Micro Econ Chapter 1

The diagram to the right illustrates a hypothetical demand curve representing the relationship between price​ (in dollars per​ unit) and quantity ​(in 1,000s of units per unit of time​). Total revenue is $___ ​(Enter your response as an​ integer.)

$1625 Areas that form rectangles and triangles on graphs can have important economic meaning. The formula for the area of a rectangle​ is: Area of a rectangle​ = Base×Height. For the diagram​ below, because the curve is a demand​ curve, the area of the rectangle is the​ firm's total revenue. Total revenue is ​$1,625,000. We can calculate total revenue for this price and quantity combination by multiplying price ​($65​) and quantity ​(25—in ​1,000s of​ units) and expressing the correct number of units.

The diagram to the right illustrates a hypothetical demand curve representing the relationship between price​ (in dollars per​ unit) and quantity​ (in 1,000s of units per unit of​ time). The area of the triangle shown on the diagram is ​$___ ​(Enter your response as an​ integer.)

$684500 Areas that form triangles on graphs can have important economic meaning. The formula for the area of a triangle​ is: Area of a triangle​ = ½ Base​ × Height. For the diagram​ below, because the curve is a demand​ curve, the area of the triangle is a specific dollar amount. The area of the triangle represents ​$684,500. We can calculate the area of the triangle by multiplying the base ​(68 − 31 — in​ 1,000s of​ units) and height ​($59−​$22​) and then divide by 2.

The diagram to the right shows a hypothetical demand curve for apples. The slope of this curve is ___. ​(Enter your response rounded to two decimal places. Include a minus sign if​ appropriate.)

-1.17 y2-y1/x2-x1 The slope of a line tells us how much the variable we are measuring on the y​-axis changes as the variable we are measuring on the x​-axis changes. We can use the Greek letter delta ​(D​) to stand for the change in a variable. The slope is sometimes referred to as the rise over the run.​ So, we have several ways of expressing​ slope: Slope =Change in the value on the vertical axisChange in the value on the horizontal axis=ΔyΔx=RiseRun. The larger the value of the slope​ (ignoring the negative​ sign), the steeper the line will be. The smaller the value of the​ slope, the flatter the line will be.

Calculating percentage change growth. Initial value = 168, new value = 101, percentage change = ___

-39.88%

Calculating percentage change growth. Initial value = 5,058, new value = 11,851, percentage change = ___

134.30%

Refer to the graph on the right: What percentage of the marbles are​ blue? ___​% ​(Enter your response as a percent rounded to one decimal​ place.)

20.4% Blue marbles/total marbles

Calculating percentage change growth. Initial value = 163, new value = ___, percentage change = 32.52%

216.01

Economists often are interested in percentage change from one period to the next. The percentage rate of change of gross domestic product​ (GDP) is an important macroeconomic variable. If in 2010 GDP was​ $11,150 billion​ dollars, and GDP increased to ​$11,793 billion in​ 2011, what is the growth rate of the U.S. economy in​ 2011? ___​%. (Enter your response rounded to one decimal​ place.)

5.8% (Value in the second period - value in the first period)/ Value in the first period) X 100

Calculating percentage change growth. Initial value = 67, new value = 106, percentage change = ___

58.2% New number - original number; divide by original number; multiply by 100

The bar graph to the right illustrates hypothetical data for the market share for the United States automobile market. The percentage of the U.S. market that U.S. auto firms control is ___​%. ​(Enter your response as an​ integer.)

60% Graphs are used to illustrate key economics ideas. Graphs appear not just in economics textbooks but also on Web sites and in newspaper and magazine articles that discuss events in business and economics. Why the heavy use of​ graphs? Because they serve two useful​ purposes: (1) They simplify economic​ ideas, and​ (2) they make the ideas more concrete so they can be applied to​ real-world problems. Economic and business issues can be​ complicated, but a graph can help cut through complications and highlight the key relationships needed to understand the issue. A bar graph is a diagram utilizing rectangular bars with lengths proportional to the values that they represent.

The pie chart to the right illustrates hypothetical data for the market share for the United States automobile market. The percentage of the U.S. market that U.S. auto firms control is ___​%. (Enter your response as an​ integer.)

60% Graphs are used to illustrate key economics ideas. Graphs appear not just in economics textbooks but also on Web sites and in newspaper and magazine articles that discuss events in business and economics. Why the heavy use of​ graphs? Because they serve two useful​ purposes: (1) They simplify economic​ ideas, and​ (2) they make the ideas more concrete so they can be applied to​ real-world problems. Economic and business issues can be​ complicated, but a graph can help cut through complications and highlight the key relationships needed to understand the issue. A pie chart is a circular diagram divided into slices which illustrate the relative magnitudes of the variables.

In your economics​ class, you scored a 70 on the first​ quiz, a 88 on the second​ quiz, and an 77 on the third quiz. Your average quiz grade is ___ (Enter your response rounded to one decimal​ place.)

78.3

Economics is a social science because

A. it applies the scientific method to the study of the interactions among individuals. B. it considers human behavior—particularly ​decision-making behavior. C. it is based on studying the actions of individuals. D. all of the above. Economics is a social science because it applies the scientific method to the study of the interactions among individuals. Because economics is based on studying the actions of​ individuals, it is a social science. As a social​ science, economics considers human behavior—particularly ​decision-making behavior—in every​ context, not just in the context of business.

When we graph the relationship between two​ variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing​ so, however, can lead to incorrect conclusions. Reasons for drawing incorrect conclusions about cause and effect include ___

A. reverse causality. B. an omitted variable. C. both a and b. When we graph the relationship between two​ variables, we often want to draw conclusions about whether changes in one variable are causing changes in the other variable. Doing​ so, however, can lead to incorrect conclusions. One reason for drawing an incorrect conclusion is an omitted variable. An omitted variable is one that affects other​ variables, and its omission can lead to false conclusions about cause and effect. A related problem in determining cause and effect is known as reverse causality. The error of reverse causality occurs when we conclude that changes in variable X cause changes in variable Y ​when, in​ fact, it is actually changes in variable Y that cause changes in variable X.

A hypothesis in an economic model is

A. tested before it can be accepted​ (or not​ rejected). B. a statement that may be either correct or incorrect about an economic variable. C. usually about a causal relationship. D. all of the above. A hypothesis in an economic model is a statement that may be either correct or incorrect about an economic variable. An economic variable is something measurable that can have different values. An economic hypothesis is usually about a causal relationship. Before accepting a​ hypothesis, we must test it

___ occurs when production is in accordance with consumer preferences.

Allocative efficiency Allocative efficiency A state of the economy in which production is in accordance with consumer​ preferences; in​ particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.

Societies organize their economies in two main ways to answer the three questions of​ what, how, and who. A society can have a ___ economy in which the government decides how economic resources will be allocated. Or a society can have a ___ economy in which the decisions of households and firms interacting in markets allocate economic resources.

Centrally planned, market Centrally planned economy An economy in which the government decides how economic resources will be allocated. Market economy An economy in which the decisions of households and firms interacting in markets allocate economic resources. Mixed economy An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources. It organize their economies in two main ways to answer the three questions of​ what, how, and who.

___ decide(s) what goods and services will be produced.

Consumers, firms, and government ​Consumers, firms, and the government face the problem of scarcity by trading off one good or service for another. Each choice made comes with an opportunity cost measured by the value of the best alternative given up.

The diagram to the right represents a demand curve for apples. The original demand curve is D1. If a factor other than price which affects demand​ changes, causing demand to increase​, the resultant demand curve is represented by ___

D2 (the line shifted right of D1) The demand curve (D1​) was drawn holding the all other factors that affect demand constant. If a factor that affects demand​ (other than​ price) causes demand to​ increase, the result on the graph will be to shift the line representing the demand curve to the right (D2​). ​Similarly, if a factor that affects demand​ (other than​ price) causes demand to​ decrease, the result on the graph will be to shift the line representing the demand curve to the left (D3​).

___ is the study of the choices people make to attain their​ goals, given their scarce resources.

Economics

In the United​ States, who receives the goods and services produced depends largely on ___

How income is distributed In the United​ States, who receives the goods and services produced depends largely on how income is distributed. Individuals with the highest income have the ability to buy the most goods and services.

Which of the following covers the study of topics such as inflation or​ unemployment?

Macroeconomics

A ___ economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.

Mixed Centrally planned economy An economy in which the government decides how economic resources will be allocated. Market economy An economy in which the decisions of households and firms interacting in markets allocate economic resources. Mixed economy An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.

In the diagram to the​ right, the curve labeled​ "S" is apparently​ ___, while the curve labeled​ "D" is apparently​ ___

Nonlinear, linear

​Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions:

One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced?

The diagram to the right illustrates a supply curve. As with all supply ​curves, this​ curve's slope is

Positive We can use graphs to show the relationships between any two variables. Sometimes the relationship between the variables is negative​, meaning that as one variable increases in​ value, the other variable decreases in value. The relationship between two variables can also be positive​, meaning that the values of both variables increase or decrease together. The demand curve for apples above illustrates a negative relationship. The supply curve for apples above illustrates a positive relationship. Demand curves are negative, supply curves are positive

______ is concerned with what is, and _____ is concerned with what ought to be. Economists is about _____, which measures the costs and benefits of different courses of action.

Positive analysis, normative analysis, positive analysis Positive analysis is concerned with what is​, and normative analysis is concerned with what ought to be. Economics is about positive​ analysis, which measures the costs and benefits of different courses of action.

___ occurs when a good or service is produced at the lowest possible cost.

Productive efficiency

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls ___

Scarcity

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational?

When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality Rationality is the assumption economists make that consumers and firms use all available information as they act to achieve their goals. Rational individuals weigh the benefits and costs of each​ action, and they choose an action only if the benefits outweigh the costs.

On the fourth​ quiz, you scored an 83. Did the fourth quiz raise your​ average?

Yes

A market is a group of ___ of a good or service and the institution or arrangement by which they come together to trade.

buyers and sellers

The slope of a curve is defined as the ___ divided by the ___ ​(Assume the Y values are on the vertical axis and the X values are on the horizontal​ axis)

change in y/change in x

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.

Firms choose how to produce the goods and services they sell. In many​ cases, firms face a​ trade-off between using more workers or using more machines. For​ example, ___

many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines.

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. Economists use the word marginal to mean an extra or additional benefit or cost of a decision. Economists reason that the optimal decision is to continue any activity up to the point where the marginal benefit equals the marginal cost—in ​symbols, where MB​ = MC. Marginal analysis involves comparing marginal benefits and marginal costs.

The diagram to the right illustrates a very important relationship in economics between two​ variables: the price of a good and the quantity demanded of that good. The two variables in this diagram​ are:

price​ (dollars per​ bushel) on the vertical axis and quantity​ (bushels per​ week) on the horizontal axis. We often use graphs to show the relationship between two variables. A graph showing the relationship between the price of a good and the quantity of the good demanded at each price is called a demand curve. In the above​ diagram, the variable on the vertical axis is the price of the good and the variable on the horizontal axis is the quantity of the good demanded.

Equity is ___

the fair distribution of economic benefits. Equity is harder to define than​ efficiency, but it usually involves a fair distribution of economic benefits. For some​ people, equity involves a more equal distribution of economic benefits than would result from an emphasis on efficiency alone.

Opportunity cost is ___

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

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives,

the policies are consistent with economic incentives. Economists emphasize that consumers and firms consistently respond to economic incentives. When a consumer or a firm responds to economic​ incentives, they choose more over less. If everything else is​ equal, consumers and firms choose the option that provides the most money.​ So, ceteris paribus​, ​(everything else​ equal) people choose the option that returns the highest net monetary benefits.

Macroeconomics is ___

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

Any model is based on making assumptions because

we cannot analyze an economic issue unless we reduce its complexity. B. models have to be simplified to be useful. C. both a and b. Economic models make behavioral assumptions about the motives of consumers and firms. Economists assume that consumers will buy the goods and services that will maximize their​ well-being or their satisfaction.​ Similarly, economists assume that firms act to maximize their profits. These assumptions are simplifications because they do not describe the motives of every consumer and every firm.

Which of the following shows a positive nonlinear ​relationship? (assume values of x>0​)

y = -19 + sqrt(x)