Chapter 1

Suppose a city block was going to be used for a parking lot. The opportunity cost would be

greater in New York City because the alternative uses of the block are more valuable.

Economists classify resources as

labor, land, real capital, and entrepreneurs.

Economic resources are the

natural, human, and manufactured inputs used to produce goods and services.

How (if at all) does the following event affect the location of a country's production possibilities curve? The quality of education increases:

Curve shifts outward

Indicate whether each of the following statements applies to microeconomics or macroeconomics: The consumer price index rose by 3.8 percent from August 2011 to August 2012:

Macroeconomics

Indicate whether each of the following statements applies to microeconomics or macroeconomics: An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise:

Microeconomics

Indicate whether each of the following statements applies to microeconomics or macroeconomics: Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point:

Microeconomics

How (if at all) does the following event affect the location of a country's production possibilities curve? The number of unemployed workers increases:

No change

Because economic resources are used to produce goods and services, they are called

factors of production or inputs.

Indicate whether each of the following statements applies to microeconomics or macroeconomics: A U.S. software firm discharged 15 workers last month and transferred the work to India:

Microeconomics

Studies indicate that married men on average earn more income than unmarried men of the same age and education level. From this statement, we can conclude that

there is a correlation, but marriage is not necessarily the cause of higher income for married men.

In a market system scarce goods are allocated through the operation of

what must be sacrificed in using a resource for its next best use.

Suppose that you are given a $100 budget at work that can be spent only on two items: staplers and pens. If staplers cost $10 each and pens cost $2.50 each, then the opportunity cost of purchasing one stapler is:

4 pens: You must forgo purchasing 4 pens if you are to free up enough money (4 × $2.50 = $10) to purchase a stapler.

How (if at all) does the following event affect the location of a country's production possibilities curve? A devastating earthquake destroys numerous production facilities:

Curve shifts inward

How (if at all) does the following event affect the location of a country's production possibilities curve? A new technique improves the efficiency of extracting copper from ore:

Curve shifts outward

Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. Would your attainable set of combinations increase or decrease if Your budget remains $100, the price of books remains $25, but the price of movie tickets rises to $20:

Decrease

Pham can work as many or as few hours as she wants at the college bookstore for $9 per hour. But due to her hectic schedule, she has just 16 hours per week that she can spend working at either the bookstore or at other potential jobs. One potential job, at a café, will pay her $12 per hour for up to 6 hours per week. She has another job offer at a garage that will pay her $10 an hour for up to 5 hours per week. And she has a potential job at a daycare center that will pay her $8.50 per hour for as many hours as she can work. If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore?

Five hours

Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. Would your attainable set of combinations increase or decrease if Your budget increases from $100 to $150 while the prices stay the same:

Increase

Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. Would your attainable set of combinations increase or decrease if Your budget remains $100, the price of movie tickets remains $10, but the price of a book falls to $15:

Increase

What are the two major ways in which an economy can grow and push out its production possibilities curve?

Increases in resource supplies and advances in technology

Indicate whether each of the following statements applies to microeconomics or macroeconomics: The unemployment rate in the United States was 8.1 percent in August 2012:

Macroeconomics

Indicate whether each of the following statements applies to microeconomics or macroeconomics: U.S. output, adjusted for inflation, decreased by 2.4 percent in 2009:

Macroeconomics

Which of the following represent a normative economic statement?

The government ought to lower taxes so people have more money.

Which of the following represents a positive economic statement?

The unemployment rate is 4.8 percent.