solving choice problems.

A, B

Which of the following statements explain positive​ economics? ​(Check all that apply​.) A. It can be rejected or amended depending on the evidence available. B. The predictions are testable. C. It is not factual. D. It depends upon value judgements.

A, B

Suppose the market price of corn is​ $5.50 per bushel. Which of the following is not one of the three conditions that will need to be satisfied for the corn market to be in equilibrium at this​ price? A. Both the buyers and sellers of corn could benefit by making small changes to their market behaviors. B. The cost to corn farmers of growing the corn must be less than​ $5.50 per bushel. C. The buyers of corn will only use it for activities that they feel are worth at least​ $5.50 per bushel. D. The quantity of corn produced by corn farmers will equal the quantity purchased by buyers.

A. Both the buyers and sellers of corn could benefit by making small changes to their market behaviors.

If you decide to go to​ class, then what do we know about the opportunity cost of your​ decision? A. The opportunity cost would be sleeping in​ late, since it was your​ next-best option. B. The opportunity cost would be​ working, since it is the only option that can be put in a dollar amount. C. The opportunity cost would include sleeping in​ late, going to work​ early, getting​ lunch, going to the gym to​ exercise, and watching television. D. There would be no opportunity cost in this example.

A. The opportunity cost would be sleeping in​ late, since it was your​ next-best option.

In which of the following examples is the cause and the effect hard to​ untangle? A. The relation between dense forests and heavy rains. B. The relation between marine pollution and coral reef death. C. The relation between smoking cigarettes and lung cancer. D. The relation between smoke and fire.

A. The relation between dense forests and heavy rains.

Which of the following cases can create a​ free-rider problem? ​(Check all that apply​.) A. Use of public parks by locals. B. The street light on the road. C. Opening a savings account in a bank. D. Use of a personal television by the owner.

A. Use of public parks by locals. B. The street light on the road.

In​ equilibrium, everyone​ ___________. A. simultaneously​ optimizes, so that nobody benefits by changing his or her own behavior. B. faces a​ trade-off, such that the individual must give up one thing to get something else. C. maximizes his or her​ benefits, so that opportunity costs and​ trade-offs are eliminated. D. benefits by changing his or her own behavior.

A. simultaneously​ optimizes, so that nobody benefits by changing his or her own behavior.

All of the following would fall under the study of microeconomics​ except: A. the stock​ market's response to an interest rate increase. B. an international trade dispute. C. a labor union strike. D. a factory polluting a lake used for fishing.

A. the stock​ market's response to an interest rate increase.

Which of the following is not an item studied under macroeconomics? A. Cigarette taxes. B. Aggregate issues. C. Economic output. D. The inflation rate.

A. Cigarette taxes.

Which of the following areas are addressed in the study of​ economics? A. The cost associated with a decision. B. Inflation Rates. C. Money. D. Pollution reduction policies.

ALL ANSWERS LISTED ARE CORRECT A, B, C, D

Which of the following statements is not a correct explanation of​ empiricism? ​(Check all that apply.​) A. It involves data analysis and drawing inferences. B. It cannot be monitored. C. It has nothing to do with optimization and equilibrium. D. It tests whether theories are applicable to real life situations

B. It cannot be monitored. C. It has nothing to do with optimization and equilibrium.

Which of the following is not one of the three key principles of​ economics? A. Optimization. B. Resource allocation. C. Equilibrium. D. Empiricism.

B. Resource allocation.

Which of the following supports the characteristics of​ optimization? A. Selection of the option that always gives the best possible results or returns. B. Selection of the option that fits the budget at the time of the decision. C. All individuals and households choose options that maximize their personal income. D. Selection of the feasible option regardless of the availability of information to the individual.

B. Selection of the option that fits the budget at the time of the decision.

Suppose there are three activities in which you could​ participate: 1. The opportunity cost of the first activity is missing 3 hours of work. 2. The opportunity cost of the second activity is missing a concert that you have tickets to. 3. The opportunity cost of the third activity is missing the afternoon nap that you take every day. Given this​ information, for which of these activities would you be able to compare opportunity​ costs? A. You can only compare activities 1 and​ 2, since they can both be easily stated in terms of dollars forgone. B. You can compare all the activities after you translate all the missed activities into dollar amounts. C. You can only compare activities 1 and​ 3, since they both relate to an amount of time that is lost. D. You cannot compare any of these opportunity​ costs, since they each are measured in different units.

B. You can compare all the activities after you translate all the missed activities into dollar amounts.

A budget constraint represents​ _________. A. any actions taken by government officials to limit the amount of government spending. B. the bundles of goods or activities that a consumer can choose given her limited budget. C. the maximum amount of spending the federal government is allowed to do by law. D. the total amount of income a family earns from all sources.

B. the bundles of goods or activities that a consumer can choose given her limited budget.

Suppose a total of​ 2,500 students are allowed in the engineering programs at all of the colleges in a particular city. From the previous three​ years' record, it shows that the number of students who enroll in the entrance exam for the engineering program increases if there is an increase in the number of IT recruiters the previous year.This year there is a total of​ 3,200 students who have enrolled to take the entrance exam of which only up to​ 2,500 of those who passed would get in. Based on either the​ students' perspective or the college​ perspective, what combination of economic key concepts does the situation​ follow? A. Optimization and equilibrium B. ​Optimization, equilibrium, and empiricism C. Optimization and empiricism D. Equilibrium and empiricism

B. ​Optimization, equilibrium, and empiricism

Which of the following is an example of a rational action by an​ individual? A. Partying with friends two days after a successful heart surgery. B. Walking down from the 5th floor of a building during an earthquake. C. Solely renting a house for 2 years worth​ $2,000 per month with an annual salary of​ $23,000. D. Accepting a job as a morning and a night duty watchman.

B. Walking down from the 5th floor of a building during an earthquake.

The ethical implications of a hotly debated government policy would best be considered a​ _________. A. positive​ question, since it deals with an objective issue based on factual evidence. B. positive​ question, since it deals with a subjective issue based on personal preferences. C. normative​ question, since it deals with a subjective issue based on personal preferences. D. normative​ question, since it deals with an objective issue based on factual evidence.

C. normative​ question, since it deals with a subjective issue based on personal preferences.

The concept of opportunity cost is a measure of​ _________. A. all the possible alternative uses of a resource. B. the dollar amount you must pay to do any activity. C. the value of the best alternative use of a resource. D. the benefit that you receive from doing any activity.

C. the value of the best alternative use of a resource

In which of the following examples is prescriptive economic analysis​ necessary? A. If the government raises the tax on​ beer, this will lead to a fall in profits of the brewers. B. The government is right to introduce a ban on smoking in public places. C. Jay chooses to go to Europe rather than China because of the huge discounts. D. Higher interest rates will reduce home prices.

C. Jay chooses to go to Europe rather than China because of the huge discounts.

How does microeconomics differ from​ macroeconomics? A. Microeconomics is the study of how individuals and firms make​ choices, while macroeconomics is the study of all state and local government policies. B. Macroeconomics is the study of how individuals and firms make​ choices, while microeconomics is the study of all state and local government policies. C. Microeconomics is the study of how​ individuals, households,​ firms, and governments make​ choices, while macroeconomics is the study of the economy as a whole. D. Macroeconomics is the study of how​ individuals, households,​ firms, and governments make​ choices, while microeconomics is the study of the economy as a whole.

C. Microeconomics is the study of how individuals, households, firms, and governments make choices, while macroeconomics is the study of the economy, as a whole.

Which of the following statements about the principles of economics is​ false? A. Five mobile operators selling mobile phones at the same price in a city is an example of equilibrium. B. A chess player selecting his best moves to win the chess tournament is an example of optimization. C. Based on the sales of last three​ years, a shopkeeper infers that the higher the discount offered on goods the higher will be its demand. This is an example of empiricism. D. An investor selecting and investing in a stock or a combination of stocks that always earns him​ 15% returns on his investment is an example of optimization.

D. An investor selecting and investing in a stock or a combination of stocks that always earns him​ 15% returns on his investment is an example of optimization.

Assume every semester after finals you fly back to your hometown using a​ $300 ticket you buy online. You have​ 40,000 frequent flier miles. You could exchange your miles for a​ round-trip ticket to Bermuda over spring break. If you choose to exchange your airline miles for a free trip to Bermuda over spring​ break, then your trip​ _________. A. equals the sum of the costs of all your previous flights​ home, since accumulating those miles cost you money. B. is​ free, since you had planned to pay for the​ $300 ticket home at the end of the semester with cash anyway. C. is​ free, since you used airline miles that you accumulated flying somewhere you needed to go. D. cost​ $300, since your​ next-best alternative for your miles was to use them to fly home at the end of the semester.

D. cost​ $300, since your​ next-best alternative for your miles was to use them to fly home at the end of the semester.

During the process of optimization economists believe that people are considering​ _________. A. what they would do if they had no money or time constraints of any kind. B. the benefits of their choices for others more than the benefits to themselves. C. only the decisions that will result in the least cost to the individual. D. the feasibility of a​ choice, given the information available at the time.

D. the feasibility of a​ choice, given the information available at the time.

Which of the following would not be considered one of the possible opportunity costs of a recent high school graduate backpacking across Europe for a year A. Joining the Peace Corps. B. Starting college right away C. Getting a full minus time job D. None of these would be considered an opportunity cost. E. All of these is a possible opportunity cost

E. All of these is a possible opportunity cost.

The Bureau of Labor Statistics defines the​ labor-force participation rate as the number of people in the labor force​ (those that either have jobs or are actively looking for​ jobs) as a percentage of the​ working-age population. The Organization for Economic Cooperation and Development defines the total fertility rate in a specific year as the total number of children that would be born to each woman if she were to live to the end of her​ child-bearing years. Given the two definitions​ above, let's look at the relationship between the​ labor-force participation rate and the total fertility rate for highly educated women with high earning potential. You would expect that the​ labor-force participation rate among highly educated women would be __________ lower than average the same as all women higher than average ​, since the opportunity cost of not working for highly educated women is __________ higher than lower than the same as that of all women.

Higher than average, higher than

Suppose you are ready to check out and see two​ lines: Line A has three​ people, while Line B has five people. Assume people choose lines at random and have not yet had a chance to switch lines. The situation will move toward equilibrium if the ____________. Assume that all eight shoppers are optimizing​ (i.e., they had a chance to switch​ lines) and the situation is in equilibrium. Given this​ information, you could infer that the shorter line will move _____________ the longer line. Assume that all eight shoppers are optimizing​ (i.e., they had a chance to switch​ lines) and the situation is in equilibrium. Given this​ information, you could infer that the behavior of the _____________________ is most informative.

Last person from the longer line switches to the shorter line Slower than last person in the five-person line

You would expect that the total fertility rate among highly educated women would be __________ the same as higher than lower than less educated​ women, since the opportunity cost of staying home to raise children is __________ higher the same lower for highly educated women.

Lower than, higher

The goal of optimization for an individual is to maximize ___________.

Overall Well-Being

The table above shows that for a given budget if you increase the amount of one type of good that you​ buy, you must ___________ not change increase decrease the amount of the other good that you buy.​ Therefore, a budget constraint implies that the consumer faces _________ trade-offs rising benefits fixed consumption .

decrease, trade-offs

You have already purchased​ (non-refundable and​ unsellable) tickets to a concert on Friday night. A friend also invites you to her birthday party on Friday. While you like your​ friend, you politely decline because you really want to go to the concert. Suppose you learn that your friend is serving flank steak at her​ party; all-you-can eat and at no charge. Flank steak is your favorite food. Your opportunity cost of going to the concert is now __________ than you had previously thought. Suppose instead that you notice that the concert ticket cost you​ $10; previously, you had mistakenly believed the price was​ $100. Should learning this information affect your decision to go to the​ concert? _________.

higher, no

The statement that the United States has too many illegal immigrants is a _______ normative positive statement since it describes what people _______.

normative, ought to do

The statement that the United States has a budget deficit that is in excess of $ 15 trillion is a _______normative positive statement since it describes what people_______.

positive, actually do

Mason and Jack are neighbors. Mason wants to buy a new outdoor grill so he can barbecue. Mason has two​ options, a charcoal grill or a gas grill. By using _________ macroeconomic analysis positive economic analysis prescriptive economic analysis ​, he chooses to buy a gas grill. Mason knows that Jack would borrow his grill without​ asking; therefore, decides to use ___________ the charcoal grill instead of the gas grill equilibrium analysis the gas grill for sure in order to prevent his neighbor Jack from becoming a​ free-rider.

prescriptive economic analysis; equilibrium analysis

The opportunity cost of an activity is a measure of ___________when you do that activity.

what is given up