Economics 1021A/B Chapter Notes -Marginal Cost, Marginal Utility, Microeconomics
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Economics – Textbook Questions
Pg. 14 #1 – 6
1. Apple Computer Inc. decides to make songs freely available in
unlimited quantities at the iTunes Store
a. How does Apple’s decision change the opportunity cost of
downloading a song?
i. Apple is giving up the profit they make off the songs in order to
have more people download their songs
b. Does Apple’s decision change the incentives that people face?
i. The marginal benefit of downloading a song off of iTunes has
increased, because the marginal cost of downloading a song off
of iTunes has decreased
c. Is Apple’s decision an example of a microeconomics or a
i. It is a microeconomics issue because it does not effect the
global economy as a whole
2. Which of the following pairs does not match?
a. Labour and wages
b. Land and rent
c. Entrepreneurship and profit
d. Capital and profit
3. Explain how the following news headlines concern self-interest and the
a. Roots Expands in China
i. That helps self-interest for Roots because they want to
increase their profit by expanding into new markets
b. McDonald’s Moves into Salads
i. This helps the social interest, because this way it gives people
more options of what to get at the McDonalds. It also will
broaden their market which is in their self-interest.
c. Food Must be Labeled with Nutrition Information
i. This helps the social interest because some people want to
know what they are eating, and watch what they eat.
4. The night before a test, you decide to go to the movies instead of
working your MyEconLab Study Plan. You get a 50% on your test, not
the 70% that you normally score.
a. Did you face a tradeoff?
i. You had a tradeoff between studying and going to the movies
b. What was the opportunity cost of your evening at the movies?
i. The opportunity cost of your evening at the movies was the
20% decrease in your grade
5. Which of the following statement is positive, which is normative, and
which can be tested?
a. The federal government should increase production if bio-fuels