Microeconomics Chapter 1

(picture)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 ....

$112,500

(picture) The slope of a curve is defined as the ΔY divided by ΔX. ​(Assume the Y values are on the vertical axis and the X values are on the horizontal​ axis) Suppose your business operates a machine at a cost of $200 per day whether it is used or not plus ​$25 for each hour it is used. Use the line drawing tool to draw the daily cost curve for this machine assuming an 8 hour day. Label the curve​ 'cost'. The slope of the cost curve is...

$25 per hour

(picture) Complete the following​ table: ​(Enter your responses rounded to two decimal​ places.)

...

(picture) Refer to the graph on the right What percentage of the marbles are​ blue? What fraction of the marbles are​ yellow? (fraction) What fraction of the marbles are​ red? (decimal)

19.8%, 6/43, .22

(picture)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....

65%

Which of the following statements about a hypothesis is​ correct? A. A hypothesis is a statement that could in principle turn out to be incorrect. B. To be called a​ hypothesis, a statement must first be shown to be correct. C. A hypothesis is another name for a model. D. A hypothesis will always incorporate a value judgment.

A. A hypothesis is a statement that could in principle turn out to be incorrect.

Which of the following best describes​ scarcity? A. Unlimited wants exceed the limited resources available. B. Markets cannot properly allocate resources. C. Prices of goods are very high. D. Wants cannot be fulfilled and thus all goods must be rationed.

A. Unlimited wants exceed the limited resources available.

Productive efficiency means that A. a good or service is produced at the lowest possible cost. B. a good or service is produced as quickly as possible. C. every good or service is distributed fairly. D. every good or service is produced up to the point where marginal benefit is equal to marginal cost.

A. a good or service is produced at the lowest possible cost.

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when A. marginal benefit equals marginal cost. Your answer is correct. B. marginal benefit is maximized. C. marginal benefit is greater than marginal cost. D. marginal cost is zero.

A. marginal benefit equals marginal cost

(picture) 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: A. price​ (dollars per​ bushel) on the vertical axis and quantity​ (bushels per​ week) on the horizontal axis. B. price​ (bushels per​ week) on the vertical axis and quantity​ (dollars per​ bushel) on the horizontal axis. C. price​ (dollars per​ bushel) on the horizontal axis and quantity​ (bushels per​ week) on the vertical axis. D. none of the above.

A. price​ (dollars per​ bushel) on the vertical axis and quantity​ (bushels per​ week) on the horizontal axis

Equity is A. the fair distribution of economic benefits. Your answer is correct. B. always achieved by the market. C. when poorer​ people's income is growing more rapidly than more wealthy​ people's income. D. an exactly equal distribution of income.

A. the fair distribution of economic benefits

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational? A. Microsoft's choice was​ rational: the price will maximize profit. B. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality. Your answer is correct. C. Microsoft's choice cannot be​ rational: the price is clearly more than most people are willing and able to pay. D. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption.

B. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality

Scarcity is central to the study of economics because it implies that A. wants are unlimited. B. every choice involves an opportunity cost. C. economic agents are rational. D. society must make decisions at the margin.

B. every choice involves an opportunity cost.

Microeconomics is the study of A. how individuals make good decisions for themselves but hurt society. B. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. C. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. D. how individuals and firms act altruistically to better society.

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

(picture) The diagram to the right illustrates a common economic relationship. Economists know this relationship as marginal cost​ (MC). The diagram illustrates the relationship between the change in total cost and quantity produced. There are three lines​ (A, B, and​ C) drawn tangent to the MC curve. At line​ A, the MC curve has a​ _____ slope. Where lines B and C touch the MC​ curve, the slope is​ _____ and​ _____. A. negative; positive; decreasing B. ​negative; positive; increasing C. positive; negative; increasing D. ​positive; negative; decreasing

B. ​negative; positive; increasing

Any model is based on making assumptions because Any model is based on making assumptions because A. 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. D. neither a nor b.

C. both a and b

Allocative efficiency means that A. a good or service is produced as quickly as possible. B. every good or service is distributed fairly. C. every good or service is produced up to the point where marginal benefit is equal to marginal cost. D. a good or service is produced at the lowest possible cost.

C. every good or service is produced up to the point where marginal benefit is equal to marginal cost.

Macroeconomics is the study of A. the economy on a​ state-by-state basis, covering areas affected by the Commerce Clause. B. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. C. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. D. why the U.S. has spent so much money on wars and government surveillance of its own citizens.

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

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives... A. pollution is likely to increase. B. the policies are futile because where the environment is​ concerned, it has been repeatedly shown that firms do not respond to economic incentives. C. the policies are consistent with economic incentives. Your answer is correct. D. the policies are likely to be more successful than policies that cost firms​ more, but they do not recognize economic incentives.

C. the policies are consistent with economic incentives

Which of the following statements about an economic variable is​ correct? A. An economic variable must always be a positive number. B. An economic variable is always measured in dollars. C. An economic variable must either be the price of a good or service or the quantity of a good or service. D. An economic variable is something measurable that can have different values.

D. An economic variable is something measurable that can have different values.

The three economic questions that every society must answer are A. What are the prices of​ goods, how are they​ determined, and who will pay for​ them? B. What economic system will be​ used, how will it be​ implemented, and who will make market​ decisions? C. What kind of government will the society​ have, how will it be​ run, and who will run​ it? D. What goods will be​ produced, how will they be​ produced, and who will receive the​ goods?

D. What goods will be​ produced, how will they be​ produced, and who will receive the​ goods?

Economics is a social science because A. it is based on studying the actions of individuals. B. it applies the scientific method to the study of the interactions among individuals. C. it considers human behavior—particularly ​decision-making behavior. D. all of the above.

D. all of the above.

Opportunity cost is A. when unlimited wants exceed the limited resources available to fulfill those wants. B. the idea that because of​ scarcity, producing more of one good or service means producing less of another good or service. C. when consumers and firms use all available information as they act to achieve their goals. D. the highest valued alternative that must be given up to engage in an activity.

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

Indicate which of the following statements represent positive analysis and which represent normative analysis a. A​ 50-cent-per-pack tax on cigarettes will reduce smoking by teenagers by 12 percent. b. The federal government should spend more on AIDS research. c. Rising paper prices will increase textbook prices. d. The price of coffee at Starbucks is too high.

a. This represents positive analysis. b. This represents normative analysis. c. This represents positive analysis. d. This represents normative analysis.

Centrally planned economies allocate resources based on decisions by BLANK while market economies answer these questions through decisions made by BLANK.

government/ households and firms

The level of total investment by firms in new machinery and equipment helps to determine how rapidly the economy grows. This is a BLANK issue. ​ However, to understand how much new machinery and equipment firms decide to​ purchase, one must analyze the incentives individual firms​ face, which is a BLANK issue.

macroeconomic/ microeconomic