Homework 1

Two points on a nonlinear curve have coordinates given by (5, 15) and (17, 13). The average slope of the curve between these points is:

-1/6.

Within the circular-flow diagram, the factor market is the place where

firms buy the resources they need for the production of goods and services.

The tools of macroeconomic policy include

government spending, taxes, and control of the money supply.

Which one of the following goods would NOT be efficiently provided by markets?

Air traffic control

For which of these groups of people is the opportunity cost of attending college especially high?

People who are star athletes

If two variables are positively related, on a graph they will always be represented by:

a line or curve that slopes upward.

Markets might fail to be efficient when individual actions have side effects that are not properly taken into account. An example of this might arise in the case of a firm that

creates pollution.

Economic growth can arise from

an increase in an economy's factors of production.

A resource is

anything that can be used to produce something else.

The bowed-out shape of the production possibilities frontier reflects

increasing opportunity cost.

In moving from point to point along a production possibilities frontier, the economy

is producing more of one thing at the opportunity cost of giving up some production of the other.

The production possibilities frontier is a depiction of

the maximum quantities of two goods an economy may produce.

Economic theory predicts that people are most likely to change their behavior when

they are given incentives to do so.

If there are gains from trade, then

we all have more to consume by trading with one another.