Econ HW1
Which of the following areas of economics studies issues such as whether government intervention is capable of reducing the severity of recessions?
Macroeconomics
Which of the following statements about microeconomics and macroeconomics is correct?
Macroeconomics is the study of the economy as a whole.
Which of the following areas of economics studies issues such as ways to reduce teenage smoking?
Microeconomics
Which of the following statements about microeconomics and macroeconomics is correct?
Microeconomics involves the study of how households and firms make choices.
Productive efficiency occurs when a good or service (such as the distribution of tickets) is produced at the lowest possible cost. Is this an efficient way to distribute the tickets?
NO
What type of economic analysis is concerned with the way things ought to be?
Normative Analysis
Suppose that your local police department recovers 100 tickets to a big NASCAR race in a drug raid. It decides to distribute these to residents and announces that tickets will be given away at 10 A.M. Monday morning at City Hall. Suppose that your college decides to give away 1,000 tickets to the football game against your school's biggest rival. The athletic department elects to distribute the tickets by giving them away to the first 1,000 students who show up at the department's office at 10 a.m. the following Monday. a. The groups of people that are most likely to get the tickets will be those for whom the expected marginal benefits of going to the department's office on Monday morning are greater than the expected marginal costs. b. What is the actual cost and also the opportunity cost of distributing the tickets this way?
The cost of travel to the department's office. B. The cost of people blocking traffic in and around the department's office building. C. The activities that cannot be done (such as earning money at work) when one is standing in line. D. ALL OF THE ABOVE . Your answer is correct. E. A and B only.
Which of the following best describes scarcity?
Unlimited wants exceed the limited resources available
The three economic questions that every society must answer are
What goods will be produced, how will they be produced, and who will receive the goods? Your answer is correct.
Indicate whether each of the following is primarily a microeconomic issue or a macroeconomic issue.
a. The effect of higher cigarette taxes on the quantity of cigarettes sold. This is a microeconomic issue. b. The effect of higher income taxes on the total amount of consumer spending. This is a macroeconomic issue. c. The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries. This is a macroeconomic issue. d. The reasons for low rates of profit in the airline industry. This is a microeconomic issue.
Scarcity is central to the study of economics because it implies that
every choice involves an opportunity cost.
What do economists mean by the word "marginal"?
extra or additional
Centrally planned economies allocate resources based on decisions by
government
while market economies answer these questions through decisions made by
households and firms
Positive analysis
is concerned with what is
normative analysis
is concerned with what ought to be
Economics
is the study of the choices people make to attain theirgoals, given their scarce resources
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
This is
not an equitable way to distribute the tickets because some students who really want them may be unable to go and get them
When economists develop models designed to explain the choices people make, they generally assume that
people are rational.
Economics is about
positive analysis: which measures the costs and benefits of different courses of action.
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 believe that an activity should be continued up to the point where
the marginal benefit from the activity is equal to the marginal cost
Economists assume that people are rational in the sense that
they use all available information as they take actions intended to achieve their goals
Macroeconomics is most likely to include the study of
unemployment