Book: economics a contemporary introduction Chapter 1

Questions for Review 1. Definition of Economics What determines whether or not a Which groups play supporting roles? In what sense are they resource is scarce? Why is the concept of scarcity important to supporting actors? the definition of economics? 15. Micro Versus Macro Determine whether each of the following 2. Resources To which category of resources does each of the is primarily a microeconomic or a macroeconomic issue: following belong? a. What price to charge for an automobile a. A taxi b. Measuring the impact of tax policies on consumer spending b. Computer software in the economy c. One hour of legal counsel Your family's decisions about what to buy d. A parking lot d. A worker deciding how much to work each week e. A forest e. Designing a government policy to increase total employment f. The Mississippi River 6. Micro Versus Macro Some economists believe that to under- g. An individual introducing a new way to market products on stand macroeconomics, you must first understand microeco- the Internet nomics. How does microeconomics relate to macroeconomics? 3. Goods and Services Explain why each of the following would 7. Normative Versus Positive Analysis Determine whether each not be considered "free" for the economy as a whole: of the following statements is normative or positive: a. Food vouchers a. The U.S. unemployment rate was 6.2 percent in 2014. b. U.S. aid to developing countries c. Corporate charitable contributions b. The inflation rate in the United States is too high. d. Noncable television programs c. The U.S. government should increase the minimum wage. e. Public high school education d. U.S. trade restrictions cost consumers $100 billion annually. Role of Theory What good is economic theory if it can't pre- OW . Economic Decision Makers Which group of economic decision makers plays the leading role in the economic system? dict the behavior of a specific individual? Problems and Exercises 9. Rational Self-Interest Discuss the impact of rational self- 10. Rational Self-Interest If behavior is governed by rational self- interest on each of the following decisions: interest, why do people make charitable contributions of time 00 0 a. Whether to attend college full time or enter the workforce and money? full time 11. Marginal Analysis The owner of a small pizzeria is deciding b. Whether to buy a new textbook or a used one whether to increase the radius of delivery area by one mile. c. Whether to attend a local college or an out-of-town What considerations must be taken into account if such a deci- college sion is to increase profitability