Intro to Macroeconomics – Week 1 – Flashcards
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Instead of taking an economics course, you could have taken a history course that meets at the exact same time. The total cost of taking the economics course would be:
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the tuition cost, the cost of the textbook and notebook, and the fact that you could not take the history course at the same time.
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Economics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentive?
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Students can choose to do extra credit at the end of the semester.
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More oranges are grown in Florida than North Dakota because Florida's warm climate gives it a ________ in growing oranges.
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comparative advantage
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A car insurance company is willing to offer accident-free drivers a discount. This is an example of:
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a positive incentive
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Sam has two options this weekend. He could work at his job and earn $9/hour for three hours, or he could go to a show at the theater for that three hours. A ticket to the theater costs $30. What is the opportunity cost of going to the theater?
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$57 (The opportunity cost will contain both the price of the ticket, $30, and the lost wages, 3 hours x $9/hour = $27. Therefore, the opportunity cost is $57.
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Which of the following concepts do economists focus their study on when explaining how humans behave?
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incentives
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The U.S. federal government offers homeowners a tax deduction for their home loan interest payments. This reduction in taxes serves as a(n) _______ to buy a house.
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direct incentive
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Suppose that government officials want to increase the population, so they offer a $1,000 payment to the parents of each child born. Which of the five foundations of economics best describes the thinking of these government officials?
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incentives (The government payment is an incentive. These government officials understand that by offering a payment for having a child, parents have an additional incentive to have children.)
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When trade is voluntary, who benefits?
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both the buyer and the seller
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You order a $20 sweatshirt online for a Father's Day gift. The shipping charge is $10. You can get free shipping if your order totals $25 or more. Consequently, you order a $5 bobble head doll, even though neither you nor your father really likes bobble head dolls. This is an example of:
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incentives
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What creates comparative advantage?
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specialization
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As a new firm in the apple-picking business, you have considered adding an economist to your management team. What would this economist be unable to help your managerial team with?
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Determining why people eat apples
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The "broken window fallacy"
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is illustrated when a government program is justified not on its merits but on the number of jobs it will create.
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What is the opportunity cost of taking this exam?
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the highest valued alternative that you gave up to prepare for and attend the exam.
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Many stores are open 24 hours a day. When store managers make the decision to stay open 24 hours, it must be the case that:
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the marginal benefit of staying open all day and the marginal cost to remaining open all day are at least equal.
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With careful planning, we can usually get something that we like without having to give up something else that we like.
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False
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One way to promote a new business is to offer free items. If you were to open a new restaurant and offer free food, you likely would have a line out the door. How would and economist understand the behavior of those standing in line?
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Those waiting in line place a low value on the use of their time.
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The term ________ means "additional."
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marginal
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The field of economics that studies the decisions of individuals and firms is called:
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microeconomics
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What is Bastiat's "broken window fallacy" all about?
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all of the above (What is "seen and what is "not seen", opportunity cost, argument used against government job programs.)
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A parent that pays a child an allowance for doing chores is providing a(n):
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positive incentive
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If you don't like changing the oil in your car and pay your father to do it for you, you have provided him with a(n):
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direct incentive
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Which of the following is a type of incentive?
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direct (Incentives can be classified as positive or negative and direct or indirect. All incentives encourage action.)
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Suppose that Marie is buying bananas. She decides that she would like to purchase three bananas at the price of $0.25/banana but not a fourth banana. Which of the five foundations of economics best describes Marie's thinking?
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marginal thinking
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Which scenario describes studying for an economics course without applying the scarcity principle?
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I study for this course and do nothing else.
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Which of the following is a macroeconomic question? a) How many textbooks should be published by a publisher? b) How much should English majors earn after college? c)How do members of a household decide whether to clean their own house or hire someone else to do it? d) What is the rate of unemployment? e) What is the price of a new 40-inch television?
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d) What is the rate of unemployment
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Judy spent 8 hours studying for an exam. Normally, she would have spent that time watching TV instead of studying. She figures she could have made a "B" after only studying 4 hours, but she really wanted an "A". What is Judy's marginal cost in terms of TV viewing to improve her grade from a "B" to an "A"?
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4 hours (Marginal cost is the additional cost of consuming one more unit. In this case, one more unit refers to increasing a grade by one letter.)
