Macro Chapter 1
the vertical intercept is the value taken by the dependent variable when the independent variable is equal to
0
Suppose Joe is trying to decide whether to buy a latte at a nearby coffee shop or make a cup of coffee at home. Joe would get $5 worth of value from the latte, and the price of a latte at the coffee shop is $3. Joe would get $2.50 worth of value from a cup of homemade coffee, and it would cost him $1 to make. How much economic surplus would Joe get from buying a latte at the coffee shop?
0.50
How does the benefit of having safety seats for infants in airplanes compare with the benefit of having them in cars?
The benefit is larger in airplanes, because severe air turbulence is much more common than car accidents.
A decrease in B leads to what
a decrease in slope
equation
a mathematical expression that describes the relationship between two or more variables
constant
a quantity that is fixed in value
variable
a quantity that is free to take a range of different values
Dependant variable
a variable in an equation whose value is determined by the value taken from another variable in an equation
independent variable
a variable in an equation whose values determines the value taken by another variable in the equation
In the graph of a line, an increase in the vertical intercept will lead to
an upward parallel shift
in y = a + bX, what is the slope
b
Vertical intercept
in a straight line, the value taken by the dependent variable when the independent variable equals zero; value of b
slope
the ratio of a vertical difference the straight line travels between any 2 points to the corresponding horizontal distance
Macroeconomics
the study of national economies and the policies that governments use to improve that preformance
The opportunity cost of an action is equal to:
the sum of its explicit and implicit costs.
average benefit
the total benefit of undertaking n units of an activity divided by n
average cost
the total cost of undertaking n units of an activity divided by n
Why are child safety seats required in automobiles but not in airplanes?
Because such a requirement would require purchasing an additional ticket on full flights, making it prohibitively expensive.
Why do moderately priced refrigerators have a light in the refrigerator compartment but not in the freezer compartment?
Because the refrigerator door is opened more frequently than the freezer door.
Why do many premium-priced refrigerators have lights not only in the refrigerator compartments but also in the freezer compartments?
Because willingness-to-pay for additional convenience is higher for high-income consumers than for low-income consumers
The meal plan at University A lets students eat as much as they like for a fixed fee of $500 per semester. The average student there eats 250 pounds of food per semester. University B charges $500 for a book of meal tickets that entitles the student to eat 250 pounds of food per semester. If the student eats more than 250 pounds, he or she pays $2 for each additional pound; if the student eats less, he or she gets a $2 per pound refund. If students are rational, at which university will average food consumption be higher?
University A
Once a week, Smith purchases a six-pack of cola and puts it in his refrigerator for his two children. He invariably discovers that all six cans are gone on the first day. Jones also purchases a six-pack of cola once a week for his two children, but unlike Smith, he tells them that each may drink no more than three cans. At both houses, the cost of drinking a cola is that it's not available to drink later, but, at Smith's house, there's always a chance your sibling will drink the cola. Thus, the cost of drinking a cola is
lower
The Cost- Benefit Principle is a _______ economic principle
normative
positive economic principle
one that predicts how people will behave
normative economic principle
one that says how people should behave
Incentive principle has which type of economic principle
positive
