Question 1

In the figure below, is the slope positive or negative? Calculate the slope.

Accepted Answer

The slope is positive because the line is upward sloping. The slope is equal to the change in Y (which is equal to 4) divided by the change in X (which is equal to 2). Therefore, the slope is equal to (4/2) which equals 2.

Question 2

Define a variable and give two examples that would apply to economics.

Accepted Answer

A variable is a measure that can change from time to time or from observation to observation. Income is a variable-it has different values for different people and different values for the same person at different times. The rental price of a movie on a DVD is a variable; it has different values at different stores and at different times.

Question 3

It is widely known among baseball enthusiasts that Babe Ruth actually performed quite well as a pitcher before leaving the Boston Red Sox for the New York Yankees. He was also of course a famously successful hitter. Why do you believe the Yankees chose not to use him as a pitcher? Explain using economic reasoning. Hint: pitchers typically only play every third or fourth game whereas other players in other positions play in nearly every game. Baseball has a season of 162 games.

Accepted Answer

The economic reasoning probably had something to do with opportunity cost. Even though the Yankees may have won most of the games when Babe Ruth was pitching he would no doubt be able to contribute to more wins as a hitter since he would be playing in more games as an outfielder or any other non-pitching position. The opportunity cost of having him as a pitcher was simply too high in terms of the number of games that would be lost when he wasn't playing.

Question 4

Explain what is meant by allocative efficiency.

Accepted Answer

Allocative efficiency means pr

Question 5

Explain the difference between positive economics and normative economics.

Accepted Answer

Positive economics seeks to understand b

Question 6

When is it more expensive for a country to go to war - during a recession or during an economic boom? Explain.

Accepted Answer

It is clearly more expensive for a count

Question 7

Your boss explains to you that the total fixed costs of the company are $1 million. He also informs you that each unit of production will cost twenty five cents more with each 100-unit increase. He has asked you to draw the fixed costs of the company with costs on the vertical axis and quantity of goods sold on the horizontal axis. Without drawing a graph tell your boss what the graph will look like using words. What information did your boss give you that you didn't need in order to draw the graph?

Accepted Answer

The fixed cost graph will be a horizonta

Question 8

Examine the following function: Y = 3x + 2. What is the slope of this function and why?

Accepted Answer

The slope of this function is 3. That's

Question 9

Suppose an economics forecaster discovers that on days when the sunspot count is high stock market on the following day is bullish, that is stock market prices edge upwards. In addition, he also observes that on days with a low sunspot count the following day the stock market tends to be bearish, that is stock market prices tend to fall. The forecaster then concludes that there is a positive relationship between the sunspot count and stock market prices and proceeds to base his investment decisions on this premise. What kind of an error has this forecaster made?

Accepted Answer

The forecaster has fallen into

Question 10

What does the phrase "post hoc, ergo propter hoc" mean?

Accepted Answer

Literally it means, "after this (in time

Question 11

Graph the following equation with qd on the horizontal axis and calculate the slope:
P = 10 - 2qd.

Accepted Answer

The student's graph should look like the

Question 12

Should economics be considered a science? Why or why not?

Accepted Answer

Yes. Economics uses models and

Question 13

Explain what is meant by the term ceteris paribus. Why is this concept often used in economic models?

Accepted Answer

Ceteris paribus means "all els

Question 14

What is meant by the phrase, "There is no such thing as a free lunch"?

Accepted Answer

Markets are generall

Question 15

Suppose that as wages increase the quantity of labor supplied increases as well. However, assume that at some point as indicated in the table below increases in wages actually lead to a reduction in the quantity of labor supplied. Graph this relationship with the quantity of labor on the horizontal axis and the wage rate on the vertical axis.

Accepted Answer

The answer of Suppose that as wages increase the quantity...

Question 16

Explain how to calculate the slope of a non-linear function. What does the slope measure?

Accepted Answer

Since the slope of a non-linear function

Question 17

Evaluate the following statement: "Water is plentiful, therefore it can't be a scarce resource like oil which is not as plentiful."

Accepted Answer

The truth is that both water a

Question 18

Why would an economist argue that tuition is not the largest cost of attending a state university?

Accepted Answer

The largest cost of attending a universi

Question 19

Assume that you are the new CEO of a major corporation that has five major product lines each run as separate corporations. You discover that if you invested the company's money outside of the firm that it could earn a 15% rate of return on the investment. You tell all the presidents of each of these subsidiary companies that in order for them to remain with the company that their return on capital must equal to or exceed 15% rate of return. Use two economic principles discussed in chapter 1 to explain why the CEO's advice is sound.

Accepted Answer

Essentially there is a high opportunity

Question 20

Graph the following equation with qs on the horizontal axis and calculate the slope:
P = 6 + 3qs.

Accepted Answer

The student's graph should look like the

In the figure below, is the slope positive or negative? Calculate the slope.

Define a variable and give two examples that would apply to economics.

Explain what is meant by allocative efficiency.

Explain the difference between positive economics and normative economics.

When is it more expensive for a country to go to war - during a recession or during an economic boom? Explain.

Examine the following function: Y = 3x + 2. What is the slope of this function and why?

What does the phrase "post hoc, ergo propter hoc" mean?

Graph the following equation with q^d on the horizontal axis and calculate the slope: P = 10 - 2q^d.

Should economics be considered a science? Why or why not?

Explain what is meant by the term ceteris paribus. Why is this concept often used in economic models?

What is meant by the phrase, "There is no such thing as a free lunch"?

Explain how to calculate the slope of a non-linear function. What does the slope measure?

Evaluate the following statement: "Water is plentiful, therefore it can't be a scarce resource like oil which is not as plentiful."

Why would an economist argue that tuition is not the largest cost of attending a state university?

Graph the following equation with q^s on the horizontal axis and calculate the slope: P = 6 + 3q^s.

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Social Choice

Filters

Exam 1: The Scope and Method of Economics

In the figure below, is the slope positive or negative? Calculate the slope.

Define a variable and give two examples that would apply to economics.

Explain what is meant by allocative efficiency.

Explain the difference between positive economics and normative economics.

When is it more expensive for a country to go to war - during a recession or during an economic boom? Explain.

Examine the following function: Y = 3x + 2. What is the slope of this function and why?

What does the phrase "post hoc, ergo propter hoc" mean?

Graph the following equation with qd on the horizontal axis and calculate the slope: P = 10 - 2qd.

Should economics be considered a science? Why or why not?

Explain what is meant by the term ceteris paribus. Why is this concept often used in economic models?

What is meant by the phrase, "There is no such thing as a free lunch"?

Explain how to calculate the slope of a non-linear function. What does the slope measure?

Evaluate the following statement: "Water is plentiful, therefore it can't be a scarce resource like oil which is not as plentiful."

Why would an economist argue that tuition is not the largest cost of attending a state university?

Graph the following equation with qs on the horizontal axis and calculate the slope: P = 6 + 3qs.

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Social Choice

Filters

Graph the following equation with q^d on the horizontal axis and calculate the slope: P = 10 - 2q^d.

Graph the following equation with q^s on the horizontal axis and calculate the slope: P = 6 + 3q^s.