Chapter 1 HW

Which of the following words best describes what economics is about?

Choices

Please select the economic term that is best described in each of the following questions. There are limited resources to satisfy all of society's wants. Comparison of the benefits and costs of engaging in an activity.

Scarcity Trade-off

Which statement describes the equity-efficiency trade‑off?

Actions intended to make economic outcomes fairer may cause efficiency to decrease.

Which demonstrates a scenario with no opportunity cost?

All of these scenarios have an opportunity cost.

Which decision is least likely to be well explained by marginal analysis?

Deciding which college to attend

What is the main problem addressed with scarcity?

Determining how to address unlimited wants with limited resources.

Which is NOT an example of a resource?

Firms

Which of the following would be most closely related to microeconomics?

How rising wages affect the choice of working instead of going to school.

You and other college students are deciding whether to major in music or engineering. You learn that there is a shortage of engineers, making it easy for engineering graduates to find employment, while there is a glut of musicians for whom finding a job is difficult. As a result, you and many other college students decide to major in engineering. Which economic principle does this illustrate?

Markets tend to move towards equilibrium as individuals respond to incentives.

Each scenario below illustrates a basic underlying principle of economics of how economics work through the interactions of individual choices. Please label each scenario accordingly.

The owner of a snow cone trailer realizes that the demand for snow cones is low during the winter, and thus, closes shop until the temperature warms back up near summertime. (Market Efficiency) The local river has so much pollution that three-eyed fish are forming. The government responds by regulating the amount of chemicals that can be dumped into the river.(Government Intervention) At a high end restaurant, the restaurant owner has one chef at a meat station, one chef at a vegetable station and one chef, who has an artistic eye, plate the food they are given. The result is increased speed, as more customers get serviced during an evening. (Specialization) During the summer, a bumper crop of oranges in Florida causes a surplus in the supply of oranges nationwide. As a result, prices fall to compensate for the surplus and civilians enjoy the fruits of the farmers labor.(Equilibrium)

Which is NOT an example of a behavior exhibited in a market economy?

The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers.

The five-dollar Burger Joint gift card that your friend gave you for your birthday expires today. You can either use the gift card to buy yourself dinner at Burger Joint, or you can stay home and eat a delicious home-cooked meal. What is the opportunity cost of eating the home-cooked meal?

The value of the ingredients that go into the home-cooked meal, and the value of a five-dollar dinner at Burger Joint.

The day-to-day living conditions of modern Americans are very different from what they were in the 20th century. While doing research for an economics project, Charlie discovers that more households today, as compared to households 100 years ago, have electricity, air conditioning, and a car. Which of the following explains why modern Americans enjoy a higher standard of living than Americans 100 years ago? In which field do researchers focus on investigating the phenomena described?

There has been economic growth in our society. Economics

The seaport town of New Monopoly has become extremely popular with shipping companies due to its superior location. The port has become so congested that ships must wait hours every day just to dock. Which decision would NOT move him towards a command economy?

This is an example of market failure. The mayor decides to let individual firms and consumers find a solution for the excessive wait time.

Daniel has decided to open his own bakery using locally sourced ingredients and supplies. He provides income and jobs to local suppliers. He also provides his community with a place to buy delicious baked goods.

This is an example of the invisible hand.

uppose that Georgiania was a thriving empire in its golden age. Business was booming and it was the center of international trade under the leadership of Emperor Raphael III. His empire's pride and joy was the trading of green and black tea, and he decreed that their entire economy should be built around it. However, in the mid 1800s, Georgiania experienced a severe economic downturn when the other nations of the world created an embargo on tea from Georgiania, which led to civil strife due to thousands of workers being laid off. A downward fluctuation in the economy like this is known as The correct term is a key component of

a recession. macroeconomics.

An economy is

a system for coordinating a society's productive and consumptive activities

In a market-oriented economy, individuals' economic lives are said to be

interrelated with many other individuals and firms.

You see a large group of stranded passengers standing next to a disabled bus, and you have only three seats in your car. You have to decide which three passengers to rescue because of:

scarcity

Economics is the

study of the consumption, production, and distribution of goods and services.

Because of scarcity

we face tradeoffs in nearly every choice we make.