Chapter 1 question 5, page 17
#5
(Micro Versus Macro) determine whether each of the following is primarily a microeconomic or a macroeconomic issue:
a. What price to charge for an automobile
b. Measuring the impact of tax policies on total consumer spending in the economy
c. A household's decision regarding how much to work each week
d. Designing a government policy to increase total employment
Chapter 1 question 11, page 18
#11
(marginal Analysis) the owner of a small pizzeria is deciding whether to increase the radius of the delivery area by one mile. What considerations must be taken into account if such a decision is to increase profitability?
Chapter 3 question 12, page 68
#12
( Objectives of the economic decision-makers) In economic analysis, what are the assumed objectives of householdâs, firms, and the government?
Chapter 3 question 15, page 69
#15
(Evolution of the household) Determine whether each of the following would increase or decrease the opportunity costs for mothers who choose not to work outside the home. Explain your answer.
a. Higher levels of education for women
b. Higher unemployment rates for women
c. Higher average pay levels for women
d. Lower demand for labor in industries that traditionally employ large numbers of women
Chapter 1 question 5, page 17
#5
(Micro Versus Macro) determine whether each of the following is primarily a microeconomic or a macroeconomic issue:
a. What price to charge for an automobile
b. Measuring the impact of tax policies on total consumer spending in the economy
c. A household's decision regarding how much to work each week
d. Designing a government policy to increase total employment
Chapter 1 question 11, page 18
#11
(marginal Analysis) the owner of a small pizzeria is deciding whether to increase the radius of the delivery area by one mile. What considerations must be taken into account if such a decision is to increase profitability?
Chapter 3 question 12, page 68
#12
( Objectives of the economic decision-makers) In economic analysis, what are the assumed objectives of householdâs, firms, and the government?
Chapter 3 question 15, page 69
#15
(Evolution of the household) Determine whether each of the following would increase or decrease the opportunity costs for mothers who choose not to work outside the home. Explain your answer.
a. Higher levels of education for women
b. Higher unemployment rates for women
c. Higher average pay levels for women
d. Lower demand for labor in industries that traditionally employ large numbers of women
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Related textbook solutions
Related questions
Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the
a. | forgone working or partying, depending on which was your next best choice. | |
b. | forgone work. | |
c. | forgone working and partying. | |
d. | test because you are taking it. |
1 points
QUESTION 2
A trend is
a. | a measure of closeness on a scatter diagram. | |
b. | a general tendency for a variable to rise or fall. | |
c. | the maximum value of a variable. | |
d. | the difference between the maximum value of a variable and the minimum value of the variable. |
1 points
QUESTION 3
A time-series graph measures
a. | time on the y-axis and the variable or variables in which we are interested on the x-axis. | |
b. | time on the x-axis and the variable or variables in which we are interested on the y-axis. | |
c. | the value of one variable against the value of another variable. | |
d. | the value of an economic variable for different groups in a population at a point in time. |
1 points
QUESTION 4
Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care. Based on this observation, Canada has decided that "everyone, regardless of their ability to pay" is the answer to what microeconomic question?
a. | Why will we offer health care? | |
b. | How will health care be produced? | |
c. | For whom will health care be produced? | |
d. | What type of health care will be produced and in what quantity? |
1 points
QUESTION 5
As a shoe factory adds more workers, shoe production grows, reaches a maximum, and then shrinks. In a diagram that has the number of workers on the horizontal axis and the number of shoes on the vertical axis, the relationship between the number of workers and the number of shoes starts as ________ and then, after the maximum point, is ________.
a. | positive; negative | |
b. | negative; positive | |
c. | linear; negative | |
d. | positive; linear |
1 points
QUESTION 6
Microeconomics includes the study of the
a. | choices made by individuals and businesses. | |
b. | recessions and inflation in the global economy. | |
c. | aggregate effects on the national economy. | |
d. | reasons why the government changes interest rates. |
1 points
QUESTION 7
When Fresh Express Salads decides to mechanically pick all of its lettuce, it directly answers the ________ question.
a. | when | |
b. | for whom | |
c. | how | |
d. | what |
1 points
QUESTION 8
Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that
a. | the opportunity cost of working is negative. | |
b. | the marginal cost of each additional work hour is not important to most workers. | |
c. | workers are irrational. | |
d. | workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work. |
1 points
QUESTION 9
A choice made by comparing all relevant alternatives systematically and incrementally is
a. | an opportunity cost. | |
b. | a benefit. | |
c. | a sunk cost. | |
d. | a choice on the margin. |
1 points
QUESTION 10
A normative statement
i. can be tested as to whether it is true or false.
ii. is considered negative.
iii. depends on a person's values.
a. | i, ii, and iii | |
b. | iii only | |
c. | i and iii | |
d. | ii and iii |
1 points
QUESTION 11
Normative statements
i. describe how the world is.
ii. describe how the world ought to be.
iii. depend on people's values and cannot be tested.
a. | iii only. | |
b. | i only. | |
c. | ii and iii. | |
d. | ii only. |
1 points
QUESTION 12
In order to determine whether to major in economics, a rational individual compares the ________ of the decision.
a. | positive benefits and normative costs | |
b. | normative benefits and positive costs | |
c. | marginal benefit and marginal cost | |
d. | opportunity cost and the sunk cost |
1 points
QUESTION 13
If x increases whenever y decreases, then x and y are
a. | positively related. | |
b. | negatively related. | |
c. | not related. | |
d. | related but whether positively or negatively related depends on whether the x variable or the y variable is plotted on the vertical axis. |
1 points
QUESTION 14
Rational choice
a. | is what you must give up get what you want. | |
b. | is made by comparing different incentives. | |
c. | making the choice. | |
d. | provides the answer to only the "how" question. |
1 points
QUESTION 15
Scarcity results from the fact that
a. | choices made in self-interest rare not always in the social interest. | |
b. | not all goals are desirable. | |
c. | people's wants exceed the resources available to satisfy them | |
d. | we cannot answer the major economic questions. |
1 points
QUESTION 16
When Delta decides to quit flying to Lithuania, it directly answers the ________ question.
a. | what | |
b. | why | |
c. | for whom | |
d. | how |
1 points
QUESTION 17
A normative statement
a. | says what is currently believed about the way the world operates. | |
b. | depends on someone's values. | |
c. | cannot use the word "should." | |
d. | must be tested to determine if it is correct. |
1 points
QUESTION 18
Which of the following statements best describes the study of economics? Economics studies how
a. | to organize production so that scarcity does not occur. | |
b. | to create incentives so that scarcity does not exist. | |
c. | firms make profits. | |
d. | we make choices in the face of scarcity. |
1 points
QUESTION 19
Which of the following best defines economics?
a. | Economics teaches how to limit our wants. | |
b. | Economics is concerned with prices and quantities of goods and services, both at the individual level and at the industry level. | |
c. | Economics helps you earn as much money as possible. | |
d. | Economics studies how to choose the best alternative when coping with scarcity. |
1 points
QUESTION 20
In economics, cost is ________, and benefit is ________.
a. | the amount of money that you pay for something; the amount of money that someone else is willing to pay you | |
b. | what you are willing to pay on the margin; what the government pays you when you are unemployed or retired | |
c. | what you must give up to get something; what you are willing to give up to get it | |
d. | the amount of money that you pay on the margin; the amount of money that you receive on the margin |
1 points
QUESTION 21
If Jessie studies economics for two hours instead of going to the movies with her friends, then
a. | the opportunity cost of studying is the missed movie. | |
b. | Jessie is ignoring a sunk cost | |
c. | Jessie is not responding to any incentives. | |
d. | Jesse definitely is making a rational choice. |
1 points
QUESTION 22
Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing.
a. | The $80 price of skiing is a sunk cost and so did not affect Adam's decision. | |
b. | He loses a total of $120 per day, so his decision is irrational. | |
c. | His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost. | |
d. | Adam's lost $40 per day in wages is a sunk cost and so did not affect his decision. |
1 points
QUESTION 23
If a curve falls and then rises, it
a. | has a maximum. | |
b. | has a linear relationship. | |
c. | has a minimum. | |
d. | has a constant slope relationship. |
1 points
QUESTION 24
In 2003, Michael Jordan decided to retire from professional basketball. Which of the following was an opportunity cost of his decision?
a. | the avoidance of pain and injury from playing one more year | |
b. | the time he could spend with his family while retired | |
c. | the lost salary from playing one more year | |
d. | the value of new employment opportunities that would await him |
1 points
QUESTION 25
Which of the following statements is a normative statement?
a. | Military spending as a percent of government spending decreased by 5 percent in the 1990s. | |
b. | Every American household should have health care insurance coverage. | |
c. | Welfare reform has decreased the amount the government spends on welfare. | |
d. | The price of computers fell last year. |
Salvatore Chapter 1:
Discussion Questions: 9. How is the concept of a normal return on investment related to the distinction between business and economic profit?
Problems:
5. Determine which of the two investment projects a manager should choose if the discount rate of the firm is 10%. The first project promises a profit of $100,000 in each of the next 4 years, while the second project promises a profit of $75,000 in each of the next 6 years.
6. Determine which of the two investment projects of Problem 5 the manager should choose if the discount rate of the firm is 20%.
15. Integration Problem Samantha Roberts has a job as a pharmacist earning $30,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $40,000 per year or to purchase a pharmacy that generates a revenue of $200,000per year. To purchase the pharmacy, Samantha would have to use her $20,000 savings and borrow another $80,000 at an interest rate of 10% per year. The pharmacy that Samantha is contemplating purchasing has additional expenses of $80,000 for supplies, $40,000 for hired help, $10,000 for rent, and $5,000 for utilities. Assume that income and business taxes are zero and that the repayment of the principle of the loan does not start before 3 years. (a) What would be the business and economic profit if Samantha purchased the pharmacy? Should Samantha purchase the pharmacy? (b) Suppose that Samantha expects that another pharmacy will open nearby at the end of 3 years and that this will drive the economic profit of the pharmacy to zero. What would the revenue of the pharmacy be in 3 years? (c) What theory of profit would account for profits being earned by the pharmacy during the first 3 years of operation? (d) Suppose that Samantha expects to sell the pharmacy at the end of 3 years for $50,000 more than the price she paid for it and that she requires a 15% return on her investment. Should she still purchase the pharmacy?
Spreadsheet Problem (see attached Excel doc)
Using the data below, (Excel doc) where column A represents student numbers, column B the finishing time for a 1 mile race for 10 students, and column C the age of the students, (a) Use the data analysis tools to plot a line graph of all the finishing times. (b) Calculate a mean, median, mode, sample variance, sample standard deviation, and coefficient of variation to statistically describe the data. (c) Use Excel to fine the covariance between the two variables. What does the covariance indicate about the relationship between finishing time and age?
Note:
P15(d): Change â⦠for $50,000 more than â¦â to â⦠for $50,000 less than â¦â Compare the present value of economic profit in each of the next three years and the loss of $50,000 in the third year using 15% as the discount rate.
The spreadsheet problem (b): Calculate a mean, â¦. to statistically describe the data of both variables, Time and Age.
Individual problems:
3-1 You won a free ticket to see a Bruce Springsteen concert (assume the ticket has no resale value). U2 has a concert the same knight, and this represents your next-best alternative activity. Tickets to the U2 concert cost $80, and on any particular day, you would be willing to pay up to $100 to see this band. Assume that there are no additional costs of seeing either show. Based on the information presented, what is the opportunity cost of seeing Bruce Springsteen?
3-3 Because of the housing bubble, many houses are now selling for much less than their selling price just 2 to 3 years ago. There is evidence that homeowners with virtually identical houses tend to ask for more is they paid more for the house. What fallacy are they making?
Salvatore Chapter 3:
Discussion Questions:
9. How would you react to a sales managerâs announcement that he or she has in place a marketing program to maximize sales?
Problems:
1(a). Given the following total-revenue function: TR= 9Q - Q^2
Derive the total-, average-, and marginal- revenue schedules from Q=0 to Q=6 by 1âs.
7. Given the total-cost schedule: Q 0 1 2 3 4
TC 1 12 14 15 20
Derive the average- and marginal-cost schedules.
9. With the total-revenue curve of Problem 1 and the total-cost curve of problem 7, derive the total-profit function and show how the firm determines the profit-maximizing level of output.
Note:
DQ9: Does maximum sales (revenue) equal maximum profit (see figure 3-4)?
Revised P1(a): Derive the total-revenue, average-revenue, and marginal-revenue schedules from Q = 0 to Q = 4 by 1s.
Average revenue (AR) = total revenue (TR)/Q
Marginal revenue (MR) = change in total revenue/change in Q
For example:
Q | TR | AR | MR |
2 | 14 | 7 (=14/2) | |
3 | 18 | 6 (=18/3) | 4 (=(18-14)/(3-2) |
Revised P9: With the total-revenue schedule of Problem 1 and the total-cost schedule of Problem 7, show the profit-maximizing level of output (profit=TR-TC).
Froeb et al. Chapter 4:
Individual problems:
4-5 Your insurance firm processes claims through its newer, larger high-tech facility and its older, smaller low-tech facility. Each month, the high-tech facility handles 10,000 claims, incurs $100,000 in fixed costs and $100,000 in variable costs. Each month, the low-tech facility handles 2,000 claims, incurs $16,000 in fixed costs and $24,000 in variable costs. If you anticipate a decrease in the number of claims, where will you lay off workers?
4-6 A copier company wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two new copiers, and output increased by 100,000 pages per day. One month ago, they added five workers, and productivity also increased by 50,000 pages per day. Copiers cost about twice as much as workers. Would you recommend they hire another employee or buy another copier?