Macro Homework 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 ______

$2000000 40 x 50 = 2000 2000 x 1000 = 2000000

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

Macroeconomics

A hypothesis in an economic model is

a statement that may be either correct or incorrect about an economic variable, usually about a casual relationship, and tested before it can be accepted (or not rejected).

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.

In your economics​ class, you scored a 66 on the first​ quiz, a 84 on the second​ quiz, and an 66 on the third quiz. Your average quiz grade is ____ On the fourth quiz, you scored a 77. Did the fourth quiz raise your average?

72, Yes 66 + 84 + 66 = 216 216 / 3 = 72 66 + 84 + 66 + 77 = 293 293 / 4 = 73.25 72 < 73.25

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

An omitted variable and reverse causality.

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.

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 AND models have to be simplified to be useful.

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 _____

$312500 60 - 35 = 25 55 - 30 = 25 25 x 25 = 625 625 x 1000 = 625000 625000 x .5 = 312500

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 2009 GDP was​ $11,150 billion​ dollars, and GDP increased to ​$11,646 billion in​ 2011, what is the growth rate of the U.S. economy in​ 2011?

4.3% 11646 - 11150 = 496 496 / 11646 = .043 .043 x 100 = 4.3 (New number - original)/new number

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

Consumers, firms, and government

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?

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

Positive analysis, normative analysis, positive analysis

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.

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

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

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.

In the United States, who receives the goods and services produced to depends largely on ______

how income is distributed

Economics

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

Economics is a social science because

it applies the scientific method to the study of the interactions among individuals, considers human behavior- particularly decision-making behavior, and is based on studying the actions of individuals.

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.

A _____ economy is an economy in which most economics 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

______ occurs when a good or service is produced at the lowest possible cost. _______ occurs when production is in accordance with consumer preferences.

productive efficiency, allocative efficency

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.

Equity is

the fair distribution of economic benefits