ECON Sapling Learning Chapter 1

Suppose you have a choice between studying one more hour for your history exam or studying one more hour for your psychology exam. Your decision on what to study should be based on: a) the additional benefits of studying for each class. b) which class you like the most. c) how much time you have already studied for each class. d) your current average scores in each class.

a) the additional benefits of studying for each class.

Because of scarcity: we face tradeoffs in nearly every choice we make. resources are limitless. wants are limited. choices are unlimited.

we face tradeoffs in nearly every choice we make.

Convenience stores, which have higher prices than supermarkets, cater to busy people. Driving long distances to supermarkets takes time that could be spent doing other things. Convenience stores may have items that are unavailable in supermarkets. Convenience stores may have loyalty programs just like the ones at many supermarkets. Many people are willing to pay a premium for higher quality.

Driving long distances to supermarkets takes time that could be spent doing other things.

Which is NOT an example of a resource? machinery land human capital firms labor

firms

For each scenario, determine whether or not government intevention will improve society's well-being. Government intervention will improve society's well-being. -------------------------------------------------------- Government intervention will not improve society's well-being.

A local energy company releases pollutants into the regional water reservoir. The coastal town of Willowby could prevent many shipwrecks by building a lighthouse. However, no individual resident is willing to pay for the lighthouse because they could never recoup the cost from ships that benefit from the lighthouse. ------------------------------------------------------- A manufacturing company in Texas is switching from producing coats to producing T-shirts in anticipation of warmer weather. Consumers are beginning to demand more smartphones than traditional cell phones.

You are better at performing lab experiments, and your lab partner is better at writing lab reports. So the two of you agree that you will do all the experiments, and she will write up all the reports. Markets move toward equilibrium. Government policies can change spending. There are gains from trade. When markets don't achieve efficiency, government intervention can improve society's welfare.

There are gains from trade.

Ride the bus instead of driving your car Waiting for the bus Fees at a parking garage Gas and wear on your car Walking to your destination from the bus stop on a beautiful fall day

Waiting for the bus

Which decision is least likely to be well explained by marginal analysis? deciding whether to take a lunch break or knock on another door as a door-to-door salesperson deciding which college to attend deciding whether to do more sit-ups at the gym deciding how fast to go on the freeway deciding between watching another episode of your favorite TV series and going to bed

deciding which college to attend

True or False: In marginal analysis, if the costs outweigh the benefits, the activity should be undertaken. This is _____. Please choose the correct answer from the following choices, and then select the submit answer button. Correct: false false true

false

Excess availability of empty parking spots near the stadium during a popular college football game indicates that the parking market _____ in an equilibrium and _____ to restore the equilibrium. Please choose the correct answer from the following choices, and then select the submit answer button. is; nothing needs to be done is not; the parking fees need to be increased is not; the parking fees need to be lowered is; the parking fees need to be lowered

is not; the parking fees need to be lowered

You are assigned a final group project for your economics course. One member of your group is really good at finding resources for the project, one is really good at proofreading and editing, and you are really good at making a presentation. Based on this, you know that via ______________________________________________ you can complete the project more efficiently than if you all did each part together. equilibrium, opportunity cost(s), specialization, efficiency, incentive(s), equity, market failure,

specialization,

Consider a situation where two gas stations located across the street from each other are charging different prices. The Exxon gas station is charging 50 cents more per gallon of each type of gasoline than the Shell gas station. The equilibrium can be restored if: Please choose the correct answer from the following choices, and then select the submit answer button. the Exxon gas station reduces the prices. the Shell gas station reduces the prices. the Exxon gas station increases the prices. both stations reduce their prices by 50 cents per gallon.

the Exxon gas station reduces the prices.

The price of gasoline is $2.50 per gallon at the closest gas station, but is only $2.30 per gallon at a gas station two miles away. By driving to the farther gas station, the opportunity cost is: the cost of filling one's tank at the original price of $2.50 per gallon. non-existent because gas is cheaper at the farther station. $0.20 per gallon, the difference in price between the two gas stations. the value of one's time and expenses to go to the farther gas station.

the value of one's time and expenses to go to the farther gas station.

Which of the following situations represents an economic problem? a) A student trying to decide how to spend his weekly allowance. b) A country choosing to sacrifice some privacy in order to gain more security. c) Neither situation is an example of an economic problem. d) Both situations are examples of an economic problem.

d) Both situations are examples of an economic problem.

While in class, you realize that there are more people in the classroom than there are seats. Across the hall, you notice a large, empty lecture hall and wonder why the university is not operating at opportunity cost(s). incentive(s). market failure. specialization. equilibrium. efficiency. equity.

efficiency.

Which of the following words best describes what economics is about? Growth Choices Money Happiness

Choices

True or False: A local cable company charging so much for subscriptions that most people cannot afford cable television is an example of market failure due to side effects not taken into account by the market. This is _____. Please choose the correct answer from the following choices, and then select the submit answer button. false true

false

Instead of attending class, one could have worked an extra hour at the café for $10 or watched a neighbor's child for $15. The opportunity cost of attending class is: $5. $10. $25. $15.

$15

Liza needs to buy a textbook for the next economics class. The price at the college bookstore is $65. One website offers it for $55 and another site for $57. All prices include sales tax. The accompanying table indicates the typical shipping and handling charges for the textbook ordered online. Shipping method Delivery time Charge Standard shipping 3-7 days $3.99 Second-day air 2 business days $8.98 Next-day air 1 business day $13.98 What is the opportunity cost of buying online instead of at the bookstore? Note that if you buy the book online, you must wait to get it. $10 (the difference between the bookstore price and the lowest online price) $58.99 plus the time value of the 3- to 7-day wait minus the $10 you save by not buying at the bookstore $55 (the lowest price you can pay) $3.99 (assuming you choose the cheapest shipping option) The time value of 3 to 7 days (again assuming the cheapest, and slowest, option)

$58.99 plus the time value of the 3- to 7-day wait minus the $10 you save by not buying at the bookstore

John is considering a purchase of a new Toyota that costs $25,000 at a local dealership. John estimates the annual cost of maintenance, registration, insurance, and gas to be about $1,000. After extensive internet research, John estimates that he can sell his Toyota in three years for $10,000. What is John's estimated cost of owning and driving the car for three years? Please choose the correct answer from the following choices, and then select the submit answer button. $25,000 3 x $1,000 + $25,000 - $10,000 = $18,000 3 x $1,000 + $25,000 = $28,000 $25,000 - $10,000 = $15,000

3 x $1,000 + $25,000 - $10,000 = $18,000

John is considering a purchase of a new Toyota that costs $20,000 at a local dealership. John estimates the annual cost of maintenance, registration, insurance, and gas to be about $1,500. After extensive internet research, John estimates that he can sell his Toyota in three years for $10,000. What is John's estimated cost of owning and driving the car for three years? Please choose the correct answer from the following choices, and then select the submit answer button. $20,000 3 x $1,500 + $20,000 = $24,500 $20,000 - $10,000 = $10,000 3 x $1,500 + $20,000 - $10,000 = $14,500

3 x $1,500 + $20,000 - $10,000 = $14,500

Fewer students enroll in classes that meet before 10 a.m. If you are in a later section, it is possible to get test questions from someone who took the test earlier in the day. Classes that meet later in the day are usually easier to enroll in. An extra hour of sleep is much more valuable before 10 a.m. than later in the day. In the winter, classrooms may be frigid early in the morning.

An extra hour of sleep is much more valuable before 10 a.m. than later in the day.

This morning you made the following individual choices: you bought a bagel and coffee at the local café, you drove to school in your car during rush hour, and you typed your course notes for your roommate because she was texting in class, in return for which she will do your laundry for a month. For each of these actions, consider how your individual choices interacted with the individual choices made by others. Were other people left better off or worse off by your choices in each case?

BETTER OFF you in your car, the cafe owner, you eating breakfast, you typing class notes, your roommate ------------------------------------------------------- WORSE OFF other drivers

Which of the following is a decision that follows the net marginal benefit principle? Choosing to give up eating meat due to concerns regarding the treatment of animals. Riding a roller coaster as many times as possible at a theme park. Deciding whether to spend one more hour studying for an exam. Eating as much food as possible at a buffet to get your money's worth.

Deciding whether to spend one more hour studying for an exam.

In 2010, Tim Geithner, the U.S. Secretary of the Treasury at the time, published an article defending the administration's policies. "The recession that began in late 2007 was extraordinarily severe," he declared, "but the actions we took at its height to stimulate the economy helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery." (Geithner, 2010) Which two of the three principles of economy-wide interaction are at work in this statement? Government policies can change spending. Overall spending sometimes gets out of line with the economy's productive capacity. One person's spending is another person's income.

Government policies can change spending. ------------------------------------------------ One person's spending is another person's income.

Which of the following would be most closely related to microeconomics? The effect of improving consumer confidence on economic growth. The extent to which people leaving the labor force affects unemployment. How rising prices cause standards of living to fall. How rising wages affect the choice of working instead of going to school.

How rising wages affect the choice of working instead of going to school.

In October 2015, Hurricane Joaquin caused massive destruction to North and South Carolina, New York, and Florida. Catastrophic flooding occurred, with 25 deaths, hundreds of people requiring rescue, and estimated damage costs of $12 billion. Even those who were not directly affected by the destruction were hurt because businesses and jobs dried up. Which principle of economy-wide interaction explains how government intervention can help in this situation? Increased government spending in the affected areas will encourage other people to spend more. Placing price controls on necessities like food and fuel, as well as building supplies, will make them affordable while rebuilding occurs. The loss of jobs in the affected areas means that the economy's output will be lower than its capacity. Reduced spending by people in the affected areas will, in turn, reduce incomes for people.

Increased government spending in the affected areas will encourage other people to spend more.

At the student center, there is a bulletin board on which people advertise used items for sale, such as bicycles. Once you have adjusted for differences in quality, all the bikes sell for about the same price. Markets move toward equilibrium. Government policies can change spending. There are gains from trade. When markets don't achieve efficiency, government intervention can improve society's welfare.

Markets move toward equilibrium.

During the Great Depression, food was left to rot in the fields, or fields that had once been actively cultivated were left fallow. Which principle of economy-wide interactions can you use to explain why this occured? One person's spending is another person's income. Overall spending sometimes gets out of line with the economy's productive capacity. Government policies can change spending. ----------------------------------------------------------- Select the statement that best explains why food was left to rot in the fields. An increase in spending resulted in farmers running out of produce and in a shortage of agricultural products. A decrease in spending resulted in farmers being unable to find enough buyers for food that had already been produced. Since most agricultural products are normal goods, demand for agricultural products dramatically decreased and prices increased. Since most agricultural products are inferior goods, demand for agricultural products dramatically increased and prices increased.

Overall spending sometimes gets out of line with the economy's productive capacity. ------------------------------------------------------ A decrease in spending resulted in farmers being unable to find enough buyers for food that had already been produced.

Attend college instead of taking a job Developing a deeper understanding of concepts that will benefit you when you do eventually take a job Being able to find a better, more highly paid job after graduation The income you would have earned on the job and the valuable on-the-job experience you would have acquired Foregoing the joy of learning

The income you would have earned on the job and the valuable on-the-job experience you would have acquired

State governments mandate that it is illegal to drive without passing a driving exam. Markets move toward equilibrium. Government policies can change spending. There are gains from trade. When markets don't achieve efficiency, government intervention can improve society's welfare.

When markets don't achieve efficiency, government intervention can improve society's welfare.

According to the principle that one person's spending is another person's income, a decrease in wealth based on stock market values can: Please choose the correct answer from the following choices, and then select the submit answer button. decrease spending on goods and services and thereby increase incomes. decrease spending on goods and services and thereby lower incomes. increase spending on goods and services but not affect incomes. increase spending on goods and services and thereby lower incomes.

decrease spending on goods and services and thereby lower incomes.

According to the principle that one person's spending is another person's income, a decrease in consumer confidence can _____ spending on goods and services and therefore _____ incomes. Please choose the correct answer from the following choices, and then select the submit answer button. decrease; lower decrease; increase increase; lower increase; have no effect on

decrease; lower

Equilibrium occurs when: Please choose the correct answer from the following choices, and then select the submit answer button. Incorrect: every member of the economy has equal opportunities. every member of the economy has equal opportunities. no one has an opportunity to increase his or her welfare. there is no difference in pay for men and women. tax rates are equal for all people.

no one has an opportunity to increase his or her welfare.

For the following examples, state how you would use the principle of marginal analysis to make a decision. Deciding how many bags of chips to eat The marginal benefit of eating more chips is profits for potato chip makers will rise. satisfying your hunger. leaving crumbs behind where you eat the chips. substituting chips for veggies as a snack. ---------------------------------------------------------- The marginal cost of eating more chips is crunching loudly and distracting people around you. pretzel makers will suffer. the money you pay and the calories you consume. offering to share your chips with friends.

satisfying your hunger. ------------------------- the money you pay and the calories you consume.

You see a large group of stranded passengers standing next to a disabled bus, and you have only three seats in your car. You have to decide which three passengers to rescue because of: equity. macroeconomics. scarcity. efficiency.

scarcity.

Abby received requests from three families to babysit a toddler for four hours on Friday night. She can only babysit for one of the three families. The Fleming family offered her $20, the Gilbert family offered her $30, and the Lewis family offered her $40. If Abby chooses to babysit for the Lewis family, her opportunity cost of this decision is: Please choose the correct answer from the following choices, and then select the submit answer button. $20. $40. $30. $50.

$30.

Craigslist allows departing students to sell items such as used books, appliances, and furniture rather than giving them away as they formerly did.

Because people usually exploit gains from trade, markets usually lead to efficiency.

After a hurricane did extensive damage to homes on the island of St. Crispin, homeowners wanted to purchase many more building materials and hire many more workers than were available on the island. As a result, prices for goods and services rose dramatically across the board.

Overall spending sometimes gets out of line with the economy's productive capacity.

On your spring break trip, your budget is limited to $35 a day.

People must make choices because resources are scarce.

There is limited lab space available to do the project required in Chemistry 101. The lab supervisor assigns lab time to each student based on when that student is able to come. One person's spending is another person's income. Resources should be used as efficiently as possible to achieve society's goals. "How much" decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less. The opportunity cost of an item—what you must give up in order to get it—is its true cost.

Resources should be used as efficiently as possible to achieve society's goals.

Watch a movie instead of studying for an exam The enjoyment you have if the movie is good Not realizing your friends were also at the movie until you saw them afterward The popcorn was too salty. A lower grade on the exam, most likely

A lower grade on the exam, most likely

Which demonstrates a scenario with no opportunity cost? It's Friday night and you have no obligations the next day, so you stay up late talking and hanging out with your friends. The chemistry club is giving out free pizza for lunch to all who come to their table to get it. Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of buying a math textbook that she would probably never open. Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both offer you a full time sous chef job at the same salary. You are ecstatic because you know it is a win-win scenario and choose to work for Chez Nous. All of these scenarios have an opportunity cost.

All of these scenarios have an opportunity cost.

What is the main problem addressed with scarcity? Ensuring that an adequate standard of living is achieved. Trying to satisfy the basic needs of everyone to eliminate poverty. Making sure that critical resources such as oil and forests are not depleted. Determining how to address unlimited wants with limited resources.

Determining how to address unlimited wants with limited resources.

In each of the following situations, explain how government intervention could improve society's welfare by changing people's incentives. In what sense is the market going wrong? a. Pollution from auto emissions has reached unhealthy levels. How has the market gone wrong? Which intervention policy could help the situation? --------------------------------------------------------- b. Everyone in Woodville would be better off if streetlights were installed in the town. But no individual resident is willing to pay for installation of a streetlight in front of his or her house because it is impossible to recoup the cost by charging other residents for the benefit they receive from it. How has the market gone wrong? What intervention policy could help the situation?

Drivers do not recognise that auto emissions create costs for others. --------------------------------------------------- Tax gas guzzlers and subsidize new technologies. ------------------------------------------------------- There are too few streetlights in Woodville. ------------------------------------------------------- Pay for streetlights with tax revenues.

Indicate whether or not you think the situation is efficient. If it is not efficient, why not? What actions would make it efficient? The enrollment for a particular course exceeds the spaces available. Some students who need to take this course to complete their major are unable to get a space even though others who are taking it as an elective can get a space. Is the situation efficient? Efficient Cannot be determined Partially efficient Inefficient ------------------------------------------------------------- Why or why not? Required courses constrain the choices for students, so it is inefficient. There is no recognition of the different needs of the students, so it is inefficient. All of the spaces are taken by someone, so it is efficient. Since majors are given first priority and their needs are greater, it is efficient. ------------------------------------------------------------ Can anything be done to improve efficiency? A lottery system could be employed so everyone has the same chance of getting the course. Remove introductory courses in the major as prerequisites for the course. The unenrolled major should be willing to pay the enrolled non-major to give up his or her space. Awarding only 20% passing grades will deter students from taking the course as an elective.

Inefficient ------------ There is no recognition of the different needs of the students, so it is inefficient. ----------------------------------------------------- The unenrolled major should be willing to pay the enrolled non-major to give up his or her space.

You and other college students are deciding whether to major in music or engineering. You learn that there is a shortage of engineers, making it easy for engineering graduates to find employment, while there is a glut of musicians for whom finding a job is difficult. As a result, you and many other college students decide to major in engineering. Which economic principle does this illustrate? Specialization leads to economic efficiency. Government intervention can improve efficiency when there is a market failure. Markets tend to move towards equilibrium as individuals respond to incentives. Individuals do not normally take into account the decisions of other individuals. Changes in incentives are unlikely to change the decisions people make.

Markets tend to move towards equilibrium as individuals respond to incentives.

The five-dollar Burger Joint gift card that your friend gave you for your birthday expires today. You can either use the gift card to buy yourself dinner at Burger Joint, or you can stay home and eat a delicious home-cooked meal. What is the opportunity cost of eating the home-cooked meal? The value of a five-dollar dinner at Burger Joint. The value of the ingredients that go into the home-cooked meal, and the value of a five-dollar dinner at Burger Joint. There is no opportunity cost since you did not pay for the gift card. The time it takes to eat your home-cooked meal, and the value of the five-dollar dinner at Burger Joint. The value of the ingredients that go into the home-cooked meal.

The value of the ingredients that go into the home-cooked meal, and the value of a five-dollar dinner at Burger Joint.

The day-to-day living conditions of modern Americans are very different from what they were in the 20th century. While doing research for an economics project, Charlie discovers that more households today, as compared to households 100 years ago, have electricity, air conditioning, and a car. Which of the following explains why modern Americans enjoy a higher standard of living than Americans 100 years ago? Americans have prospered and earned more money due to a complete lack of recessions. Market failures are nonexistent. There has been economic growth in our society. The invisible hand has guided all nations around the world to this prosperity. ------------------------------------------------------------- In which field do researchers focus on investigating the phenomena described? Business Sociology Political Science Economics

There has been economic growth in our society. ------------------------------------------------------ Economics

When four roommates agree to specialize in the chores they are most efficient at, this can lead to: some roommates doing many more chores than others. no chores getting done at all. a situation in which less time is spent on chores by every roommate. one roommate who is most efficient doing all of the chores.

a situation in which less time is spent on chores by every roommate.

To change people's spending, the government can: Please choose the correct answer from the following choices, and then select the submit answer button. alter its own spending or the amount of money in circulation, but changing taxes will have no effect. alter its own spending, taxes, and/or the amount of money in circulation. alter taxes or the amount of money in circulation, but changing its own spending will have no effect. alter its own spending or taxes, but changing the amount of money in circulation will have no effect.

alter its own spending, taxes, and/or the amount of money in circulation.

True or False: In order to achieve efficiency, markets always need to be heavily regulated. This is _____. Please choose the correct answer from the following choices, and then select the submit answer button. false true

false

Your economics professor is attempting to recruit more students to major in economics. She presents data showing that economics majors develop skills valuable in private industry, government, and research. She also argues that they earn a relatively higher income than other majors. Your professor is presenting you with _____________________________________________to major in economics. equilibrium specialization incentive(s) equity opportunity cost(s) efficiency market failure

incentive(s)

In a market-oriented economy, individuals' economic lives are said to be interrelated with many other individuals and firms. almost completely controlled by government regulation. illegal and in violation of government rules on prices and sales. based more on production than on consumption.

interrelated with many other individuals and firms.

The seaport town of New Monopoly has become extremely popular with shipping companies due to its superior location. The port has become so congested that ships must wait hours every day just to dock. This is an example of a recession. market failure. marginal analysis. a private good. ------------------------------------------------------------- The mayor of New Monopoly realizes that the congestion at the port costs the shipping companies and his town money. Which decision would NOT move him towards a command economy? The mayor decides to only allow the five most profitable shipping companies to use the port. The mayor orders the port's employees to work extra hours. The mayor decides to let individual firms and consumers find a solution for the excessive wait time.

market failure. ----------------------------------------------------- The mayor decides to let individual firms and consumers find a solution for the excessive wait time.

Suppose you are a freshmen in college and you have not declared a major. One reason you enrolled at your respective college was the school's vibrant social life. At the same time, you want to balance your academic life because you know that your grades will matter for graduate school or job applications. You decide to forgo partying for two hours to study for an upcoming economics exam. In your first semester's Principles of Economics class, you learn that the enjoyment you would have received from partying is an example of a(n) specialization. market failure. equilibrium. opportunity cost(s). efficiency. equity. incentive(s).

opportunity cost(s).

Please select the economic term that is best described by each statement below. There are limited resources to satisfy all of society's wants. entrepreneurship margins trade-off recession scarcity business cycle ------------------------------------------------------------ Comparing the benefits and costs of engaging in an activity. financial capital resources margins recession trade-off scarcity

scarcity ----------------------------------------------------- trade-off

You realize that you can graduate a semester early by forgoing a semester of study abroad. The opportunity cost of an item—what you must give up in order to get it—is its true cost. One person's spending is another person's income. "How much" decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less. Resources should be used as efficiently as possible to achieve society's goals.

The opportunity cost of an item-what you must give up in order to get it-is its true cost.

Which of the following describes an equilibrium? Which does not? a. Many people regularly commute from the suburbs to downtown Pleasantville. Due to traffic congestion, the trip takes 30 minutes via highway but only 15 minutes via side streets. b. At the intersection of Main and Broadway are two gas stations. One station charges $3.00 per gallon for regular gas, and the other charges $2.85 per gallon. Customers can get service immediately at the first station but must wait in a long line at the second. c. Every student enrolled in Economics 101 must also attend a weekly tutorial. This year two sections are offered: section A and section B, which meet at the same time in adjoining classrooms and are taught by equally competent instructors. Section A is overcrowded, with people sitting on the floor and often unable to see what is written on the board at the front of the room. Section B has many empty seats. Given the situations described above, what would you expect to happen? Select all that apply. More people will use the side streets. More people will buy gas at the second station. Students will switch from section A to section B.

a. not an equilibrium b. equilibrium c. not an equilibrium ------------------------------------------- -More people will use the side streets. -Students will switch from section A to section B.

Some apartments in many large cities are subject to rent controls that restrict the maximum rent that can be legally collected from the tenants to an affordable level below the prevailing market rent. These rent controls are an attempt by the city governments to improve _____ of the rental markets. Please choose the correct answer from the following choices, and then select the submit answer button. equity efficiency Incorrect: market equilibrium market equilibrium both equity and efficiency

equity

Tyrone has three options on how to spend his Saturday afternoon: to go out with friends, watch a movie, or wash his car. Tyrone's opportunity cost of washing his car would be: a) the value of going out with friends. b) the value of watching a movie. c) the value of going out with friends AND watching a movie. d) the value of going out with friends OR watching a movie.

d) the value of going out with friends OR watching a movie.

According to the principle that one person's spending is another person's income, a decrease in manufacturing employment can: Please choose the correct answer from the following choices, and then select the submit answer button. increase spending on goods and services and thereby lower incomes. decrease spending on goods and services and thereby increase incomes. decrease spending on goods and services and thereby lower incomes. increase spending on goods and services but not affect incomes.

decrease spending on goods and services and thereby lower incomes.

Economics is the study of the distribution of unlimited resources to satisfy limited wants. study of the consumption, production, and distribution of goods and services. study of political organization. exclusive study of financial markets and instruments.

study of the consumption, production, and distribution of goods and services.

Daniel has decided to open his own bakery using locally sourced ingredients and supplies. He provides income and jobs to local suppliers. He also provides his community with a place to buy delicious baked goods. This is an example of the invisible hand. a command economy. market failure. a recession.

the invisible hand.

Governments often adopt certain policies in order to promote desired behavior among their citizens. For the following policy, determine what the incentive is and what behavior the government wishes to promote. Why do you think that the government might wish to change people's behavior rather than allow their actions to be solely determined by individual choice? The government pays college students to tutor children from low-income families. The incentive is better grades for the tutored children. the reduced cost of tutoring services. the 'babysitting' the families receive. the need to hire fewer teachers. ------------------------------------------------------------- The behavior to be promoted is increasing incomes for college students. helping less-fortunate children. giving future teachers practice working with students. caring for children. ------------------------------------------------------------- Why would the government wish to change people's behavior? The better that children do in school, the more productive, happier, and healthier citizens they will be. The government has a duty to make sure every child gets the best grades he or she can. The less time that teachers spend with students, the more time they will have to attend to paperwork. It is expensive to build and staff public schools.

the reduced cost of tutoring services. ------------------------------------------ helping less-fortunate children. ------------------------------------------ The better that children do in school, the more productive, happier, and healthier citizens they will be.

During economic downturns the number of Americans without jobs increases. According to the principle that one person's spending is another person's income: Please choose the correct answer from the following choices, and then select the submit answer button. availability of workers will increase opportunities for new businesses. the reduction in the number employed will reduce the costs of goods and services. the higher number of unemployed will increase enrollment into colleges. the reduction in spending by the unemployed workers will further lower incomes.

the reduction in spending by the unemployed workers will further lower incomes.

An economy is the geographical boundaries of a nation. the political organization of a nation. the system society uses to coordinate productive activities. the group of individuals who lead a society.

the system society uses to coordinate productive activities.

True or False: An increase in the amount of money in circulation will increase spending. This is _____. Please choose the correct answer from the following choices, and then select the submit answer button. false true

true

Which describes the equity-efficiency trade-off? There is always a more equitable outcome that is also more efficient. Actions intended to make economic outcomes fairer can cause efficiency to decrease. The least efficient economic outcome is the fairest outcome. Government intervention can increase efficiency in a market.

Actions intended to make economic outcomes fairer can cause efficiency to decrease.

Liza needs to buy a textbook for the next economics class. The price at the college bookstore is $65. Liza finds the textbook online at two sites. The first website offers it for $55 and the second site for $57. All prices include sales tax. The accompanying table indicates the typical shipping and handling charges for the textbook ordered online. Shipping method Delivery time Charge Standard shipping 3 to 7 days $3.99 Second-day air 2 business days $8.98 Next-day air 1 business day $13.98 Below are the relevant choices for this student. What is the monetary cost of each of Liza's options? Buy from bookstore $65 Buy from first site with 1-day delivery $68.98 Buy from first site with 2-day delivery $63.98 Buy from first site with 3- to 7-day delivery $58.99 Buy from second site with 1-day delivery $70.98 Buy from second site with 2-day delivery $65.98 Buy from second site with 3- to 7-day delivery $60.99 Which option will Liza choose? The first online site with standard shipping, since it is the cheapest overall option Until we know more about how much she values the time she may spend waiting, we will not know her preferred choice. The bookstore, since she gets the book the fastest If she is in a big hurry for the book, she will choose the bookstore; otherwise, she will choose the second online site with standard shipping.

Until we know more about how much she values the time she may spend waiting, we will not know her preferred choice.

Under a system of specialization: Please choose the correct answer from the following choices, and then select the submit answer button. Correct: each person performs the task he or she does best. each person performs the task he or she does best. there are no gains from trade. each household in the economy is self-sufficient. there is no interaction between people producing different goods.

each person performs the task he or she does best.

Consider the efficiency and equity implications of this scenario. How would you go about balancing the concerns of equity and efficiency? The government pays the full tuition for every college student to study whatever subject he or she wishes. This situation is efficient but not equitable. equitable but not efficient. neither equitable nor efficient. both equitable and efficient. ------------------------------------------------------------- Which of the following is not an efficiency concern with such a plan? Paying tuition for everyone means some other (possibly more worthwhile) government projects cannot be undertaken. It rewards academic merit and hard work. Some people might go to college when they could more productively follow a career that does not require a college education. It allows everyone, regardless of ability to pay, to attend college.

equitable but not efficient. ----------------------------- It allows everyone, regardless of ability to pay, to attend college.

According to the principle that one person's spending is another person's income, an increase in manufacturing employment can: Please choose the correct answer from the following choices, and then select the submit answer button. decrease spending on goods and services and thereby increase incomes. increase spending on goods and services but not affect incomes. increase spending on goods and services and thereby increase incomes. increase spending on goods and services and thereby lower incomes.

increase spending on goods and services and thereby increase incomes.

According to the principle that one person's spending is another person's income, an increase in consumer confidence can _____ spending on goods and services and therefore _____ incomes. Please choose the correct answer from the following choices, and then select the submit answer button. increase; have no effect on increase; lower increase; increase decrease; increase

increase; increase

Determine which economic principle is illustrated by each scenario. The owner of a snow cone trailer realizes that the demand for snow cones is low during the winter, and thus, closes shop until the temperature warms back up near summertime. ----------------------------------------------------------- The local river has so much pollution that three-eyed fish are forming. The government responds by regulating the amount of chemicals that can be dumped into the river. ----------------------------------------------------------- At a high-end restaurant, the restaurant owner has one chef at a meat station, one chef at a vegetable station, and one chef, who has an artistic eye, plate the food she is given. The result is increased service speed, and the kitchen is able to serve more customers in an evening. ----------------------------------------------------------- During the summer, a bumper crop of oranges in Florida causes a surplus in the supply of oranges nationwide. As a result, prices fall to compensate for the surplus and consumers enjoy the fruits of the farmers' labor.

market efficiency ------------------- government intervention ---------------------------- specialization ---------------- equilibrium

Health insurance companies that charge so much for health insurance premiums that many people cannot afford insurance is an example of market failure caused by: Please choose the correct answer from the following choices, and then select the submit answer button. actions that have side effects that are not properly taken into account by the market. a good that is not suitable for efficient management by markets. society's choice of equity over efficiency. one party preventing mutually beneficial trade in order to capture more profits.

one party preventing mutually beneficial trade in order to capture more profits.

Deciding how many class lectures to skip The marginal benefit of skipping lectures is getting partial tuition remission for each class you skip. getting further behind with the material. learning the material on your own without your professor's explanations. you can spend the time doing other things. ----------------------------------------------------------- The marginal cost of skipping lectures is not having to listen to your professor's dreadful puns. getting further behind with the material. sleeping later if it is an early class—or even if it is not. you can spend the time doing other things.

you can spend the time doing other things. ------------------------------------------------ getting further behind with the material.

Fergie, Joan, Les, and Sheila are trying to form a band. They each have some basic skills on most instruments, so their current plan is for each of them to rotate among vocals, guitar, bass, and drums. After a year of practice and rehearsals the band still sounds awful. Fergie cannot keep a steady beat when on bass or drums, Les sounds terrible on everything except the bass, nobody except Joan can remember all the chords on guitar, and even Sheila's own mother thinks her singing sounds like a dying cow. At their current rate, they expect it will be several years before they are good enough to land their first paid performance. None of them have enough money saved up to last that long. They all know you are taking economics and ask your advice. What would you say to them? Have each member specialize in the role that they are best in to take advantage of benefits from specialization. Change the rotation to be random rather than equal to take advantage of heteroskedasticity. Abandon the band, as continued practice is doomed to suffer diminishing marginal returns. Invest their remaining savings in new instruments, as they are at a point where the marginal product of capital exceeds the marginal product of labor. Continue with the current plan, as economies of scale should eventually kick in.

Have each member specialize in the role that they are best in to take advantage of benefits from specialization.

True or False: In order to improve class attendance, professors should give unannounced pop quizzes. This is _____. Please choose the correct answer from the following choices, and then select the submit answer button. true false

true

True or False: Resources are no longer scarce if efficiency is achieved. This is _____. Please choose the correct answer from the following choices, and then select the submit answer button. true false

false

More people choose to do their own home repairs when the economy is slow and hourly wages are down. When the economy is slower, the demand for home repairs falls, so home repair companies will offer their services at lower costs. Whether the economy is slow or not, some people simply do not know enough about plumbing, wiring, or carpentry to do their own repairs. When the economy is slower, unemployed people may not be able to afford the materials needed to repair their own homes. When the economy is slow, the opportunity cost of people's time is also lower, so the opportunity cost of spending time doing their own repairs is lower.

When the economy is slow, the opportunity cost of people's time is also lower, so the opportunity cost of spending time doing their own repairs is lower.

The Hatfield family lives on the east side of the Hatatoochie River, and the McCoy family lives on the west side. Each family's diet consists of fried chicken and corn-on-the-cob, and each is self-sufficient, raising their own chickens and growing their own corn. Explain the conditions under which each of the following would be true. a. The two families are made better off when the Hatfields specialize in raising chickens, the McCoys specialize in growing corn, and the two families trade. The McCoys have a lower opportunity cost for each good. The opportunity costs for both chickens and corn are the same for both families. The McCoys have a lower opportunity cost for chickens, and the Hatfields have a lower opportunity cost for corn. The Hatfields have a lower opportunity cost for chickens, and the McCoys have a lower opportunity cost for corn. ---------------------------------------------------------- b. The two families are made better off when the McCoys specialize in raising chickens, the Hatfields specialize in growing corn, and the two families trade. Neither family has an opportunity cost for chickens, but both do for corn. The Hatfields have lower opportunity costs for each good. The Hatfields have a lower opportunity cost for chickens, and the McCoys have a lower opportunity cost for corn. The McCoys have a lower opportunity cost for chickens, and the Hatfields have a lower opportunity cost for corn.

a. The Hatfields have a lower opportunity cost for chickens, and the McCoys have a lower opportunity cost for corn. ---------------------------------------------------- b. The McCoys have a lower opportunity cost for chickens, and the Hatfields have a lower opportunity cost for corn.

Consider the efficiency and equity implications of this scenario. How would you go about balancing the concerns of equity and efficiency? When people lose their jobs, the government provides unemployment benefits until they find new jobs. This situation is both equitable and efficient. equitable but not efficient. efficient but not equitable. neither equitable nor efficient. ------------------------------------------------------------- Which of the following is not an efficiency concern with such a plan? People might stop looking for a job. It reduces overall output below the economy's potential. People might remain unemployed longer. It guarantees everyone a certain amount of income.

equitable but not efficient. ------------------------------ It guarantees everyone a certain amount of income.

By going to college and majoring in accounting, which of the following resources is Mary developing? Please choose the correct answer from the following choices, and then select the submit answer button. land labor physical capital human capital

human capital

According to the principle that one person's spending is another person's income, an increase in wealth based on stock market values can: Please choose the correct answer from the following choices, and then select the submit answer button. increase spending on goods and services and thereby increase incomes. decrease spending on goods and services and thereby increase incomes. increase spending on goods and services and thereby lower incomes. increase spending on goods and services but not affect incomes.

increase spending on goods and services and thereby increase incomes.

Governments often adopt certain policies in order to promote desired behavior among their citizens. For the following policy, determine what the incentive is and what behavior the government wishes to promote. Why do you think that the government might wish to change people's behavior rather than allow their actions to be solely determined by individual choice? The government pays parents $100 when their child is vaccinated for measles. The incentive is the final price of the vaccine. the $100 payment. the shorter lines at the doctor's office. the smaller chance of getting sick. ---------------------------------------------------------- The behavior to be promoted is hiring more doctors and nurses. getting vaccinated. going to the doctor. caring for children. --------------------------------------------------------- Why would the government wish to change people's behavior? Sick people can pass diseases on to others. The government has a duty to make sure everyone is vaccinated. No children will be vaccinated if parents have to pay for it themselves. Publicly funded clinics need more patients.

the $100 payment. -------------------- getting vaccinated. ------------------------------------------------ Sick people can pass diseases on to others.

Governments often adopt certain policies in order to promote desired behavior among their citizens. For the following policy, determine what the incentive is and what behavior the government wishes to promote. Why do you think that the government might wish to change people's behavior rather than allow their actions to be solely determined by individual choice? The government imposes a tax on the amount of air pollution that a company discharges. The incentive is increasing the costs of production for firms. involving the government in the commercial sector. the extra cost of discharging pollution. cleaning up the environment. ------------------------------------------------------------- The behavior to be promoted is reducing profits. paying taxes. buying American-made products. reducing pollution. ------------------------------------------------------------- Why would the government wish to change people's behavior? Paying the tax will increase government revenues and allow it to fund other public works programs. The government has a vested interest in intervening in the economy when it can. The pollution creates costs for society that the firm does not take into account. To dissuade the owners of affected firms from contributing to candidates who oppose such measures.

the extra cost of discharging pollution. ------------------------------------------- reducing pollution. ------------------------ The pollution creates costs for society that the firm does not take into account.

You decide how many cups of coffee to have when studying the night before an exam by considering how much more work you can do by having another cup versus how jittery it will make you feel. "How much" decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less. The opportunity cost of an item—what you must give up in order to get it—is its true cost. Resources should be used as efficiently as possible to achieve society's goals. One person's spending is another person's income.

"How much" decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less.

Ed is taking off from work for four hours this afternoon and going to a baseball game. The ticket to the game costs $25 and it costs $15 to park at the stadium. Ed earns $15 an hour at his job. Ed's opportunity cost of going to the ball game is: Please choose the correct answer from the following choices, and then select the submit answer button. $25. $60. $100. $50.

$100

Abby received requests from three families to babysit a toddler for four hours on Friday night. She can only babysit for one of the three families. The Fleming family offered her $30, the Gilbert family offered her $40, and the Lewis family offered her $60. If Abby chooses to babysit for the Lewis family her opportunity cost of this decision is: Please choose the correct answer from the following choices, and then select the submit answer button. $30. $40. $60. $70.

$40.

Ed is taking off from work for five hours this afternoon and going to a baseball game. The ticket to the game costs $20 and it costs $15 to park at the stadium. Ed earns $10 an hour at his job. Ed's opportunity cost of going to the ball game is: Please choose the correct answer from the following choices, and then select the submit answer button. $20. $35. $85. $50.

$85

Lisa is choosing between three alternatives: a) working at her job that pays 60 dollars; b) writing a term paper which she values at 40 dollars; or c) going out with a friend, which she values at 80 dollars. The opportunity cost of writing the term paper is: 80 dollars. 140 dollars. 20 dollars. 0 dollars.

80 dollars

Your parents' after-tax income has increased because of a tax cut passed by Congress. They therefore increase your allowance, which you spend on a spring break vacation. Markets move toward equilibrium. Government policies can change spending. There are gains from trade. When markets don't achieve efficiency, government intervention can improve society's welfare.

Government policies can change spending.

More people choose to get graduate degrees when the job market is poor. When the job market eventually turns around, a graduate degree will put you in a good position to get a better job. If the job market is bad, the salary you can expect to earn is low, or you might be unemployed. Because there will be more graduate students, the chances of receiving a research or teaching assistantship will be lower. Because the number of people applying to graduate programs will be relatively high, there is a lower chance of being accepted.

If the job market is bad, the salary you can expect to earn is low, or you might be unemployed.

Indicate whether or not you think the situation is efficient. If it is not efficient, why not? What actions would make it efficient? Electricity is included in the rent at your dorm. Some residents in your dorm leave lights, computers, and appliances on when they are not in their rooms. Is this situation efficient? Partially efficient Efficient Inefficient Cannot be determined ------------------------------------------------------ Why or why not? Even if students cut electricity use, there is no guarantee that room fees would be reduced. It is efficient, since, like water, the use of power is difficult to monitor. Less of this activity could be done without harming anyone. Students have already paid for the electricity, so there is no cost to using more. ------------------------------------------------------ Can anything be done to improve efficiency? No, the situation is efficient. Ban the use of personal electronic devices and appliances. Hire students to patrol the dorms and periodically open doors to see if anyone left a light on. Require that students pay for the electricity they use.

Inefficient ----------- Less of this activity could be done without harming anyone. -------------------------------------------------------- Require that students pay for the electricity they use.

Indicate whether or not you think the situation is efficient. If it is not efficient, why not? What actions would make it efficient? Although they cost the same amount to prepare, the dorm cafeteria consistently provides too many dishes that diners do not like, such as tofu casserole, and too few dishes that diners do like, such as roast turkey with dressing. Is the situation efficient? Cannot be determined Efficient Inefficient Partially efficient ----------------------------------------------------------- Why or why not? Students who prefer one particular meal just arrive at the dining hall earlier. If the meals are being prepared with no waste of ingredients, there is no reason to change. Forcing students to choose meals wastes time. Each night, the cafeteria should offer only one choice. A reallocation of resources could produce a more desirable mix of outputs. ---------------------------------------------------------- Can anything be done to improve efficiency? Randomly serve one of the two dishes to each diner. Nothing can be done to increase the efficiency, as the situation is currently efficient. Open the dining hall earlier to increase students' chances of getting the meal they prefer. Produce more of the items that students prefer and cut back on less popular choices. Close the cafeteria and equip the dorms with kitchens so students can make their own meals.

Inefficient ------------ A reallocation of resources could produce a more desirable mix of outputs. -------------------------------------------------------- Produce more of the items that students prefer and cut back on less popular choices.

You buy a used textbook from your roommate. Your roommate uses the money to buy songs from iTunes. "How much" decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less. The opportunity cost of an item—what you must give up in order to get it—is its true cost. Resources should be used as efficiently as possible to achieve society's goals. One person's spending is another person's income.

One person's spending is another person's income.

You choose to purchase your textbooks online through Chegg rather than paying a higher price for the same books through your college bookstore.

People usually respond to incentives, exploiting opportunities to make themselves better off.

Which is NOT an example of a behavior exhibited in a market economy? The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers. Nettoyer decides to introduce a soap scent, Pomegranate, in response to Schoon's new soap scent, Blood Orange, and Sauber's award-winning scent, Tangerine. Despite the advice of its business partners, Puna discontinues its most popular lines of clothing, and chooses instead to produce retro jean jackets and purple sweatpants, thinking that jean jackets and sweatpants are bound to make a fashion comeback. For their wedding, Alex and Erika choose Matte Photography instead of Pro Finish Photography, since Matte Photography is cheaper.

The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers.

There are more parks in suburban areas than in urban areas. Urban dwellers prefer to journey to the suburbs for parks rather than live next to dog walks and soccer fields. Since population density is much higher in urban areas, parks located there would be too crowded to be enjoyable. People in suburban areas value green space much more highly than people in urban areas do. The price per square foot of land is much higher in urban areas than in suburban areas.

The price per square foot of land is much higher in urban areas than in suburban areas.

Suppose that Georgiania was a thriving empire in its golden age. Business was booming and it was the center of international trade under the leadership of Emperor Raphael III. His empire's pride and joy was the trading of green and black tea, and he decreed that their entire economy should be built around it. However, in the mid 1800s, Georgiania experienced a severe economic downturn when the other nations of the world created an embargo on tea from Georgiania, which led to civil strife due to thousands of workers being laid off. A downward fluctuation in the economy like this is known as the invisible hand. market failure. economic growth. a recession. ----------------------------------------------------- The correct term is a key component of both microeconomics and macroeconomics. microeconomics. macroeconomics.

a recession. -------------------- macroeconomics.

The source of one person's _____ is another person's spending. Please choose the correct answer from the following choices, and then select the submit answer button. leisure borrowing spending Correct: income income

income

A sharp downturn in the U.S. housing market in August 2007 reduced the income of many who worked in the home construction industry. A Wall Street Journal news article reported that Walmart's wire transfer business was likely to suffer because many construction workers are Hispanics who regularly send part of their wages back to relatives in their home countries via Walmart. With this information, correctly order the statements below to trace a chain of links that explains how reduced spending for U.S. home purchases is likely to affect the performance of the Mexican economy. reduction in spending for U.S. home purchases adverse impact on Mexican economy Answer Bank Which principle of economy-wide interactions can you use to explain why reduced spending in housing is likely to adversely affect the Mexican economy? Overall spending sometimes gets out of line with the economy's productive capacity. One person's spending is another person's income. Government policies can change spending.

fall in income of construction workers ------------------------------------------ reduction in funds sent by workers to relatives in mexico ------------------------------------------ reduction in spending by mexican households --------------------------------------------------- less business for mexican firms and job loss in mexico --------------------------------------------------- One person's spending is another person's income.

Deciding how much time to spend researching before writing your term paper The marginal benefit of more research is finding prior research that supports your thesis. more time to spend on a subject you like less. less time for your other classes. taking breaks from online research to check e-mail and shop. ------------------------------------------------- The marginal cost of more research is continually finding more pertinent data that you need to investigate. discovering that your thesis is invalid theoretically and empirically. running out of money because you spent so much buying things online. less time for your other classes, or for other things.

finding prior research that supports your thesis. ---------------------------------------------------- less time for your other classes, or for other things.

For the following examples, state how you would use the principle of marginal analysis to make a decision. Deciding how many days to wait before doing your laundry The marginal benefit of waiting is eventually having to ask your roommate to lend you some clothes. wearing clothes you have not worn in a while because you did not like the color. friends avoiding you after you start dipping into the hamper for clothes. free time to do other things now. ----------------------------------------------- The marginal cost of waiting is fewer clean clothes from which to choose. deciding to use laundry money to go on a lunch date. getting compliments on your novel fashion statements. discovering your roommate's clothes look pretty good on you.

free time to do other things now. ------------------------------------ fewer clean clothes from which to choose.

Governments often adopt certain policies in order to promote desired behavior among their citizens. For the following policy, determine what the incentive is and what behavior the government wishes to promote. Why do you think that the government might wish to change people's behavior rather than allow their actions to be solely determined by individual choice? A tax of $5 per pack is imposed on cigarettes. The incentive is ---------------------------------------------------------- The behavior to be promoted is ---------------------------------------------------------- Why would the government wish to change people's behavior? Cigarette manufacturers are dependable donors. Smoking has undesirable side effects on other people. Governments need to modify behavior to demonstrate their necessity. A laissez-faire policy is usually the best approach.

increasing the price ---------------------- smoking less ---------------------- Smoking has undesirable side effects on other people.

Markets usually lead to efficient outcomes because: Please choose the correct answer from the following choices, and then select the submit answer button. individuals usually respond to economic incentives to further their own self-interest in markets. they are always heavily regulated by the government. the invisible hand is not allowed in markets. the main goal of markets is to promote equity.

individuals usually respond to economic incentives to further their own self-interest in markets.