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Homework help, Chapter 1

by: alicekhanh

Homework help, Chapter 1 Econ 121

Marketplace > Santa Ana College > Economcs > Econ 121 > Homework help Chapter 1
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This note contains all the answers of the homework from Chapter 1: Economics and Economic Reasoning (Colander)
Gus Montes
Microeconomics, Homework
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This 4 page Bundle was uploaded by alicekhanh on Sunday April 24, 2016. The Bundle belongs to Econ 121 at Santa Ana College taught by Gus Montes in Spring 2016. Since its upload, it has received 198 views. For similar materials see Microeconomics in Economcs at Santa Ana College.

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Date Created: 04/24/16
1. Which of the following statements explains why the textbook author focuses on coordination rather than on scarcity when defining economics? Wants are changeable and partially determined by society, and the degree of scarcity changes as the quantity of goods, services, and usable resources changes with technology and human action that underlie production. 2. State whether the following are primarily microeconomic or macroeconomic policy issues: a. Should U.S. interest rates be lowered to decrease the amount of unemployment? Macro. b. Will the fact that more and more doctors are selling their practices to managed care networks increase the efficiency of medical providers? Micro. c. Should the current federal income tax be lowered to reduce unemployment?  Macro. d. Should the federal minimum wage be raised? Micro. e. Should Sprint and Verizon both be allowed to build local phone networks? Micro. f. Should commercial banks be required to provide loans in all areas of the territory from which they accept deposits? Micro. 3. a. Which of the following are microeconomic problems? How wages are determined in labor markets. The pricing policies of firms. Slow growth. Unemployment. b. Which of the following are macroeconomic problems? Unemployment. Inflation. The pricing policies of firms. How wages are determined in the labor market. Negative externalities. 4. Calculate, using the best estimates you can: a. Your opportunity cost of attending college. My opportunity cost of attending college is the benefit of the next­best alternative; that benefit becomes a cost because I forgo it by attending college. My personal opportunity cost is probably the leisure I could enjoy if I wasn't studying as well as the money I could be earning if I was working instead of attending college. b. Your opportunity cost of taking this course. My opportunity cost of taking this course is the benefit of the next­best alternative; that benefit becomes a cost because I forgo one activity by taking this course. My personal opportunity cost is probably the knowledge, perspective, or skills I could have gained from taking a different course. c. Your opportunity cost of attending yesterday's lecture in this course. My opportunity cost of attending yesterday's lecture is the benefit of the next­best alternative; that benefit becomes a cost because I forgo another activity by attending the lecture. My personal opportunity cost is probably the benefit I would have gained from missing the lecture by sleeping in or spending more time at breakfast. 5. You rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car beyond the first 150 free miles? The marginal cost is $7.50 plus the cost of gas. 6. Economists   Henry   Saffer   of   Kean   University,   Frank   J.   Chaloupka   of   the University of Illinois at Chicago, and Dhaval Dave of Bentley College estimated that the government must spend $4,170 on drug control to deter one person from using drugs and the cost that one drug user imposes on society is $897. Based on this information alone, should the government spend the money on drug control? No, since the marginal cost of drug control exceeds the marginal benefit, the government should not spend $4,170 to deter one person from using drugs. 7. What is the opportunity cost of buying a $20,000 car? The benefit from spending that $20,000 on the next­best alternative. 8. Two examples of social forces that prevent an economic force from becoming a market force are: Our unwillingness to charge friends interest and our unwillingness to “buy” friends. 9. What is an economic model? What besides a model do economists need to make policy recommendations? An economic model is a framework that places the generalized insights of a theory in a more specific contextual setting. Policymakers need to understand the empirical evidence supporting the theory as well as real­world economic institutions to make policy recommendations. 10.Does economic theory prove that the free market system is best? Why? No, economic theory proves nothing about what system is best. It simply   gives   ways   to   look   at   systems   and   determine   what   the advantages   and   disadvantages   of   various   systems   will   likely   be. Normative decisions about what is best can only follow from one’s value judgments. 11.Distinguish between theorems and precepts. Is it possible for two economists to agree about theorems but disagree about precepts? Why or why not? A   theorem   is   a   proposition   that   is   logically   true   based   on   the assumptions of the model, while a precept is a policy rule that a particular course of action is preferable. Economists can agree about theorems but disagree about precepts if they have different value judgments about appropriate goals. 12.What is the difference between normative and positive statements? Positive statements are all about what is; normative statements are concerned with what the goals of the economy should be.


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