7. Indicate whether each of the following is primarily a microeconomics issue or a macroeconomic* issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold. This is a (1) issue. b. The effect of higher income taxes on the total amount of consumer spending. This is a (2) issue. c. The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries. This is a (3) issue. d. The reasons for low rates of profit in the airline industry. This is a (4) issue. 3: Definition Microeconomics The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. 4: Definition Macroeconomics The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth. (1) O microeconomic (2) O microeconomic (3) O microeconomic (4) O microeconomic O macroeconomic O macroeconomic O macroeconomic O macroeconomicW 8. Macroeconomics is O A. the study of rms as a group with special emphasis on hovlr these rms interact with one another. 0 B. the study of "large'I {greater than $100,000) economic transactions in the economy. 0 C. the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth. 0 D. the study of how households and rms make choices, how they interact in markets, and hovrlr the government attempts to inuence their choices. hpszttxlitem prodpearsoncmgcorntapilw Ipnntten-usmighered 2:3 9111101, 4:03 PM Module 2 Homework: Intro to EconNikelas Nguyen 9. Microeconomics is the study of O A. rms as individual units excluding how these rms interact with one another. 0 B. the economy as a whole, including topics such as ination, unemployment, and economic growth. 0 (2. how households and rms make choices, how they interact in markets, and how the government attempts to influence their choices. 0 D. "small" (less than $100,000) economic transactions in the economy. 10. Which of the following best describes scarcity\"? O A. Unlimited wants exceed the limited resources available. 0 B. Markets cannot properly allocate resources. 0 C. Prices of goods are very high. O D. Wants cannot be Jllled and thus all goods must be rationed. Scarcity is central to the study of eoonomics because it implies that O A. society must make decisions at the margin. 0 B. every choice involves a tradeoff (also called an opportunity cost}. 0 C. economic agents are rational. O D. wants are unlimited. J 11 . The three economic questions that every society must answer are 0 A. What goods will be produced, how will they be produced, and who will receive the goods? 0 B. What are the prices of goods, how are they determined, and who will pay for them? 0 C. What kind of govemment will the society have, how will it be run, and who will run it? O D. What economic system will be used, how will it be implemented, and who will make market decisions? 12. Evaluate the following argument: "Adam Smith's analysis is based on a fundamental aw: He assumes that people are motivated by selfinterest. But this isn't ne. I'm not selsh, and most people I know aren't selsh." O A. This statement correctly identies how Smith's analysis ignored charitable acts of giving and benevolence. O B. This statement is based on the misconception that Smith's analysis applies to every aspect of life. 0 O. This statement is based on the misconception that following your selfinte rest and being selsh are the same thing. 0 D. This statement is based on the misconception that Smith's analysis provides no role for government guidance. 0 E. This statement is based on the misconception that Smith's analysis applies to rms and households. ..__', ..__ . _..___._ _ ___.._.__..._. _..__ __ ___.. ___.._.__ . \"3-)-.. (1) is concerned with what is, and (2} is concerned with what ought to be. Economics is about (3) , which measures the costs and benets of different courses of action. (1) 0 Positive analysis (2) O positive analysis (3) O positive analysis O Neutral analysis 0 neutral analysis 0 neutral analysis 0 Normative analysis O normative analysis O normative analysis
