Homework 1&2 for Microeconomics
Choco Fantasy is a firm that produces both dark chocolates as well as liquor chocolates. It can produce10,000 bars of dark chocolate per month if all its resources are used to produce only this variety. Similarly, using all its resources in the production of liquor chocolates, the firm can produce 8,000 bars per month.However, during a given month, the firm produces both varieties. Which of the following, if true, would suggest that the firm is operating at point inside its PPF?
the firm believes in maintaining a certain amount of excess capacity to meet unexpected changes in demand
in relation to government spending: what is the opportunity cost of spending more money to find a cure for heart disease?
the reduction in funding for research to cure other diseases
The three economic questions that every society must answer are:
what goods will be produced, how they will be produced, and who will receive the goods
in relation to government spending: how should policymakers determine the amount of money that should be allocated for research curing heart disease? they should base their decision on:
whether the last dollar devoted to research on heart disease results in more benefit than the last dollar spent on research for curing other diseases
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 areas of economic studies issues such as ways to reduce teenage smoking
microeconomics
normative analysis
opinion
which of the following are examples of intellectual property?
software books and films ideas for new products or new production techniques
in a simple circular-flow model, there are flows of _______ and flows of _______
-factors of production; goods and services AND -funds received from the sale of factors of production; spending on final goods and services
examples of microeconomic issues
-the effect of higher cigarette taxes on the quantity of cigarettes sold -the reasons for ow rates of profit in the airline industry
examples of macroeconomic issue
-the effect of higher income taxes on the total amount of consumer spending -the reasons for the economies of East Asian countries growing faster than the economies of sub-saharan African countries
in general the term "ceteris paribus" means
all else equal
the government seeks to protect intellectual property rights by granting
copyrights patents (not franchises)
positive analysis
fact
centrally planned economies
government
market economies
households and firms
which of the following are the two key groups of participants in the circular flow of income?
households and firms
