Econ hw 1

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Every society faces​ trade-offs because we live in a world of scarcity. Suppose a​ student-athlete has the opportunity to earn ​$800,000 next year playing for a minor league baseball​ team, ​$900,000 next year playing for a European professional football​ team, or​ $0 returning to college for another year. The opportunity cost of the​ student-athlete returning to college next year is ​

900,000

According to Forbes​ magazine, in 2017 Bill Gates was the​ world's richest person with wealth of​ $86 billion. Which of the following statements is​ true?

All individuals face a scarcity of time and need to make choices how to allocate it.

The effect of higher income taxes on the total amount of consumer spending. This is a _______issue.

macroeconomic

d. The price of coffee at Starbucks is too high. This represents

normative analysis

According to Forbes​ magazine, in 2017 Bill Gates was the​ world's richest person with wealth of​ $86 billion. Does Bill Gates face​ scarcity?

​Yes, because even though​ billionaires' financial resources enable them to afford a much greater array of goods and services than those less​ wealthy, their financial resources are not infinite.

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 comma 25211,252 billion in​ 2011, what is the growth rate of the U.S. economy in​ 2011?

0.9%

Which of the following statements about a hypothesis is​ correct?

A hypothesis is a statement that could in principle turn out to be incorrect.

Economic data is used to

test models

Economists use models

to answer questions and analyze issues.

Which of the following statements about an economic variable is​ correct?

An economic variable is something measurable that can have different values.

Which of the following is a correct statement about a mixed​ economy?

In a mixed​ economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources.

A primary difference between macroeconomics and microeconomics is

Microeconomics examines individual markets while macroeconomics examines the economy as a whole.

What type of economic analysis is concerned with the way things ought to​ be?

Normative Analysis

Which of the following best describes​ scarcity?

Unlimited wants exceed the limited resources available.

Scarcity is central to the study of economics because it implies that

every choice involves an opportunity cost.

Consider an organization that exists to help the poor. The members of the organization are discussing alternative methods of aiding the​ poor, when a proponent of one particular method asserts​ that: ​"If only one poor person is helped with this​ method, then all our time and money would have been worth​ it." If you were a member of the​ organization, what reply best represents clear economic​ thinking? This attitude....

ignores the fact that the cost of helping that one person has an opportunity cost of what those funds could have been used for to help other people.

The reasons for the economies of East Asian countries growing faster than the economies of​ sub-Saharan African countries. This is a _______ issue.

macroeconomic

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when

marginal benefit equals marginal cost.

Efficiency means that goods are distributed in a way that_____, while equity means that goods are distributed in a way that _________

maximizes benefits to society is fair

The effect of higher cigarette taxes on the quantity of cigarettes sold. This is a _______ issue.

microeconomic

The reasons for low rates of profit in the airline industry. This is a _______ issue.

microeconomic

The federal government should spend more on AIDS research. This represents

normative analysis

c. Rising paper prices will increase textbook prices. This represents

normative analysis

A​ 50-cent-per-pack tax on cigarettes will reduce smoking by teenagers by 12 percent. This represents

positive analysis

A large corporation that runs nursing homes estimates that changes to Medicare will result in lower payments by Medicare to nursing homes for​ short-term stays by patients that require therapy or care upon leaving hospitals. Assume the corporation is considering expanding the number of​ "beds" it offers at its nursing homes. Given the changes to​ Medicare, if the marginal benefit of offering an additional bed is ​$8,000 and the marginal cost is ​$2,000 per​ bed, then the corporation _______offer additional beds.

should

Equity is

the fair distribution of economic benefits.

Opportunity cost is

the highest valued alternative that must be given up to engage in an activity.

Economists assume that people are rational in the sense that

they use all available information as they take actions intended to achieve their goals.

​Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions:

​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?


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