HW #1 Questions
Which of the following is a positive statement? A. If we reduce welfare payments given to the poor, they will find jobs. B.Taxes on gasoline should be lower so that gasoline is more affordable to the poor. C. The rich should pay more in taxes. D. social Security must be reformed. E. Everyone should have some knowledge of economics.
A. If we reduce welfare payments given to the poor, they will find jobs.
The additional cost resulting from a small increase in some activity is called the A. marginal cost. B. diminishing returns of the activity. C. marginal benefit. D. opportunity cost.
A. marginal cost.
One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls A. scarcity. B. economics. C. rationality. D. the market.
A. scarcity
Which of the following is a normative statement? A. Flood victims should pay for their own rebuilding. B. When the price of kiwi fruit increases, fewer people eat kiwi fruit. C. An increase in the supply of computers has caused computer prices to fall. D. Hurricanes strike mainly Florida and North Carolina. E.Recessions lead to increases in the unemployment rate.
B. When the price of kiwi fruit increases, fewer people eat kiwi fruit.
Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when... A. marginal benefit is greater than marginal cost. B. marginal benefit equals marginal cost. C. marginal benefit is maximized. D. marginal cost is zero
B. marginal benefit equals marginal cost.
Assume that the marginal benefit (MB) of consuming gasoline has the following algebraic expression: MB = 5 + 0.5Q. Is this formula representative of a well-behaved marginal benefit function? A. Yes. Marginal benefit is supposed to increase with each unit consumed. B. No. Marginal benefit is supposed to increase with each unit consumed. C. No. Marginal benefit is supposed to decrease with each unit consumed. D. Yes. Marginal benefit is supposed to decrease with each unit consumed.
C. No. Marginal benefit is supposed to decrease with each unit consumed.
The extra benefit resulting from a small increase in an activity is called the A. marginal cost. B. opportunity cost. C. marginal benefit. D. diminishing returns of the activity.
C. marginal benefit.
Saving time by driving faster is an example of a ________ of driving faster. Increasing the severity of injuries from a potential accident due to driving faster is a(n) ________ of driving faster. A. normative benefit; opportunity cost B. nominal cost; real cost C. marginal benefit; marginal cost D. marginal cost; nominal cost
C. marginal benefit; marginal cost
When economists develop models designed to explain the choices people make, they generally assume that.... A. consumers do not act to achieve their goals. B. everyone knows everything. C. people are rational. D. people make the best decisions. E. consumers do not use all available information.
C. people are rational.
primary difference between macroeconomics and microeconomics is.... A. Microeconomics is concerned with present decisions while macroeconomics is concerned with future decisions. B. Microeconomics is concerned with market economies while macroeconomics is concerned with centrally-planned economies. C. There are no true differences between microeconomics and macroeconomics. D. Microeconomics examines individual markets while macroeconomics examines the economy as a whole.
D. Microeconomics examines individual markets while macroeconomics examines the economy as a whole.
Define Economics
Economics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile our choices.
