Macroeconomics HW!

Julia Paul, an analyst at a research institute, lives very close to her office and walks to work every day. Meanwhile, her colleague, Amanda Jones, dislikes the fact that it takes her almost an hour to commute to work every day. As a result, when Julia decides to move to a suburb farther away, Amanda is very surprised. Which of the following, if true, would explain Julia's behavior?

Julia saves more in rent than she spends on commuting to work.

Every society faces economic trade- offs. This means

producing more of one good means less of another good can be produced.

If cost Hobie $900 to produces 5 lamps and $1200 to produce 6 lamps, the marginal cost of producing the 6th lamp is?

$300

If you go to college, you have to the give up other opportunities as follows(each of them has been assumed with different value). The opportunity cost of attending college is

100 - to work after high school graduation

Every society faces trade-offs because we live in a world of scarcity. Suppose a student-athlete has the opportunity to earn $400,000 next year playing for a minor league baseball team, $700,000 next year playing for a European professional football team, or $0 returning to college for another year. The opportunity cost of the student-athlete returning to college next year is

700,000

Which of the following best describes scarcity?

Unlimited wants exceed the limited resources available.

Suppose, in an effort to prevent the population from declining, Italy begins offering new mothers extended periods of paid family leave from work and, consequently, the birthrate per woman increases. If so, then this could best be characterized as an example of people responding to

economic incentives.

To develop a model that will answer economic questions, economists typically:

first make simplifying assumptions, then formulate a hypothesis, test the hypothesis, and finally revise the model if necessary.

Microeconomics is the study of

how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.

Economics

is the study of the choices people make to attain their goals, 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.

When economists develop models designed to explain the choices people make, they generally assume that

people are rational.

A large corporation that runs nursing homes estimates that changes to Medicare will result in lower payments by Medicare to nursing homes for short-term stays by patients that require therapy or care upon leaving hospitals. Assume the corporation is considering expanding the number of "beds" it offers at its nursing homes. Given the changes to Medicare, if the marginal benefit of offering an additional bed is $4,000 and the marginal cost is $5,000

should not

Macroeconomics is the study of

the economy as a whole, including topics such as inflation, unemployment, and economic growth.

Opportunity cost is

the highest valued alternative that must be give up to engage in an activity.