Econ hw 1
Every society faces trade-offs because we live in a world of scarcity. Suppose a student-athlete has the opportunity to earn $800,000 next year playing for a minor league baseball team, $900,000 next year playing for a European professional football team, or $0 returning to college for another year. The opportunity cost of the student-athlete returning to college next year is
900,000
According to Forbes magazine, in 2017 Bill Gates was the world's richest person with wealth of $86 billion. Which of the following statements is true?
All individuals face a scarcity of time and need to make choices how to allocate it.
The effect of higher income taxes on the total amount of consumer spending. This is a _______issue.
macroeconomic
d. The price of coffee at Starbucks is too high. This represents
normative analysis
According to Forbes magazine, in 2017 Bill Gates was the world's richest person with wealth of $86 billion. Does Bill Gates face scarcity?
Yes, because even though billionaires' financial resources enable them to afford a much greater array of goods and services than those less wealthy, their financial resources are not infinite.
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 comma 25211,252 billion in 2011, what is the growth rate of the U.S. economy in 2011?
0.9%
Which of the following statements about a hypothesis is correct?
A hypothesis is a statement that could in principle turn out to be incorrect.
Economic data is used to
test models
Economists use models
to answer questions and analyze issues.
Which of the following statements about an economic variable is correct?
An economic variable is something measurable that can have different values.
Which of the following is a correct statement about a mixed economy?
In a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources.
A primary difference between macroeconomics and microeconomics is
Microeconomics examines individual markets while macroeconomics examines the economy as a whole.
What type of economic analysis is concerned with the way things ought to be?
Normative Analysis
Which of the following best describes scarcity?
Unlimited wants exceed the limited resources available.
Scarcity is central to the study of economics because it implies that
every choice involves an opportunity cost.
Consider an organization that exists to help the poor. The members of the organization are discussing alternative methods of aiding the poor, when a proponent of one particular method asserts that: "If only one poor person is helped with this method, then all our time and money would have been worth it." If you were a member of the organization, what reply best represents clear economic thinking? This attitude....
ignores the fact that the cost of helping that one person has an opportunity cost of what those funds could have been used for to help other people.
The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries. This is a _______ issue.
macroeconomic
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.
Efficiency means that goods are distributed in a way that_____, while equity means that goods are distributed in a way that _________
maximizes benefits to society is fair
The effect of higher cigarette taxes on the quantity of cigarettes sold. This is a _______ issue.
microeconomic
The reasons for low rates of profit in the airline industry. This is a _______ issue.
microeconomic
The federal government should spend more on AIDS research. This represents
normative analysis
c. Rising paper prices will increase textbook prices. This represents
normative analysis
A 50-cent-per-pack tax on cigarettes will reduce smoking by teenagers by 12 percent. This represents
positive analysis
A large corporation that runs nursing homes estimates that changes to Medicare will result in lower payments by Medicare to nursing homes for short-term stays by patients that require therapy or care upon leaving hospitals. Assume the corporation is considering expanding the number of "beds" it offers at its nursing homes. Given the changes to Medicare, if the marginal benefit of offering an additional bed is $8,000 and the marginal cost is $2,000 per bed, then the corporation _______offer additional beds.
should
Equity is
the fair distribution of economic benefits.
Opportunity cost is
the highest valued alternative that must be given up to engage in an activity.
Economists assume that people are rational in the sense that
they use all available information as they take actions intended to achieve their goals.
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?