Chapter 1 Problem Set, Ten Principles of Economics Homework

1. Which of the following describe some of the trade-offs faced by a family deciding whether to buy a new car? Check all that apply. 2. Which of the following describe some of the trade-offs faced by a member of Congress deciding how much to spend on national parks? Check all that apply. 3. Which of the following describe some of the trade-offs faced by a company president deciding whether to open a new factory? Check all that apply. 4.Which of the following describe some of the trade-offs faced by a professor deciding how much time to spend preparing for class? Check all that apply. 5.Which of the following describe some of the trade-offs faced by a recent college graduate deciding whether to go to graduate school? Check all that apply

1. An increase in the family's car payment means the family will be unable to afford a vacation. 1. A larger vehicle means saving time by not having to make multiple trips somewhere, but a smaller vehicle is cheaper 1. fuel-efficient cars are more expensive, but regular cars require spending more on gas 2.Congress can spend either a small amount on a lot of parks or a large amount on a single national park. 2.Money spent on national parks benefits park visitors, but alternatively the money could be spent on highways to benefit drivers. 3. The firm can either pay out more of its profit to shareholders or earn additional profit next year by increasing production. 3.The firm can either open a new factory or upgrade existing equipment. 4.The more he prepares, the better his lectures, but the less he prepares, the more free time he can enjoy doing something else 4.The better the lecture, the better his chances of tenure, but time spent preparing the lecture decreases the time he has available to work on research 5.If she goes to graduate school, she won't be able to spend as much time with her family. 5. Graduate school means fewer years of on-the-job experience. 5. taking out more student loans means she may not able to purchase the new car she needs.

Kyoko is a hard-working college sophomore. One Thursday, she decides to work nonstop until she has answered 150 practice problems for her chemistry course. She starts work at 8:00 AM and uses a table to keep track of her progress throughout the day. She notices that as she gets tired, it takes her longer to solve each problem. The marginal, or additional, gain from Kyoko's first hour of work, from 8:00 AM to 9:00 AM, is___________ The marginal gain from Kyoko's third hour of work, from 10:00 AM to 11:00 AM is _____________ Given this information, in order to use her 4 hours of study time to get the best exam score possible, how many hours should she have spent working on problems, and how many should she have spent reading?

60 30 2 hours working on problems, 2 hours reading

when markets do not achieve efficiency, government intervention can improve overall welfare

Because a type of fish is on the verge of extinction, the government imposes rules that prohibit fishing in the publicly owned spawning grounds. At first, owners of fishing boats complain about this restriction on where they can fish, but soon they notice that the number of adult fish swimming outside the protected area is much higher than it was before. With the restriction, each fishing boat ends up catching more fish than it did before the restriction was in place. Which of the following principles of economic interaction best describes this situation a) markets usually lead to efficiency b) there is a tradeoff between equality and efficiency c) markets allocate goods effectively d) when markets do not achieve efficiency, government intervention can improve overall welfare

15, 5

Brian is a hard-working college senior. One Thursday, he decides to work nonstop until he has answered 50 practice problems for his economics course. He starts work at 8 am and uses a table to keep track of his progress throughout the day. He notices that as he gets tired, it takes him longer to solve each problem. 8am ----- 0 9am ----- 20 10 am -----35 11 am ------ 45 12 pm ------ 50 The marginal, or additional, gain from Brian's second hour of work from 9 am to 10 am is _____ problems The marginal gain from Brian's fourth hour of work, from 11 am to 12 is ______

Which basic principle of individual choice does Teresa's plan illustrate?

Decisions are made at the margin.

decisions are made at the margin

Dmitri is training for a triathlon, a timed race that combines swimming, biking, and running. While Dmitri usually practices swimming for two hours per day, he decides to continue for an additional hour because the pool is less crowded than usual today allowing his practice time to be more productive. Which basic principle of individual choice does Dimitri's plan illustrate? a) decisions are made at the margin b) resources are scarce c) all decisions involve opportunity costs d) people usually exploit opportunities to make themselves better off

higher

In other words, the economy faces a trade-off between inflation and unemployment: Lower inflation leads to _____ unemployment.

Which of the following statements support the reality that your standard of living is different from that of your parents or grandparents when they were your age? Check all that apply. True or False: Labor unions are the primary reason the standard of living in the United States has changed over time.

In the United States, the average person's life expectancy was roughly 78 years in 2010, but only 70 years in 1960. Many families have two or more cars, whereas having any motor vehicle was a luxury in the early 20th century. A cutting-edge television comes with HD, 3D, and SmartTV technology, while your grandparents likely enjoyed at most a black-and-white television in the early years. FALSE

store across town

Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, but it is more convenient for Juanita to get to some stores than others. At her local department store the time each way would be 15 minutes, while the price is 112. At the store across town the time each way would be 30 minutes, while the price is 89. in the neighboring city the time each way would be 60 minutes, while the price is 70. Juanita makes $26 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $26 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Where should she purchase the suit?

3 hrs of problems and 1 hr of reading

Later, the teaching assistant in Brian's economics course gives him some advice. "Based on past experience," the teaching assistant says, "working on 7.5 problems raises a student's exam score by about the same amount as reading the textbook for 1 hour." For simplicity, assume students always cover the same number of pages during each hour they spend reading. Given this information, in order to use his 4 hours of study time to get the best exam score possible, how many hours should he have spent working on problems, and how many should he have spent reading? a) 0 hrs of problems, 4 hrs of reading b) 2 hrs of problems, 2 hrs of reading c) 3 hrs of problems, 1 hr of reading d) 4 hrs of problems, 0 hrs of reading

earning money

Suppose that in the hypothetical country of the Republic of Chat, telephones are distributed to whoever is willing to pay the most. This distribution rule gives the residents of the Republic of Chat an incentive to spend time

decreases, lower, fewer, higher

Suppose that the government believes the economy is producing goods and services beyond its optimal level. The government therefore decides to decrease the quantity of money in the economy. This monetary policy _____ the economy's demand for goods and services, leading to _____ product prices. In the short run, the change in prices induces firms to produce _____ goods and services. This, in turn, leads to a _____ level of unemployment.

Juanita makes $18 an hour at work. She has to take time off work to purchase her dress, so each hour away from work costs her $18 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Assume that Juanita takes opportunity costs and the price of the dress into consideration when she shops. Juanita will minimize the cost of the dress if she buys it from the ___________

TABLE: local store: 18,102,120 across town: 27,88,115 Neighbor City: 45,63,108 store in the neighboring city

$22 (add 13+9 to get the correct amount)

You work as an assistant coach on the university basketball team and earn $13 per hour. One day, you decide to skip the hour-long practice and go to the local carnival instead, which has an admission fee of $9. The total cost (valued in dollars) of skipping practice and going to the carnival (including the opportunity cost of time) is

this monetary policy ______________ the economy's demand for goods and services, leading to ______________ product prices. in the short, run the change in prices induces firms to produce ______________ goods and services. This, in turn, leads to a ______________ level of unemployment. In other words, the economy faces a trade-off between inflation and unemployment: Higher inflation leads to _________ unemployement

increases, higher, more, lower lower

Suppose that in the hypothetical country of the Republic of Chat, telephones are distributed on a first-come, first-see This distribution rule gives the residents of the Republic of Chat an incentive to spend time _______________

maintaining their place in line

A 1996 bill reforming the federal government's antipoverty programs limited many welfare recipients to only two years of benefits. this change gives people the incentive to find a job _________ quickly than if welfare benefits lasted forever the loss of benefits after two years will result in the distribution of income becoming ______ equal. in addition, the economy will be ______ efficient because of the change in working incentives

more less, more

People in the U.S. state of Iowa eat both corn and potatoes. It is technically possible for farmers to grow both corn and potatoes in Iowa, yet almost no farmers grow potatoes. Instead, every year, Iowa exports corn and imports potatoes from the U.S. state of Idaho, where farmers specialize in potatoes. Which of the following principles of economic interaction best describes this scenario?

trade can make everyone better off

Before you started applying for college, a job recruiter offered you a full-time cashier position at a department store, earning an after-tax salary of $26,000 per year. However, you turn down this offer and attend your first year of college. The additional monetary cost of college to you, including tuition, supplies, and additional housing expenses, is $32,000. You decide to go to college, probably because___________________________

you value a year of college at more than $58,000