Macro economics: Chapter 1 study example questions

Instead of attending class, one could have worked an extra hour at the cafe for $10 or watched a neighbors child for $15. The opportunity cost of attending class is:

$15

examples of opportunity cost:

- its 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 *, is at a bookstore and chooses to buy a book about a young wizard instead of buying math textbook that she would probably never open - Chez moi and chez nous, two premiere french restaurants with three Michelin stars, both offer you sous chef job at the same salary. You are ecstatic because you know it is a win-win scenario and choose to work for for chez nous.

examples of microeconomics

-A tax on tires increases the price of tires paid by car owners -optimism about future car sales leads General Motors to hire more auto workers -Robotic technology reduces the demand for auto workers

examples of macroeconomics

-As a result of severe recession, the total output, or gross domestic product, of a nation falls by 4% -Increased consumer spending causes the national unemployment rate to fall -increased consumer spending causes the rate of inflation to rise

Lisa is choosing between three alternatives: a) working on her job that pays her 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

which describes the equity-efficiency trade-off?

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

which of the following decision that follows net marginal benefit principle?

Deciding whether to spend one more hour studying for an exam

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

Government intervention

During the summer, the largest computer game retailer has a massive sale. As prices for computer games fall, consumers purchase more games, ceteris paribus. What does the term ceteris paribus mean in this context?

Holding all else equal (unchanged)

why, if at all, is the ceteris paribus condition important in economic analysis?

It allows the analysis

Megan has a 1 hr gap in her course load for the fall semester. There are two courses available for her to take at that time: reading piano sheet music and beginning rock climbing, She does not have any experience with piano or rock climbing. in the end, she decides to enroll in the rock climbing course, despite her fear of heights.

Learning to read piano sheet music

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

Market efficiency

is "The richest 1% of Americans should pay more taxes than the rest of the 99%" positive or normative economics?

Normative Economics

is "social welfare spending in Sweden occupies too large a portion of the national budget" positive or normative economics?

Normative economics

is " a decrease in the supply of coconut will increase the price of German chocolate cake, a good which requires coconut shavings as a key ingredient" positive or normative economics?

Positive economics

Ava finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time

Resource Scarcity

at a high end restaurant, the owner has one chef at a meat station, one at a veggie station and one chef who has an artistic eye, plate the food they are given. The result is increased speed, as more customers get serviced during the evening

Specialization

The price of gasoline is $2.50 per gallon at the closest gas station, but it is only $2.30 pr gallon at a gas station two miles away. By driving to the farther gas station, the opportunity cost is:

The value of ones time and expenses to go to the farther gas station

When four roommates agree to specialize in the chores they are most efficient at, this can lead to:

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

Not primary goals of macroeconomic policy:

eliminating political conflict, help set the optimal price for a pound of peaches at local grocery store, calculate how much urban residents are willing to pay to protect biodiversity

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

equilibrium

trade offs

everything you do requires giving up something (time, money, etc. )

Primary goal of macroeconomic policy

low unemployment , low inflation, growth in the standard of living

An educational software company wants to expand the number of economics questions that it offers and is considering hiring another economist. The company compares how much adding another worker will improve the product to the additional cost.

marginal decisions

On Black Friday, there are huge sales for electronics at many retail stores. David must decide between buying a camera at one store or a flat screen TV at another store, and buying one means losing out on the ability to purchase the other

opportunity cost

Scarcity

people have limited resources

is " As minimum wage increases, the prices of all goods and services also tend to increase." positive or normative economics?

positive economics