Macroeconomics exam 1
given the information above, if the interest rate on your savings account was 3 percent a year, then the yearly opportunity cost of using this money for a down payment would be equal to $______
$2100
the opportunity cost of a beer is _____ snack(s).
1.5 snacks
how do economists distinguish between models that work and those that don't?
they test their models against real-world data
the costs of many food safety regulations can be calculated in dollars, but the benefits often are in terms of lives saved (mortality) or decreases in the incidence of a particular illness (morbidity). what does this imply about the cost-benefit analysis of food safety regulations?
we must first translate the mortality and morbidity data into dollars in order to compare it to the costs of the regulations
which of the following is NOT true about economic models?
they are not useful since they do not include all variables
this third principle of economics, supported by the scientific method is:
empiricism
which of the following is more susceptible to the free-rider problem: government- funded symphonies or city - wide pest control?
use of city - wide pest control is more susceptible since even those who don't pay taxes still benefit, while government - funded symphonies can charge for admission, so that everyone who goes pays their share
empiricism is a principle in economics that _________.
uses data to test economic models
when a cost-benefit analysis is done:
all relevant options must be considered.
clara visits the local bakery shop several times a week and knows the owner, sam, very well. her favorite cupcakes, chocolate cream, sell for $2 each. she buys them regularly. the $2 charged per cupcake is the ______ price. if sam raised the price to $2.50, clara would buy her favorite cupcake from the coffee shop down the street for $2.25, which would be the ______ price for her.
equilibrium, optimum
an argument against evidence-based economics would be:
it is only an approximation, often based on averages
which of the following is NOT an important property of an economic model?
it predicts actual results over half the time
you are thinking about buying a house. you find one you like that costs $350,000. you learn that your bank will give you a mortgage for $280,000 and that you would have to use all of your savings to make the down payment of $70,000. you calculate that the mortgage payments, property taxes, insurance, maintenance, and utilities would total $1,680 per month. Which of the following is true regarding your calculation of the cost of owning the house?
it should include the opportunity cost of the money used to make the down payment. this money could be earning interest in a bank
suppose you are ready to check out and see two lines: line A has three people, while line B has five people. assume people choose lines at random and have not yet had a chance to switch lines. the situation will move toward equilibrium if the ________. assume that all eight shoppers are optimizing (i.e., they had a chance to switch lines) and the situation is in equilibrium. given this information, you could infer that the shorter line will move _______ the longer line. assume that all eight shoppers are optimizing (i.e., they had a chance to switch lines) and the situation is in equilibrium. given this information, you could infer that the behavior of the _________ is most informative.
last person from the longer line switches to the shorter line. slower than last person in the five-person line
Michael has a statistics final exam tomorrow morning and he needs to decide how many hours to study. the benefits column shows how many more points he expects to earn because of increased knowledge. the cost column shows how many points he will lose because of careless errors due to lack of sleep. (the "marginal" columns show the effect of each additional hour. these numbers are the differences of the "total" columns.) using the marginal benefits and marginal costs analysis, if Michael studies for three hours, the outcome will be _______ because ____________.
optimal; net benefit is maximized
free riding occurs when _________ are out of sync with ______
people's private benefits; the public interest
making a prediction today about the world's population in twenty years based on current growth trends is an example of _________ economics. Advising the residents of a town to choose a toll road over a freeway extension due to a limited budget and high trucking usage is an example of ________ economics.
positive, normative
your roommate admits that he was able to make 4 shots out of 10. based on this information, it is ___________ that you are a better shooter than your roommate.
suggestive but not conclusive
every day, you go to the gym to practice free throws. each time, you attempt 10 shots. in the last four days, you have made 7, 6, 6, and 5 shots. your average free-throw percentage is ____ percent.
60%
the mean and the median are closely related concepts. the median is the numerical value separating the higher half of your data from the lower half. you can find the median by arranging all of the observations from lowest value to highest value and picking the middle value (assuming you have an odd number of observations). Although the mean and median are closely related, the difference between the mean and the median is sometimes of interest. suppose country A has five families. their incomes are $9,000, $20,000, $31,000, $41,000, and $50,000. country A's median income is $________, and its mean income is $________.
31000; 30200
suppose country B also has five families. their incomes are $9,000, $20,000, $31,000, $41,000, and $151,000. country B's median income is $_____ , and its mean income is $______.
31000; 50400
suppose 3,675 people bought popsicles o a hot summer day. if the average number of popsicles that each person bought is 10, the number of popsicles sold that day is ___.
36,750
country ___ has greater income inequality
B
which of the following would be considered a scarce resource for producers? A. Natural resources for production B. Low- skill labor C. Equipment and tools D. All of the above
D. All of the above
The statement that the U.S. government should increase carbon taxes to reduce carbon emissions that cause global warming is ________.
a normative statement, since it describes what ought to be done and is therefore not possible to confirm with data
which of the following areas are addressed int he study of economics? (check all that apply) A. money B. the benefits associated with a decision C. optimal tax policies D. prices
all of the above
which of the following is subject to the free-rider problem?
all of the above; public libraries, a neighborhood watch, national security
which of the following would not be considered one of the possible opportunity costs of a recent high school graduate starting college right away
all of these is a possible opportunity cost
to say that economists use the scientific method means that they are using _______.
an ongoing process to develop models of the world and then test and evaluate those models
when making your decision about which activity to choose, you should consider the monetary cost _______ the opportunity cost of the activities. The goal is to choose the option that offers the greatest _______ benefit.
as well as, net
you have decided that you are going to consume 800 calories of beer and snacks at a party Saturday night. A beer has 200 calories and a snack has 400 calories. Create a table that shows the various combinations of beer and snacks you can consumer. to do this, calculate the number of snacks that you can consume for each amount of beer.
beer: 0, 1, 2, 3, 4 snacks: 2, 1.5, 1, .5, 0
since the inputs used to produce goods are scarce, the total amount produced of most goods is ________ the amount that consumers would like to buy. To allocate the goods produced to the people who value them the most, we use _____________.
below, the price mechanism
suppose the market price of corn is $5.50 per bushel. Which of the following is NOT one of the three conditions that will need to be satisfied for the corn market to be in equilibrium at this price?
both the buyers and sellers of corn could benefit by making small changes to their market behaviors
you are trying to decide how to spend $40 you earned last night. you could buy a new shirt or go out to dinner and a movie with a friend. you could also go to the movie, not have popcorn, and buy a less expensive shirt. taken together these things form your ________.
budget constraint
All of the following are principles of economics except:
categorization
assume every semester after finals you fly back to your hometown using a $300 ticket you buy online. You have 40,000 frequent flier miles. you could exchange your miles for a round-trip to Bermuda over spring break. if you choose to exchange your airline miles for a free trip to Bermuda over spring break, then your trip ______.
cost $300, since your next-best alternative for your miles was to use them to fly home at the end of the semester
which of the following would an economist use when conducting empirical analysis?
data
suppose you have a part-time job and earn $400 a month. suppose you decide to spend your income buying new shoes and jeans. the chart below shows the possible combinations that could be purchased in a month. assume jeans cost $50 each and shoes cost $100 each. The table above shows that for a given budget if you increase the amount of one type of good that you buy, you must _____ the amount of the other good that you buy. Therefore, a budget constraint implies that the consumer faces _____.
decrease, trade-offs
suppose your new year resolution is to get back in shape. you are considering various ways of doing this: you can sign up for a gym membership, walk to work, take the stairs instead of the elevator, or watch your diet. how would you evaluate these options and choose an optimal one?
do a cost-benefit analysis to compare the alternatives
economics is all about making choices. the reason we have to choose one thing over another is:
economic resources are scarce
you have already purchased (non-refundable and unsellable) tickets to a concert on Friday night. a friend also invited you to her birthday party on Friday. while you like your friend, you politely decline because you really want to go to the concert. suppose you learn that your friend is serving flank steak at her party; all-you-can-eat and at no charge. flank steak is your favorite food. your opportunity cost of going to the concert is now _____ then you had previously thought
higher
the scientific method uses ____ for setting forth predictions and _____ to support or deny them. it is more important for a model to be _____ than ______.
hypotheses; data; usable; accurate
How does microeconomics differ from macroeconomics?
microeconomics is the study of how individuals, households, firms, and governments make choices, while macroeconomics is the study of the economy as a whole
suppose instead that you notice that the concert ticket cost you $10; previously, you had mistakenly believed the price was $100. should learning this information affect your decision to go to the concert?
no
is the price of a good in an equilibrium market is $112, all of the following statements are true except:
producers know that if they colluded, they could increase the price.
which of the following statements would NOT be considered a positive statement?
production in the automobile industry is still low and should be subsidized by the government
suppose you thought income inequality in the United States had increased over time. Based on your answers to this question, would you expect the ratio of the mean income in the United States to the median income has risen or fallen? explain.
risen, because mean change more with extreme values.
which of the following would be considered an opportunity cost of spending time to go to the movies with your friends?
the amount of money you would have made had you worked instead
a budget constraint represents ______.
the bundles of goods or activities that a consumer can choose given her limited budget
how does the sample size affect the validity of an empirical argument?
the larger the sample size the better
how is the mean calculated from a series of observations?
the mean is the sum values of the observations divided by the number of observations
which of the following is NOT an item studied under microeconomics?
the money supply
one reason free-riders exist could be that:
the private benefit exceeds the private cost
all of the following would fall under the study of microeconomics except:
the stock market's response to an interest rate increase
the concept of opportunity cost is a measure of _______.
the value of the best alternative use of a resource
suppose there are 3 activities in which you could participate: 1. the opportunity cost of the first activity missing 3 hours of work 2. the opportunity cost of the second activity is missing a concert that you have tickets to 3. the opportunity cost of the third activity is missing the afternoon nap that you take every day. given this information, for which of these activities would you be able to compare opportunity costs?
you can compare all the activities after you translate all the missed activities into dollar amounts.
