Questions and Answers of Microeconomics Principles

What role do domestic opportunity costs play in determining a nation’s area of comparative advantage and therefore specialization relative to that of a trading partner? Provide a numerical example
The United States usually runs a __________in its international trade in goods and a __________ in its international trade in services.a. Deficit, deficit.b. Deficit, surplus.c. Surplus, deficit.d.
A country that has an absolute advantage over another country in producing a product __________ a comparative advantage as well.a. Will have.b. May have.
True or False: Consider the exchange rate between the U.S. dollar and the Japanese yen. If the exchange rate changes from $1 = ¥80 to $1 = ¥105, then the dollar has “appreciated” in value
Tariffs and quotas __________ domestic producers but __________ domestic consumers.a. Help, help.b. Help, harm.c. Harm, help.d. Harm, harm.
Initially assume that it costs $1.36 to purchase 1 euro. How many euros are needed to buy $1? How many dollars are needed to purchase an item priced at 84 euros? Next, assume that the exchange rate
Suppose a country’s total output is growing 10 percent per year but its population is growing 11 percent per year. What will happen to living standards?a. Remain the same.b. Fall.c. Rise.
True or False: A DVC that has little in the way of natural resources is destined to remain poor.
True or False: The term developing country (DVC) is applied to rich nations like the United States and Germany because their economies are always growing quickly by developing new technologies.
List and discuss five policies that DVC governments might undertake to promote economic development and expansion of income per capita in their countries?
As it relates to the vicious circle of poverty, what is meant by the saying “Some DVCs stay poor because they are poor”? Change the box labels as necessary in Figure 25W.3 to explain rapid
What is the demographic transition? Contrast the demographic transition view of population growth with the traditional view that slower population growth is a prerequisite for rising living standards
Explain how each of the following can be obstacles to the growth of income per capita in the DVCs: lack of natural resources, large populations, low labor productivity, poor infrastructure, and
Explain how the absolute per capita income gap between rich and poor nations might increase, even though per capita income (or output) is growing faster in DVCs than in IACs.
What are the four categories used by the World Bank to classify nations on the basis of national income per capita? Identify two nations for each of the four categories.
Return to Problem 3 and assume the exchange rate is fixed against the dollar at the equilibrium exchange rate that occurs in year 1. Also suppose that Japan and the United States are the only two
Suppose that the current Canadian dollar (CAD) to U.S. dollar exchange rate is $.85 CAD = $1 US and that the U.S. dollar price of an Apple iPhone is $300. What is the Canadian dollar price of an
Refer to following table, in whichQd is the quantity of yen demanded,P is the dollar price of yen,Qs is the quantity of yen supplied in year 1, andQs' is the quantity of yen supplied
China had a $214 billion overall current account surplus in 2012. Assuming that China’s net debt forgiveness was zero in 2012 (its capital account balance was zero), by how much did Chinese
Alpha€™s balance-of-payments data for 2012 are shown below. All figures are in billions of dollars. What are the (a) Balance on goods, (b) Balance on goods and services, (c)
Other things equal, if the United States continually runs trade deficits, foreigners will own________ U.S. assets. a. More and more.b. Less and less.c. The same amount of.
Why do you think there is so much government corruption in some developing countries?
Do you think that the nature of the problems the DVCs face requires a government-directed or a private-sector directed development process? Explain your reasoning.
Contrast the older and the modern views of technological advance as they relate to the economy. What is the role of entrepreneurs and other innovators in technological advance? How does research by
Answer the following questions, which relate to measures of concentration: a. What is the meaning of a four-firm concentration ratio of 60 percent? 90 percent? What are the shortcomings of
Erin grows pecans. The number of bushels (B) that she can produce depends on the number of inches of rainfall (R) that her orchards get. The relationship is given algebraically as follows: B = 3,000
Match each term with the correct definition. economics opportunity cost marginal analysis utility a. The next-best thing that must be foregone in order to product one more unit of a given
How does shielding employees and suppliers from business risk help to improve economic outcomes? Who is responsible for managing business risks in the market system?
In a sentence, describe the meaning of the phrase “invisible hand.”
Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the second pound is worth
Pham can work as many or as few hours as she wants at the college bookstore for $9 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the
Suppose that you are given a $100 budget at work that can be spent only on two items: staplers and pens. If staplers cost $10 each and pens cost $2.50 each, then the opportunity cost of purchasing
For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units. a. 3,000
Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. For each of the following situations,
Indicate whether each of the following statements applies to microeconomics or macroeconomics: a. The unemployment rate in the United States was 8.1 percent in August 2012. b. A U.S.
Match each term with the correct definition. economics opportunity cost marginal analysis utility a. The next-best thing that must be foregone in order to product one more unit of a given

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