Macroeconomics: (HW-CH 1-4) and (Quizzes 1&2&3)

QUIZ-1 Which of the following could be considered an economic​ agent? ​(Check all that apply.​) Scarcity is the situation of having _____________ wants in a world of _____________ resources. Which of the following are considered scarce​ resources? ​(Check all that apply.​)

A. Parents. B. Workers. C. Criminals. D. Firms. unlimited; limited A. Gas. B. Diamonds. C. Time D. Mechanical pencils.

HW-CH4 Brazil is the​ world's largest coffee producer. There was a severe drought in Brazil in 2013-2014 that damaged​ Brazil's coffee crop. The price of coffee beans doubled during the first three months of 2014. Draw and discuss a supply and demand diagram to explain the increase in coffee prices. Consider the market for coffee illustrated in the figure on the right. Show the effect of the drought on the coffee market. ​1.) Using the line drawing tool​, graph either a new coffee demand curve ​(D2​) or a new coffee supply curve ​(S2​) that shows the effect of the drought. Label your curve appropriately. ​2.) Using the point drawing tool​, indicate the new market equilibrium price and quantity. Label your point ​'e2​.' Coffee and tea are likely ___________________ because an increase in the price of coffee ______________ the demand for tea. What do you think the impact of this drought has been on the equilibrium price and quantity of​ tea? Draw a supply and demand diagram for the tea market to explain your answer. Consider the market for tea illustrated in the figure on the right. Show the effect of the drought on the tea market. ​1.) Using the line drawing tool​, graph either a new tea demand curve ​(D2​) or a new tea supply curve ​(S2​) that shows the effect of the drought. Label your curve appropriately. ​2.) Using the point drawing tool​, indicate the new market equilibrium price and quantity. Label your point ​'e2​.'

Graph in Homework CH4 folder (Question 9) substitutes; increases Graph in Homework CH4 folder (Question 9)

QUIZ-3 Using the graph on the​ right, show the effect of a negative shock on the labor demand curve in an economy. Assume that wages in the economy are rigid and cannot change in the short run. ​1.) Using the line drawing​ tool, show the new labor demand curve prior to the effects of any multipliers. Label your cuurve ​'D2​'. ​2.) Using the line drawing​ tool, show the new labor demand curve after the effects of multipliers. Label your cuurve ​'D3​'. ​3.) Using the point drawing​ tool, locate the equilibrium point if wages were flexible. Label your point ​'e1​'. ​4.) Using the point drawing​ tool, locate the equilibrium point given that wages are rigid. Label your point ​'e2​.' Compare the point of trough employment on the graph with the point of trough employment if wages were flexible. If wages were​ flexible, employment would have been _________________ employment with rigid wages.

Graph in Quiz 3 folder Question 6 higher than

QUIZ-3 Suppose that the mythical country Moricana has a very high minimum wage. Labor market laws are trade union-friendly and allow unions a high degree of bargaining power. Moricana is in a recession-capacity utilization in the economy is at an​ all-time low, surveys show that firms do not expect economic conditions to improve in the coming year. Firms in the country are cutting back on capital spending and investment. In​ Moricana, wages are likely to be​ ____________. Using the graph on the​ right, show how the​ firms' actions would affect the labor demand curve​ (ignore the effects of​ multipliers). ​1.) Using the line drawing​ tool, show the new labor demand curve. Properly label your line. ​2.) Using the point drawing​ tool, locate the equilibrium point if wages were flexible. Label your point​ 'e1.' ​3.) Using the point drawing​ tool, locate the equilibrium point given that wages are rigid. Label your point​ 'e2.' Using the graph on the​ right, show how the economy would move along the aggregate production function curve. ​1.) Using the point drawing​ tool, locate the equilibrium point if wages were flexible. Label your point​ 'e2.' In​ Moricana, unemployment is likely to be classified as​ ____________.

rigid. Graph in Quiz 3 folder Question 19 Graph in Quiz 3 folder Question 19 involuntary.

HW-CH1 Comparing a set of feasible alternatives and picking the best one is an optimization process called​ _________. When deciding whether to install visible countdown timers for pedestrians at​ crosswalks, which of the following would be considered in the​ cost-benefit analysis? ​(Check all that apply.​)

​cost-benefit analysis. A.) The value of the lives lost by drivers who watch the countdown timers and try to make it through a light. B.) The cost in terms of dollars of installing these new timers all over the city. C.) The value of the​ pedestrians' lives saved by having the timers to assist in crossing the street. D.)The higher maintenance bill associated with fixing these more complex signals when they break down.

HW-CH3 What is the difference between marginal values and average​ values?

Marginal values show the additional benefit or cost from consuming an additional unit of a​ good, while average values are the benefit or cost per unit of a good.

HW-CH2 How does the sample size affect the validity of an empirical​ argument?

The larger the sample size the better.

QUIZ-2 What policies can be used to raise real GDP in a​ country? ​(Check all that apply​.)

Improve efficiency in the allocation of resources. Increase technology. Raise physical and human capital.

HW-CH4 Which of the following is not one of the four major factors that shifts the supply curve when it​ changes? When one of the four major factors​ changes, causing an increase in​ supply, the supply curve shifts __________________. The graph to the right illustrates the supply of smartphones in a country. If firms expect future price ​increases, how would the supply of smartphones be​ impacted? ​1.) Using the line drawing​ tool, depict how this increase will impact the supply of smartphones. Label the new curve ​'S2​'.

The price of the good itself. rightward Graph in Homework CH4 folder (Question 7)

QUIZ-2 You decide to cook your own meal rather than eat in a restaurant. As a​ result, GDP estimates will ______________.

decrease

QUIZ-3 The value of the marginal product of labor is the​ ____________. Anthony owns a landscaping business that has 4 employees. His company is able to earn revenue of​ $600 per day. He knows that if he hires another​ worker, he would have to pay that worker​ $50 per day and the company would earn revenue of​ $680 per day if the new worker is hired. Determine the value of the marginal product of labor of the employee that Anthony is considering hiring.

market value of a​ worker's additional output for a firm. $80

QUIZ-3 In​ general, we find that unemployment rates are lower among​ ____________ workers since the opportunity cost of their time spent not working is​ ____________.

more​ educated; higher.

QUIZ-3 When repaying a​ loan, the payment a borrower makes consists of​ ____________.

principal and interest.

HW-CH2 In general people with more education earn higher salaries. Economists have offered two explanations of this relationship. The human capital argument says that high schools and colleges teach people valuable​ skills, and employers are willing to pay higher salaries to attract people with those skills. The signaling argument says that college graduates earn more because a college degree is a signal to employers that a job applicant is​ diligent, intelligent, and persevering. The ________________ implies that a college student who drops out of school one month before graduation should earn much less than a student who graduates. The ________________ implies that a college student who drops out of school one month before graduation should earn almost the same as a student who graduates.

signaling argument human capital argument

HW- CH3 Optimization is the process that describes​ __________. Optimization in levels examines​ ___________, while optimization in differences analyzes​ ____________.

the choices that people make. total net benefits of​ alternatives; the change in net benefits.

QUIZ-3 Maturity transformation is the process by which banks​ ____________.

transfer​ short-term liabilities into​ long-term investments.

QUIZ-3 Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for ​$2.00. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. Hours of Labor_____Output 0_________________________0 1_________________________50 2_________________________90 3_________________________120 4_________________________140 5_________________________150 6_________________________155 7_________________________157 The marginal product of labor for the sixth hour of labor is_____________. The value of the marginal product of labor for the sixth hour of labor is____________. If the wage paid to workers in Die​ Cast's plant is​ $25/hour, it should employ _______________worker(s). If the wage paid to workers in Die​ Cast's plant is​ $35/hour, it should employ ____________________worker(s). If the wage is​ $25/hour, but the price of a bracket declines to ​$1.50​, it should employ_____________ worker(s).

5 10 4 4 4

QUIZ-3 If nominal GDP​ increases, what might be the cause of this​ increase? If nominal GDP​ increases, this could be caused​ by: ​(Select all that apply.​) A. Deflation B. An increase in the price level C. An increase in real GDP D. A decrease in the price level Given the following​ information, what is the growth rate of nominal​ GDP? Y0 real GDP​ = ​$1500 ​(in millions) Y 1 real GDP​ = ​$1800 ​(in millions) Y 0 price level​ = 125 Y 1 price level​ = 140 The growth rate of nominal GDP is ________________%.

B. An increase in the price level C. An increase in real GDP 32

HW-CH4 Which of the following is not one of the five major factors that shifts the demand curve when it​ changes? When one of the five major factors​ changes, causing an increase in​ demand, the demand curve shifts ________________________. The graph to the right illustrates the demand for smartphones in a country. If the price of a substitute good ​increases, how would the demand for a normal good be​ impacted? ​1.) Using the line drawing​ tool, depict how this increase will impact the demand for smartphones. Label the new curve 'D2​'.

Prices of inputs used to produce the good. rightward Graph in Homework CH4 folder (Question 4)

HW-CH2 What is meant by randomization in the context of an economic​ experiment?

Subjects are assigned by​ chance, rather than by​ choice, to a group.

QUIZ-1 What is meant by randomization in the context of an economic​ experiment?

Subjects are assigned by​ chance, rather than by​ choice, to a group.

QUIZ-2 Population​ density, like the fraction of the population urbanized​ (the fraction of the population living in urban centers with​ 5,000 or more​ inhabitants), can be used as a measure of economic development for areas 500 years ago​ (say, in​ 1500). Suppose the graph on the right illustrates the relationship between population density in 1500 and GDP per capita in 1500 and between population density in 1500 and GDP in 2005. Based on this​ information, you can conclude there is​ ____________. *Graph in Quiz 2 folder Question 19*

a positive relationship between population density in 1500 and prosperity has become negative.

HW-CH1 The definition of economics states that it is the study of how​ _________.

agents choose to allocate scarce resources and the impact of those choices on society.

QUIZ-3 A bank run is​ ____________.

an extraordinarily large volume of withdrawals driven by a concern that a bank will run out of liquid assets with which to pay withdrawals.

QUIZ-3 The primary reason that people use money is to​ ____________.

conduct market transactions in a modern economy.

QUIZ-2 The United States is currently a relatively rich country. How do the following items support U.S. economic​ strength? Sam​ Walton, the founder of​ Walmart, is an example of the power of ________________________ ​, which creates economic growth. Your university or college is an example of ______________________ ​, which contributes to economic growth. New developments that enable natural gas and oil fracking are examples of ________________________ ​, which contribute to economic growth.

entrepreneurship human capital physical capital technology

QUIZ-2 When government statisticians gather and analyze data on the purchases of goods and services produced in the domestic​ economy, they are measuring GDP using the​ ____________. The national income accounting identity associated with the​ expenditure-based accounting method is represented by​ ___________.

expenditure​-based accounting method. Y =C + I + G + X - M.

QUIZ-2 The saving rate in an economy is defined as the​ ____________. Factors that help households decide whether to consume or save their income are​ ___________. ​(Check all that apply.​) Household saving decisions impact investment in the economy by having​ ___________.

fraction of total income that households save. A. expectations of future income growth. B. expectations about taxes. a direct impact on​ investment, as saving is correlated with investment.

QUIZ-2 Productivity varies across countries because of differences in​ ____________. ​(Check all that apply​.) Human capital is __________________________. Physical capital is __________________________. Technology is ____________________.

human capital physical capital technology each person's stock of skills to produce output or economic value any good, including machines and buildings, used for production the ability to use labor and capital more efficiently

QUIZ-3 According to the quantity theory of​ money, ____________. Which of the following equations is the equation for velocity in the quantity theory of​ money?

in the long​ run, the growth in the money supply is directly related to the inflation rate. Nominal GDP / Money supply

HW-CH1 Free riding occurs when ________________ are out of sync with _______________. Which of the following is subject to the​ free-rider problem? Which of the following is more susceptible to the​ free-rider problem: government-funded symphonies or street lights​?

people's private benefits; the public interest A.) A neighborhood watch. B.) National security. C.) Public libraries. Use of street lights 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.

HW-CH4 The Law of Demand states that as the price of a good​ increases, ceteris paribus​, the ________________ decreases. This can be shown graphically with ___________________ demand curve or numerically in a table using a _______________________. The relationship that exists between these two variables can be described as________________.

quantity demand; a downward- sloping; demand schedule negatively related

HW-CH4 The Law of Supply states that as the price of a good increases, ceteris paribus​, the ________________ of that good increases. This can be shown graphically with _____________________ supply curve or numerically in a table using a _________________. The relationship that exists between these two variables can be described as ___________________. ExxonMobil's Supply Schedule Price ($/barrel): $10 50 100 150 Quantity Supplied (billions of barrels): 0.0 1.1 1.5 1.7 1. Using the point drawing tool​, plot each of the points in the supply schedule above on the graph to the right. 2. Using the​ 4-point curve drawing tool​, draw and properly label​ ExxonMobil's supply curve.

quantity supplied; an upward-sloping; supply schedule positively related Graph in Homework CH4 folder ( Question 5)

HW-CH1 During the process of optimization economists believe that people are considering​ _________. The goal of optimization for an individual is to maximize ______________.

the feasibility of a​ choice, given the information available at the time. overall well-being

QUIZ-3 According to the quantity theory of​ money, the inflation rate is If the inflation rate is positive​, what must be​ true?

the gap between the growth rate of money supply and the growth rate of real GDP. The growth rate of real GDP < the growth rate of money supply.

QUIZ-1 Some people choose to live close to the city​ center; others choose to live away from the city center and take a longer commute to work every day. Does this mean that those who stay away from the city center are being​ irrational?

​No, because their opportunity cost of commuting must be lower.

QUIZ-1 Give an example of a pair of variables that have negative correlation.

The number of winter coats sold and the temperature outside.

HW-CH1 Economics is divided into two broad fields of​ study: microeconomics and macroeconomics. Microeconomics studies​ _________, while macroeconomics studies​ _________. Policy decisions made by the government are analyzed by​ _________. A policy such as those limiting a firm's monopoly powers would be studied under _________, since it deals with ___________.

a small piece of the overall​ economy; the economy as a whole. both microeconomics and macroeconomics. microeconomics ; a small part of the overall economy

HW-CH4 Suppose a new​ off-campus university apartment complex could rent its rooms on the open market for​ $900 a month. ​If, instead, the university chooses to cap the price of rooms to​ $500 a month for​ students, the result would be that​ ____________. Suppose the university is trying to determine the most efficient way to allocate the rooms such that those who value the rooms the most get them. Which of the following would you suggest as the most​ efficient?

quantity demanded would exceed the quantity​ supplied, resulting in a shortage. Auctioning the rooms to the highest bidders.

HW-CH3 You are considering renting a city apartment with​ 1,000 square feet for ​$1,300 per month. The monthly rent on a​ larger, 1,500-square-foot city apartment is ​$1,650. The marginal cost of renting an apartment with 500 additional square feet is ​$_______________ per square foot per month.

$0.70

HW-CH3 You are a professor of economics at a university.​ You've been offered the position of serving as department​ head, which comes with an annual salary that is ​$9,500 higher than your current salary.​ However, the position will require you to work 200 additional hours per year. Suppose the next best use of your time is spending it with your​ family, which has value of ​$10 per hour. What is the difference in the net benefit from becoming the department​ head? The change in net benefit is ​$________________. To optimize, you _________________ become a department head.

$7500 should

QUIZ-2 Assume that the aggregate production function is Y​ = F​(K​, H​). Let K​ = 40​, H​ = 40​, and the function be Y equals 2 times the product of K and H. Y​ =_______________

3200

QUIZ-1 Your total benefits from spending time with your spouse are shown in the following table. *Hours per Day*_______*Total Benefit* 0_________0 1__________18 2__________34 3__________48 4__________60 5__________70 6__________78 7__________84 8__________88 ​Alternatively, you have the option of working as many hours as you​ want, earning ​$11 per hour. Assume this is the next best use of your time. Use the marginal principle to find your optimal number of hours to spend with your spouse per day. The optimal amount of time for you to spend with your spouse is ____________ hours per day.

4

HW-CH3 Suppose your total benefit from eating slices of pizza​ (value in​ dollars) is 14x-x^2​, where x is the number of slices of pizza. Pizza is sold by the slice and costs ​$2 per​ slice, and so the total cost of pizza is 2x. Using optimization in​ levels, what is the optimal amount of pizza for you to​ eat? Your net benefit is maximized at ___________ slices of pizza.

6

QUIZ-2 The investment (I) component of aggregate expenditure includes​ ____________. ​(Check all that apply​.)

A. residential houses. C. business structures. D. business inventories.

HW-CH1 Suppose that you allocate​ $20 each week for your entertainment budget. This money is spent on two​ items: either renting movies for​ $1 each at Redbox or downloading songs from iTunes at​ $1 each. Given this​ information, which of the following would represent your budget constraint for​ entertainment? Your budget constraint for entertainment illustrates the concept of _________________​, since as you increase your purchases of one​ item, you __________________.

Amount spent on iTunes​ + Amount spent at Redbox​ = $20. trade-offs; must decrease your purchases of the other item

HW-CH3 Suppose you are accepted at all of the three business schools to which you applied. Consider all the factors that could matter when it comes to choosing a business school. How would you go about making an optimal decision about which school to​ attend? Suppose you have to give up a job that pays you​ $40,000 a year to attend business school. How would this affect your calculation of whether to attend business​ school?

By comparing the net benefits from attending the three schools. It will increase the indirect cost of your​ time, making you less likely to attend business school.

HW-CH1 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? 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 ____________.

Do a​ cost-benefit analysis to compare the alternatives. as well as; net benefit.

HW-CH2 Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your research has uncovered the following​ data: Price of Crude Oil $80 90 100 110 GDP 17.0 16.9 16.8 16.7 # of New Mustaches Grown 3,000 2,000 5,000 1,000 Price of Gasoline $2.75 3.00 3.25 3.50 Your client has asked you to plot GDP and gasoline prices on a graph. ​1.) Using the multipoint curve drawing​ tool, plot GDP against gasoline prices on the graph to the right. There is a ______________correlation between GDP and gasoline prices.

Graph in Homework CH2 folder (Question 10) negative

HW-CH2 Consider the following data that show the quantity of coffee produced in Brazil from 2007 to 2011. Year______Production (in tons) 2007_______210 2008_______240 2009_______260 2010_______280 2011_______250 ​1.) Using the multipoint curved line drawing​ tool, graph the annual coffee production on the graph to the right. The mean quantity of coffee produced is ____________tons. Suppose, due to favorable​ weather, the crop in 2012 is 330 tons. In percentage​ terms, how much bigger is the 2012 crop over the​ 2007-2011 average? The 2012 crop is ________________ percent larger.

Graph in Homework CH2 folder (Question 15) 248 33.06

QUIZ-2 The figure on the right illustrates the returns to entrepreneurship and the costs of entrepreneurship. The market is initially in equilibrium at point E1. Suppose a​ country's economic institutions make entry barriers for entrepreneurial activities more expensive. Show the effect of higher entrepreneurial entry barriers on the graph. ​1.) Using the line drawing tool​, graph either a new​ return-to-entrepreneurship curve ​(R2​), a new​ cost-of-entrepreneurship curve ​(C2​), or both. Label your​ curve(s) appropriately. ​2.) Using the point drawing tool​, indicate the new equilibrium. Label your point ​'E2​.'

Graph in Quiz 2 folder (Question 3)

HW-CH3 Refer to the optimization analysis used to make a decision about the choice of an apartment. Suppose the government in a certain country wants to reduce urban sprawl.​ (Urban sprawl refers to the development of residential and commercial areas in the suburbs around the periphery of a city. One of the main problems with urban sprawl is that it leads to increased traffic congestion and air pollution as commuters travel to the city every​ day.) What measures could it take to ensure that people choose to live closer to the central business​ district?

Increase property taxes on houses in the suburbs.

QUIZ-3 In February​ 2014, the United States added​ 175,000 jobs to the economy. Given this​ information, what can we say about the unemployment rate of the​ country? Suppose that in January there were 6,000,000 workers in the labor​ force, with 5,604,000 employed and 396,000 ​unemployed, implying a 6.6 percent unemployment rate. A month​ later, there were 6,200,000 workers in the labor​ force, with 5,779,000 employed and 421,000 unemployed.​ (Notice the number employed went from 5,604,000 to 5,779,000​, an increase of​ 175,000. The unemployment rate in February is _________________%.

It may​ increase, decrease, or not change depending on how many people started searching for jobs during the month. 6.79

QUIZ-1 Which of the following is the best example of causation​ (versus correlation)?

Oil prices go up and gasoline prices go up.

QUIZ-3 Why is the rise in housing prices between the late 1990s and 2006 characterized as a bubble by some​ economists? How did the fall in housing prices cause the entire financial system in the United States to freeze​ up? The fall in housing prices resulted in ______________, leading to enormous_____________, disrupting the​ banks' ability and willingness to make loans to______________________.

The large increase in the price of housing assets did not reflect the true​ long-run value of the assets. increased defaults; bank losses; consumers and firms

QUIZ-2 Most products we buy go through a lengthy series of intermediate steps before they are available for us to purchase. For this​ problem, say we are tracing the​ stages, and the associated transaction​ values, involved in the production of a hypothetical loaf of​ bread: *Transaction and Price:* Farmer sells wheat to miller ​$0.60 Miller grinds wheat into​ flour, and sells to baker ​$1.80 Baker bakes the​ loaf, and sells to a grocery wholesaler ​$3.10 Wholesaler sells loaf to various chain retail outlets ​$3.40 Retailer sells loaf to public $3.73 As a result of the production and sale of the loaf of​ bread, the category of GDP that increased is _______________________. The addition to GDP contributed by this loaf using the​ expenditure-based accounting method is _________________, while the​ income-based accounting method indicates a contribution to GDP of ______________________ and the​ production-based accounting method indicates___________________.

consumption $3.73 $3.73 $3.73

QUIZ-2 Exponential growth is the​ ____________.

process by which new growth builds on past​ growth, leading to a​ (roughly) constant growth rate.

HW-CH3 You and your​ friend, Jim, have just moved out of your dorm and into a new apartment. Both of you decide that you need to get a couch. Jim thinks you should get a new one from a furniture store nearby. You feel​ that, given your​ budget, it is best to buy a used one. Your other options are to buy one online or get a couch​ custom-made at the same furniture store. How would you arrive at an optimal solution​ here? Assume that your opportunity cost of time is​ $5 per hour. You and Jim would need to consider​ ___________. Now suppose that you have a summer job that pays you​ $15 per hour. How would your analysis​ change? With a​ $15-per-hour summer​ job, _________________ would increase.

the direct costs and the indirect opportunity cost of your time required to shop. the opportunity cost of your time

QUIZ-2 Give an intuitive explanation of the concept of​ "efficiency of​ production." Efficiency of production is the ability of the economy to produce​ ____________. Why is efficiency of production so important to real​ GDP?

the maximal amount of output at a given cost or for given amounts of the factors of production. Higher efficiency translates into higher incomes for workers.

QUIZ-2 ​China's economy is one of the​ fastest-growing economies in the world. Growth in China is primarily driven by investment and exports. You are discussing the sustainability of​ China's growth model with your friend. He says that according to the aggregate production​ function, China needs to continue to increase its physical capital stock to ensure sustainable growth. Do you​ agree? If increasing the stock of physical capital does not lead to sustained growth for​ China, what should China do to ensure the sustainability of its growth​ model?

​No, because diminishing marginal product of capital means that growth will not be sustained. Improve its technology.

HW-CH3 A company mines 330,000 tons of coal per year in a rural county. The coal is worth ​$65 per ton. The average price for a​ 2,000-square-foot house with three bedrooms more than 20 km away from the mining site in this county is ​$230,000. The average price for a​ similar, 2,000-square-foot house with three bedrooms within 4 km of the mine is 4 percent lower. Using comparative​ statics, what is the effect of mining on home prices in this​ county? Mining changes the price of a​ 2,000-square-foot home​ (with three​ bedrooms) by ​$_____________.

$-9200

HW-CH2 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 ​$10,000​, ​$20,000​, ​$31,000​, ​$40,000​, and ​$51,000. Country​ A's median income is ​$________​, and its mean income is ​$_______________. Suppose country B also has five families. Their incomes are ​$10,000​, ​$20,000​, ​$31,000​, ​$40, 000​, and ​$150,000. Country​ B's median income is ​$__________​, and its mean income is ​$______________. Country ____________has greater income inequality. 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. ​

$31,000; $30,400 $31,000; $50,200 B ​Risen, because means change more with extreme values.

HW-CH3 You have been invited to play a​ 4-hour round of golf that has a value to you of ​$70. The total price to play the round of golf is ​$25. The net benefit of the round of golf is ​$_____________________. Now assume that you have a job that pays you ​$12 per hour. Would you be optimizing to accept the invitation to play​ golf? To​ optimize, you should ________________ golf.

$45 not play

Quiz-1 You have been invited to play a​ 4-hour round of golf that has a value to you of ​$90. The total price to play the round of golf is ​$35. The net benefit of the round of golf is ​$___________. Now assume that you have a job that pays you ​$12 per hour. Would you be optimizing to accept the invitation to play​ golf? To​ optimize, you should _______________ golf.

$55 play

QUIZ-1 Economists refer to the process of adding up the individual demand curves to find the market demand curve as aggregation. Aggregation consists of fixing the ________________ and adding up the ____________________ by each buyer. *Al's Demand Schedule:* Price($/gallon): $5 4 3 2 1 Quantity Demanded (gallons): 150 200 250 300 350 *Joe's Demand Schedule:* Price ($/gallon): $5 4 3 2 1 Quantity Demanded (gallons): 300 400 500 600 700 Given the demand schedules above for Al and​ Joe, complete the total demand schedule for these two buyers. *Total Demand Schedule:* Price ($/gallon): $5 4 3 2 1 Quantity Demanded (gallons/year): _________ _________ _________ _________ _________ The graph to the right illustrates​ Al's and​ Joe's demand curves for gasoline. ​1.) Using the multipoint curve drawing​ tool, plot each point for the total demand curve and label the curve appropriately. ​Note: When using the multipoint curve drawing tool press the Esc key when you have drawn all the points.

450 600 750 900 1050 Graph in Quiz 1 folder (Question 4)

QUIZ-2 Which of the following will be considered a final good in the calculation of U.S.​ GDP? ​(Check all that apply​.) Items are classified as final goods only if they are the_____________________ in a chain of production.

A. Golf outings at courses in North Carolina. B. Defense equipment purchased by the federal government. end product

HW-CH1 In which of the following areas will taking an economics course help benefit you throughout your​ life?

A. It will help you analyze and predict human behavior in a variety of situations. B. It will instill the concept that what activity is given up by a decision plays an important role when making choices. C. It will give you the logic behind using​ cost-benefit analysis when evaluating decisions.

HW-CH3 Scott loves to go to baseball games, especially home games of the Cincinnatti Reds. All else​ equal, he likes to sit close to the field. He also likes to get to the stadium early to watch batting practice. The closer he parks to the stadium the more batting practice he is able to watch​ (the garages all open​ simultaneously). Find​ Scott's optimal seat type and parking garage using the information that follows. Location/Seat: Diamond Seats ​Club Home Club Seating Scout Box Scout Price: $233 93 83 79 69 Scott's Value of View: $137 132 127 120 100 ​Scott's optimal seat type is ________________. Parking Location: Westin parking garage Fountain Square South Garage West river parking East river parking Under stadium parking Parking Fee: $4 9 16 23 33 Arrival Time: 6:20 PM 5:50 PM 5:25 PM 5:10 PM 5:00 PM Missed Batting Practice: 60 min 50 min 25 min 10 min 0 min Benefit of Arrival Time: $0 10 35 50 65 ​Scott's optimal parking is ___________________.

Club Seating Under stadium parking

HW-CH4 In​ 1999, the​ Coca-Cola Company developed a vending machine that would raise the price of Coke in hot weather. To the right is an initial equilibrium in the market for soft drinks. Illustrate the logic behind this machine by either shifting the demand curve or supply curve and labeling the new equilibrium. ​1.) Using the line drawing​ tool, illustrate the likely effect on the market for soft drinks when temperatures rise. Properly label your line. ​2.) Using the point drawing​ tool, locate the new equilibrium price and quantity. ​Coca-Cola's decision to have vending machines raise prices in hot weather​ _________ make​ sense, since as a result of the change in demand for soft​ drinks, the equilibrium quantity demanded​ _________ and the equilibrium price companies can charge​ _________.

Graph in Homework CH4 folder (Question 8) ​does; increases; increases.

HW-CH2 Assume that income inequality has increased between 2000 and 2010 in the United States. Assume that both mean and median incomes are​ $40,000 in 2000 and that median income remains constant through 2010. ​ 1.) Using the line drawing​ tool, draw a line representing median income from 2000 to 2010. Label your line appropriately. ​2.) Using the line drawing​ tool, draw a line for mean income to represent a rising degree of income inequality over time. Label your line appropriately.

Graph in Homework CH2 folder (Question 5)

QUIZ-1 *​Chloe's Demand Schedule* Price ($/gallon): $6 5 4 3 2 1 Quantity Demanded (gallons/year): 50 100 150 200 250 300 1. Using the point drawing tool​, plot each of the points in the demand schedule above on the graph to the right. 2. Using the line drawing tool​, draw and properly label​ Chloe's demand curve.

Graph in Quiz 1 folder (Question 11)

QUIZ-1 Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client wants to know what will happen to gasoline demand if it increases gasoline prices by one cent higher than its nearest competitors. One of the members of your consulting​ team, Debbie, shares that one time in college she stopped buying gasoline from a service station that was one cent more expensive. Based on this​ story, should you conclude that demand will fall to zero if the client raises gas prices by one​ cent? _____________, since this is an __________________, which can lead to ____________________. Instead of relying on​ Debbie's college story to make a​ conclusion, you decide it is smarter to collect and analyze​ __________. You are able to collect the following data on the impact of a​ one-cent increase in gasoline prices. Calculate the percentage change in demand for each service station. *Service Station* A B C D *Gasoline Sold​ (thousands of​ gallons) With No Price Increase* 120 150 210 300 *Gasoline Sold​ (thousands of​ gallons) With​ 1-Cent Price Increase* 90 130 180 270 *Percentage Change* ____________________ ____________________ ____________________ ____________________ What is the average percentage change in gasoline sold for all four service stations analyzed​ above? The average percentage change is ______________ percent.

No; argument by anecdote; wrong conclusions a large amount of empirical data. -25 -13.33 -14.29 -10 -15.66

HW-CH4 Land in​ Sonoma, California, can be used to either grow grapes for pinot noir wine or to grow Gravenstein apples. Given this​ information, what is the relationship between pinot noir wine and Gravenstein​ apples? If the demand for pinot noir suddenly shifts sharply to the​ right, we would expect to see ________________ in the demand for land in​ Sonoma, which would ___________________ the equilibrium price of land. Assume that a sharp increase in demand for pinot noir leads to an increase in the price for land. Graph the impact of this price increase for land on the market for Gravenstein apples. ​1.) Using the​ 4-point curve drawing​ tool, depict the effect of the increased price of land in Sonoma on the market for Gravenstein apples. Draw either a shift in the supply or demand curve for Gravenstein apples. Label your curve. ​2.) Using the point drawing​ tool, plot the equilibrium point. Since both pinot noir wine and Gravenstein apples use the same land in​ Sonoma, California, a sharp increase in demand for pinot noir wine will result in a ___________________ price for Gravenstein apples and a ___________________ equilibrium quantity.

They share a common input. increase; an increase Graph in Homework CH4 folder (Question 10) higher; lower

HW-CH3 The concept of opportunity cost would explain whether someone chooses to​ drive, take a​ cab, take a​ bus, or walk to school or work because someone with​ ___________. Consider the total cost of traveling from point A to point B. The cost of traveling by car would include the cost of gasoline and the opportunity cost of​ time; the cost of hopping on a bus would include the bus ticket and the opportunity cost of time. Assume that the bus ticket costs less than the gasoline. Does this imply that using a bus to get to the destination involves lower total costs than getting there by​ car? What if the bus​ doesn't take the fastest route from point A to point​ B?

a high wage is more likely to drive or take a cab to work because his time is worth more. The marginal cost of using a bus may be higher if it takes more time than by car.

HW-CH4 In a perfectly competitive​ market, sellers​ _________ and buyers​ _________. In a perfectly competitive​ market, if one seller chooses to charge a price for its good that is slightly higher than the market​ price, then it will​ _________.

cannot charge more than the market​ price; cannot pay less than the market price. lose all or almost all of its customers.

HW-CH1 For a market to be in​ equilibrium, three conditions must hold. Fill in the blanks below to complete these conditions. The amount produced by sellers must be ______________the amount purchased by buyers. The costs of making a product must be _________________ the final price at which the product sells. Buyers must place a value on the uses of the product that is ______________________ the cost of buying the product.

equal to less than greater than

HW-CH4 In the context of the​ firm's supply​ curve, as the firm produces more of a​ good, the cost of producing each additional unit __________________. This implies that the marginal cost of producing a good ___________________ as it makes more of that good. The​ firm's supply curve represents​ ___________.

increases; increases the minimum price the seller is willing to accept to sell an extra unit of a good.

HW-CH1 The three principles of economics include optimization, equilibrium, and empiricism. Equilibrium describes a situation where _________________. Empiricism describes a situation where __________________. Optimization describes a situation where _____________.

no one would benefit from changing his or her behavior. economists use data to analyze what is happening in the world. people weigh costs and benefits when making a decision.

HW-CH1 The statement that the United States has a budget deficit that is in excess of $ 15 trillion is a __________ statement since it describes what people actually do. The statement that the United States should legalize same-sex marriage is a ___________ statement since it describes what people ought to do. The ethical implications of a hotly debated government policy would best be considered a​ _________.

positive normative normative​ question, since it deals with a subjective issue based on personal preferences.

HW-CH4 Suppose the price of bananas increases and the demand for oranges increases. You determine that these goods must be _______________. A nasty fungus sharply reduces the supply of sugar cane. What will happen to the equilibrium price and quantity of both sugar and tea as a result of this​ event? ​1.) Using the line drawing​ tool, illustrate the impact of the reduced supply of sugar cane on the market for sugar by either drawing a new supply or demand curve. Label the new curve either ​'S2​' or ​'D2​'. ​2.) Using the point drawing​ tool, illustrate the new equilibrium in the sugar market. Label this point​ 'A'. Given that tea and sugar are complements and that the previous graph illustrated how the nasty fungus led to an increase in the price of sugar​, graph the​ following: ​1.) Using the line drawing​ tool, illustrate the impact of the increase in the price of sugar on the market for tea by either drawing a new supply or demand curve. Label the new curve either ​'S2​' or ​'D2​'. ​2.) Using the point drawing​ tool, illustrate the new equilibrium in the tea market. Label this point​ 'B'.

substitutes Graph in Homework CH4 folder (Question 13) Graph in Homework CH4 folder (Question 13)

QUIZ-2 Economists have long debated the causes of the slowdown in productivity​ (GDP per hour​ worked) in the United States during the 1970s and 1980s. This slowdown can be clearly seen in the following two​ exhibits: Exhibit 1 and Exhibit 2. Based on the data in Exhibit​ 1, indicate which factors are most responsible for the overall decline in the annual growth rate of GDP per hour worked in these two decades. *Factor* Physical capital Human capital Technology *Responsible for Decline* Not resposible responsible responsible An interesting study of the slowdown has been done by Yale economist William​ Nordhaus, which is summarized at ​http://www.nber.org/digest/jun05/w10950.html. The two main conclusions that Nordhaus reaches concerning the 1970s slowdown are​ ___________ and​ ___________. Which industries were most affected by the​ slowdown? ​(Check all that apply​.) What is the major reason for these industries being the most​ affected?

the 1970s energy crises accounted for approximately ​ two-thirds of the slowdown.; the productivity slowdown was not unique. Oil and gas extraction. Auto repair. Pipelines. The energy crises in the 1970s.

HW-CH2 Suppose that you are on a date with an economics​ major, and you want to impress them by talking about economics. Your date challenges you to state your knowledge of positive and normative questions. You say that positive questions ask ____________________ and normative questions ask ____________________. Which of the following examples do you provide as a normative​ question? Which of the following do you provide as a positive​ question?

what is or what will be; what ought to be Should welfare be​ repealed? How much is the national​ debt?

QUIZ-1 This chapter stressed the importance of using appropriate samples for empirical studies. Consider the following two problems in that light. You are given a class assignment to find out if​ people's political leanings affect the newspaper or magazine that they choose to read. You survey two students taking a political science class and five people at a coffee shop. Almost all the people you have spoken to tell you that their political affiliations do not affect what they read. Based on the results of your​ study, you conclude that there is no relationship between political inclinations and the choice of a newspaper. Is this a valid​ conclusion? Why or why​ not? Your uncle tells you that the newspaper or magazine that people buy will depend on their age. He says that he believes this​ because, at​ home, his wife and his teenage children read different papers. Do you think his conclusion is​ accurate? _______________________, because the sample set is _________________ and the people surveyed _____________ selected randomly.

​No, because the newspapers that people read could affect their political inclinations. No; too small; were not

QUIZ-1 *​Chloe's Demand Schedule* Price ($/gallon): $6 5 4 3 2 1 Quantity Demanded (gallons/year): 50 100 150 200 250 300 *GRAPH IN QUIZ 1 FOLDER (QUESTION 12)*​ Chloe's willingness to pay for her 51st gallon of gasoline is ​$_________ and her willingness to pay for her 301st gallon of gasoline is $_________. This is an example of _________________. If you drew​ Chloe's demand​ curve, using the demand schedule​ above, what would you notice about​ Chloe's marginal benefit curve and the demand​ curve? The two curves would be __________________.

$5.98; $0.98 diminishing marginal benefit the same

QUIZ-2 Consider the returns to entrepreneurship and the cost of​ entrepreneurship, as illustrated in the graph on the right. Assume equilibrium is initially at point E1. Now suppose property rights are strengthened. Show the effect of stronger property rights on the graph. ​1.) Using the line drawing tool​, graph either a new​ return-to-entrepreneurship curve ​(R2​), a new​ cost-of-entrepreneurship curve ​(C2​), or both. Label your​ curve(s) appropriately. ​2.) Using the point drawing tool​, indicate the new equilibrium. Label your point ​'E2​.'

Graph in Quiz 2 folder (Question 18)

HW-CH4 The Thai government bought rice from its farmers at a price that was 40 percent higher than the prevailing market price in the country. How is this likely to affect other buyers in the domestic market for​ rice? Given the​ government's plan to purchase any amount of rice at a price that is 40 percent above the market​ price, on the graph to the​ right, illustrate the quantities produced and consumed if the market price is initially​ $5 and the​ new, higher price is​ $7. ​1.) Using the point drawing​ tool, depict the quantity of rice that will be demanded by domestic consumers when the price is​ $7. Label your point​ 'A'. ​2.) Using the point drawing​ tool, depict the quantity of rice that will be supplied by farmers when the price is​ $7. Label your point​ 'B'. ​3.) Using the​ double-sided arrow drawing​ tool, depict the gap between the quantity supplied and quantity demanded when the price is​ $7. Using the graph to the​ right, the​ government's plan to buy rice from farmers at​ $7 will result in domestic consumers purchasing​ ________ million tons and the government purchasing​ _________. Assume this scheme allows the government to build up large supplies of rice. Considering that Thailand is one of the​ world's largest rice​ exporters, if the government decides to sell the rice in the international​ market, the world supply curve would shift ___________________, causing the world price to _______________.

It will drive the price above the market​ price, resulting in a higher price for domestic consumers and therefore a smaller quantity demanded. Graph in Homework CH4 folder (Question 14) ​3; an excess supply of 4 million tons. rightward; fall

HW-CH3 Determine if the following statements better describe optimization in levels or optimization in differences. John is attempting to decide on a movie. He determines that the new Batman movie provides him with​ $5 more of a net benefit than the new Spiderman movie. Marcia finds that the net benefit of flying from Chicago to Honolulu on a​ non-stop United Airlines flight is​ $400, and the net benefit for the same trip flying on a​ one-stop American Airlines flight is​ $200. Nikki decided to take the first available parking space as she entered the student lot. She felt that the first available space had a​ $5 premium compared with all other possible spaces since she did not want to risk being late for her exam. Reagan determined that the net benefit of taking the combination of two lecture courses and an online lecture course was​ $100. The same three courses online gave her a net benefit of​ $80, and all three in a​ lecture-based format gave her a net benefit of​ $90.

Optimization in​ differences, since he is calculating the change in net benefits between alternatives. Optimization in​ levels, since she is comparing the net benefits between alternatives. Optimization in​ differences, since she is calculating the change in net benefits between alternatives. Optimization in​ levels, since she is comparing the net benefits between alternatives.

Quiz-3 Which of the following best explains why the labor supply curve slopes​ upward? Which of the following does *not* cause the labor supply curve to​ shift?

When wages​ increase, the opportunity cost of not working​ increases, leading people to seek more work hours. Changes in the wage rate paid to workers.

HW-CH2 As the text​ explains, it can sometimes be very difficult to sort out the direction of causality. Causation occurs when there is​ ____________. Demonstrate causation or correlation with the following​ examples: More ____________ and ____________ crime rates is likely to be ______________. More _______________ and ______________ employment levels is likely to be _________________. The length of​ women's skirts and stock market performance is likely to be __________________.

a logical​ cause-and-effect relationship. police officers; lower; causation economic growth; higher; causation correlation

QUIZ-1 Economics is divided into two broad fields of​ study: microeconomics and macroeconomics. Microeconomics studies​ _________, while macroeconomics studies​ _________. Policy decisions made by the government are analyzed by​ _________. A policy such as pollution regulations on steel plants would be studied under ______________________, since it deals with __________________

a small piece of the overall​ economy; the economy as a whole. both microeconomics and macroeconomics. microeconomics; a small part of the overall economy

HW-CH1 Identify the cause and effect in the following​ examples: Lower infant mortality is ____________ and an improvement in nutrition is ________________. A surge in cocoa prices is _________________ and a pest attack on the cocoa crop is ________________.

an effect; the cause an effect; the cause

HW-CH2 To say that economists use the scientific method means that they are using​ ___________. How do economists distinguish between models that work and those that​ don't?

an ongoing process to develop models of the world and then test and evaluate those models. They test their models against​ real-world data.

HW-CH4 Lobsters are plentiful and easy to catch in August but scarce and difficult to catch in November. In​ addition, vacationers shift the demand for lobsters further to the right in August than in any other month. Given this​ information, we know that​ _________ is/are higher in August than in other months. On the right is a graph of the supply and demand for lobsters in August. Compare the equilibrium price and quantity of lobsters in August to the equilibrium price and quantity of lobsters in November. ​1.) Using the line drawing​ tool, depict the supply and demand for lobsters in November. Label the new demand curve ​'DN​' and label the new supply curve ​'SN​'. ​2.) Using the point drawing​ tool, depict the equilibrium price and quantity of lobsters in November. Label your point​ 'N'. When comparing the equilibriums in the lobster market for August and​ November, the equilibrium quantity is​ ______ in November than in​ August, while the equilibrium price is​ ______.

both supply and demand. Graph in Homework CH4 folder (Question 11) ​lower; higher,​ lower, or unchanged.

HW-CH3 You are taking two courses this​ semester, biology and chemistry. You have quizzes coming up in both classes. The table below shows your grade on each quiz for different numbers of hours studying for each quiz. For​ instance, the second row implies that one hour of studying for Chemistry will generate an expected grade of 73 on​ Chemistry, whereas one hour of studying for Biology will generate an expected grade of 65 on Biology. Hours of Study 0 1 2 3 Chemistry 65 73 79 83 Biology 58 65 70 73 Your goal is to maximize your average grade on the two quizzes. Use the idea of optimization in differences to decide how much time you would spend studying for each quiz if you had a total of​ 1, 2, or 3 hours to prepare for each exam. If you had 1​ hour, you should study ________________. If you had 2​ hours, then you should study __________ hour(s) for chemistry and ____________ hour(s) for biology. If you had 3​ hours, then you should study ____________ hour(s) for chemistry and _____________ ​hour(s) for biology.

chemistry 1; 1 2;1

HW-CH4 Given the supply and demand curves on the​ right, when the price of the good is​ $20, we say that the market is in __________________. At this​ price, we know that the quantity supplied is _________________ the quantity demanded. Using the graph on the​ right, illustrate the impact of an increase in the price of the good from​ $20 per unit to​ $30 per​ unit, assuming everything else in the economy remains the same. ​1.) Using the point drawing​ tool, place a point at the quantity supplied when the price is​ $30 per unit. Label this point​ 'A'. ​2.) Using the point drawing​ tool, place a point at the quantity demanded when the price is​ $30 per unit. Label this point​ 'B'. If the only change in the market was that the price increased to​ $30, then we know that the quantity supplied will be _______________ the quantity​ demanded, resulting in _____________, which is also known as _________________. Suppose instead that the price of the good dropped below the competitive equilibrium price to a price of​ $15 per unit. If this were to​ occur, then the quantity supplied would be _______________ the quantity​ demanded, resulting in _______________, which is also known as _________________.

competitive equilibrium; equal to Graph in Homework CH4 folder (Question 12) greater than; an excess supply; a surplus less than; an excess demand; a shortage

QUIZ-3 If an economic shock decreases labor​ demand, equilibrium employment______________and real GDP _____________. If wages are​ flexible, the decrease in employment and real GDP will be _____________________the decrease if wages are rigid. When workers are laid​ off, what happens to physical​ capital?

falls; falls smaller than Physical capital becomes less​ productive, leading firms to reduce capacity utilization.

QUIZ-3 Banks and other financial institutions of an economy are in the business of channeling funds from suppliers of financial capital to users of financial capital. This process is known as​ ____________. The two basic types of financial capital are​ ____________.

financial intermediation. credit and equity.

QUIZ-1 If the number of people over the age of 16 in the country increased significantly​, then the demand for the Toyota Rav4 SUV would​ __________. If people expect the price of SUVs to decrease in the future​, then the demand for the Toyota Rav4 SUV would​ __________.

increase (shift right). decrease (shift left).

HW-CH2 Oregon expanded its Medicaid coverage in 2008. Roughly​ 90,000 people applied but the state had funds to cover only an additional​ 30,000 people. The state used a lottery to determine who would receive this free health care insurance from Medicaid. How could you use the Oregon experience to estimate the impact of increased access to health care on health​ outcomes? The Oregon experience is a _____________________ . One might analyze the data as​ follows: gather and analyze the data on the health care outcomes for the two groups to determine if ___________________________.

natural experiment; free health care results in better health outcomes

QUIZ-1 The statement that the United States has a lower unemployment rate than Spain is a ______________ statement since it describes what people________________. The statement that the United States has an unemployment rate that is too high is a _______________ statement since it describes what people ______________________. The ethical implications of a hotly debated government policy would best be considered a​ _________.

positive; actually do normative; ought to do normative​ question, since it deals with a subjective issue based on personal preferences.

QUIZ-1 Economists refer to the process of summing the individual supply curves to find the market supply curve as aggregation. Aggregation consists of fixing the _______________ and adding up the ____________ by each firm. *Pizza​ Hut's Supply Schedule* Price ($/pizza): $1 2 3 4 5 *Quantity Supplied (pizzas)* 150 200 250 300 350 *Domino's Pizza's Supply Schedule* Price ($/pizza): $1 2 3 4 5 Quantity Supplied (pizzas): 300 400 500 600 700 Given the supply schedules above for Pizza Hut and​ Domino's Pizza, complete the total supply schedule for these two firms. *Total Supply Schedule* Price ($/pizza): $1 2 3 4 5 Quantity Supplied (pizzas): _____________ _____________ _____________ _____________ _____________ The graph to the right illustrates Pizza​ Hut's and​ Domino's Pizza's supply curves. ​1.) Using the multipoint curve drawing​ tool, plot each point for the market supply curve and label the curve appropriately. ​

price of the good; quantity supplied 450 600 750 900 1050 Graph in Quiz 1 folder (Question 17)

QUIZ-1 You and your​ friend, Jim, have just moved out of your dorm and into a new apartment. Both of you decide that you need to get a couch. Jim thinks you should get a new one from a furniture store nearby. You feel​ that, given your​ budget, it is best to buy a used one. Your other options are to buy one online or get a couch​ custom-made at the same furniture store. How would you arrive at an optimal solution​ here? Assume that your opportunity cost of time is​ $5 per hour. You and Jim would need to consider​ ___________. Now suppose that you have a summer job that pays you​ $15 per hour. How would your analysis​ change? With a​ $15-per-hour summer​ job, _______________ would increase.

the direct costs and the indirect opportunity cost of your time required to shop. the opportunity cost of your time

HW-CH1 The opportunity cost of an activity is a measure of _______________ when you do that activity. ​Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following​ order: going to​ class, sleeping in​ late, going to work​ early, getting​ lunch, going to the gym to​ exercise, and watching television. If you decide to go to​ class, then what do we know about the opportunity cost of your​ decision?

what is given up The opportunity cost would be sleeping in​ late, since it was your​ next-best option.

HW-CH2 Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your research has uncovered the following​ data: Price of Crude Oil $80 90 100 110 GDP 5,000 4,700 4,500 4,300 ​# of New Mustaches Grown 3,000 2,000 5,000 1,000 Price of Gasoline $2.75 3.00 3.25 3.50 Your client has asked you to plot crude oil prices and gasoline prices on a graph. The​ cause, or independent​ variable, should be plotted on the _____________ and the​ effect, or dependent​ variable, should be plotted on the _____________. ​1.) Using the multipoint curve drawing​ tool, plot crude oil prices against gasoline prices on the graph to the right. There is a ______________correlation between oil prices and gasoline prices.

x-axis; y-axis Graph in Homework CH2 folder (Question 9) positive

HW-CH3 There is a proverb​ "anything worth doing is worth doing​ well." Do you think an economist would agree with this​ proverb?

​No, because the marginal cost of extra effort may be greater than the marginal benefit.

QUIZ-2 The following table lists GDP per capita from 1970 to 2010 for South Korea and the United States. As you can ​see, both grew substantially over that​ 40-year period. Year: 1970 1980 1990 2000 2010 South Korea GDP per Capita: 317 1,778 6,642 11,948 22,151 U.S. GDP per Capita: 5,247 12,598 23,955 36,467 48,358 Data from the World​ Bank, World Development Indicators On the right is a blue line showing GDP per capita for the United States in a diagram using a nonproportional scale. Complete this diagram as​ follows: ​1) Use the point tool to plot the five data points for South Korea. Do not worry that you​ can't vertically position your points accurately. You only need to be close. ​2) Use the multipoint curve tool to connect those points to produce a line graph similar to the one shown for the United States. Label this line graph​ 'SK'. Now appearing on the right is a red line showing GDP per capita for South Korea in a diagram using a proportional​ scale, that​ is, a scale where equal distances represent equal percentage changes. Complete this diagram as​ follows: ​1) Use the point tool to plot the five data points for the United States. Do not worry that you​ can't vertically position your points accurately. You only need to be close. ​2) Use the multipoint curve tool to connect those points to produce a line graph similar to the one shown for the South Korea. Label this line graph​ 'US'. Interpret the differences you see in the two graphs.

Graph in Quiz 2 folder (Question 5) Graph in Quiz 2 folder (Question 5) A. The first graph implies that South Koreans are worse off relative to the US while the second graph says their relative position has improved. B. The first graph emphasizes the absolute difference in GDP per capita while the second highlights the relative difference. C. The second graph indicates that GDP per capita in South Korea has grown more rapidly over the covered period than it has in the United States.

HW-CH2 Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client would like your team to perform a study on​ customers' gasoline purchasing habits when they notice price increases. You suggest that the team​ _____________. Debbie, a member of your​ team, advocates finding random people and then breaking them up into two groups. Group A would be shown an increase in the price of gas before taking the survey. Group B would be told there was no increase in the price of gas before taking the survey.​ Troy, another member of your​ team, recommends finding two groups of people already sorted by whether or not they have recently noticed an increase in the price of gas. Debbie's method is a ________________ and​ Troy's method is a ________________. Group A is the _________________ and Group B is the ___________________.

design and execute an experiment. controlled experiment ;natural experiment treatment group; control group

QUIZ-3 The Conference Board publishes data on Business Cycle Indicators​ (BCI). The Composite Index of Leading Economic Indicators is one of the three components of the BCI. Changes in leading economic indicators usually precede changes in GDP. Some of the variables tracked by the index are listed below. i. The average weekly hours worked by manufacturing workers ii. The average number of initial applications for unemployment insurance iii. The amount of new orders for capital goods unrelated to defense iv. The amount of new building permits for residential buildings v. The​ S&P 500 stock index vi. Consumer sentiment Examine each variable and explain whether it is likely to be positively​ correlated, negatively​ correlated, or uncorrelated with real GDP. The average weekly hours worked by manufacturing workers is likely to be________________ with real GDP. The average number of initial applications for unemployment insurance is likely to be________________ with real GDP. The amount of new orders for capital goods unrelated to defense is likely to be__________________ with real GDP. The amount of new building permits for residential buildings is likely to be ________________ with real GDP. The​ S&P 500 stock index is likely to be ____________________ with real GDP. Consumer sentiment is likely to be _________________ with real GDP.

positive correlation negative correlation positive correlation positive correlation positive correlation positive correlation

QUIZ-2 Suppose the return and cost of entrepreneurship curves are described by the following equations​ (with numbers measured in the​ thousands): R=600 - 100N C=200 + 150N where R=returns to​ entrepreneurship, C-cost of​ entrepreneurship, and N=number of entrepreneurs. Based on the equations​ given, the​ cost-of-entrepreneurship curve differs from the one drawn in the chapter because it is​ ____________. The equilibrium number of entrepreneurs is N=_____________ thousand. The equilibrium returns to entrepreneurship is R=$________________thousand. The government enacts a license fee of ​$100 thousand to file the paperwork necessary to start a firm. The new equilibrium number of entrepreneurs is N=____________thousand The new equilibrium returns to entrepreneurship is R=$_______________ thousand.

​upward-sloping, indicating the opportunity cost of entrepreneurship increases with the number of entrepreneurs. 1.6 $440 1.2 $480

HW-CH2 A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus.​ However, you observe that some people still do not take the bus even after the price of a ticket fell. Is the model​ incorrect? How would you test this​ model?

​​No, because it predicts the outcome of increased bus ridership on average. You should run a natural experiment by analyzing bus ridership and price changes.

QUIZ-3 According to the quantity theory of​ money, what must the growth rate of the money supply be given the following​ information? The growth rate of real GDP is 1.0​%. The growth rate of nominal GDP is 3.8​%. The nominal interest rate is 5.6​%. The real interest rate is 2.8​%. The money supply​ (M2) is ​$8,591 ​(in billions) According to the quantity theory of​ money, the growth rate of the money supply must be ______________%. According to the quantity theory of​ money, what is the inflation​ rate? Use the information given above and calculate the inflation rate. According to the quantity theory of​ money, the inflation rate is ______________%.

3.8 2.8

HW-CH1 Which of the following is true regarding the concept of​ causation? Which of the following is NOT an example of​ causation?

It describes how one event can bring about change in another. Driving without car insurance will lead to getting into an accident.

HW-CH4 Market demand is derived by​ __________. Does the shape of the market demand curve differ from the shape of an individual demand​ curve?

fixing the price and adding up the quantities that each buyer demands. ​No, they both tend to be​ downward-sloping curves.

QUIZ-1 You have the option to play tennis or a round of golf​ (but not​ both). The tennis match requires you to take 2 hours off from work and the round of golf requires you to take 4 hours off from work. Playing tennis has value to you equal to ​$60​, while golf has value to you equal to ​$95. Tennis courts are publicly available at no​ cost, but golf costs ​$40 per round. Suppose your wage from working is ​$6 per hour. The net benefit from playing tennis is ​$__________ and the net benefit from playing golf is ​$_________________. Therefore, you should play _______________.

$48; $31 tennis

QUIZ-2 Suppose the country of Burondo is one of the poorest countries in the world. Its economy is heavily reliant on income from the export of oil. There are only two​ oil-extracting companies in Burondo. Both are owned by the government. A large part of the earnings from oil exports goes toward financing the​ president's lifestyle and entourage. Burondo has not had a single democratic election ever since it gained independence 50 years ago. Although Burondo is said to have abundant oil​ resources, only a small proportion is extracted every year because the extraction process is so inefficient. Transporting goods in and out of the country is​ costly, as Burondo is surrounded by lofty mountain ranges. School enrollment in this country is very low and as a​ result, most of the adult population is illiterate. Life expectancy is also quite low. Agriculture is collectivized in Burondo and so food shortages are common in the country. Using the information​ given, distinguish between the fundamental and proximate causes of prosperity​ (or its​ absence) in Burondo. Proximate causes of​ Burondo's lack of prosperity are​ ___________. ​(Check all that apply.​) Fundamental causes of​ Burondo's lack of prosperity are​ ____________. ​(Check all that apply.​)

B. the workforce is not skilled. C. the oil extraction process is inefficient. B. the government is an extractive political institution. D. the farmers have limited incentive to bring their produce to market. E. the topography is not favorable.

QUIZ-3 As used in​ finance, the term maturity refers to the​ ____________. For banks and other financial​ institutions, the discrepancy between the​ short-term maturities of their deposits and the​ long-term maturities of their assets is referred to as​ ____________.

time until a debt must be repaid. a maturity mismatch.

HW-CH2 What is your response to his​ question? Your client becomes critical of your​ "sloppy" technique of using a model that does not include all factors. What is the most appropriate reply to this​ criticism? He is still unconvinced about the reliability of using economic models to make business decisions. You can answer this concern by sharing that you will confirm the accuracy of the model by _______________ with _________________.

​No, the model is a simplified representation of reality. Economic models are meant to be approximations that predict what happens in most circumstances. testing its predictions; empirical data

HW-CH1 Economics, anthropology,​ psychology, sociology, and political science all study human behavior. Economics differs from these other social sciences because it also addresses these three key​ concepts: ______________.

​Optimization, equilibrium, and empiricism.

QUIZ-1 Consider the following three​ statements: *Statement​ 1:* You can either stand during a college football game or you can sit. You believe that you will see the game very well if you stand and others sit but that you will not be able to see at all if you sit and others stand. You therefore decide to stand. *Statement 2​:* Your friend tells you that he expects many people to stand at football games. *Statement​ 3:* An economist studies photos of many college football games and estimates that 75 percent of all fans stand and 25 percent sit. Which of these statements deals with​ optimization, which deals with​ equilibrium, and which deals with​ empiricism? Explain. Statement 1 deals with​ ____________. Statement 2 deals with​ ____________. Statement 3 deals with​ ____________.

​optimization, because you are choosing your best feasible option. ​equilibrium, because your friend presumes everyone is behaving optimally. ​empiricism, because it describes behavior using​ real-world data.

Quiz1 QUIZ-1 The Law of Supply states​ that, in most​ cases, the quantity supplied of a good​ ___________ when the price of the good rises. This means we would expect a typical supply curve to​ be___________.

​rises; upward-sloping.