The Book question came out of is: (ECONmacro/ Principles of Macroeconomics/ student Edition 4\ Willian A. McEachern)

1. 1. EXPLAIN THE ECONOMIC PROBLEM OF SCARCE RESOURCES AND UNLIMITED WANTS
2. (Definition of Economics) What determines whether or not a resource is scarce? Why is the concept of scarcity important to the definition of economics?
   1. DESCRIBE THE FORCES THAT SHAPE ECONOMIC CHOICES
3. (Rational Self-Interest) Discuss the impact of rational self-interest on each of the following decisions:
4. Whether to attend college full time or enter the workforce full time
5. Whether to buy a new textbook or a used one
6. Whether to attend a local college or an out-of-town college

3.) (Rational Self-Interest )if behavior is governed by rational self-interest, why do people make charitable contributions of time and money?

4.) (Marginal Analysis) The owner of a small pizzeria is deciding whether to increase the radius of delivery area by one mile. What consideratios mist be taken into account if such a decision is to increase profitability?

5.) (Time and information) it is often costly to obtain the information necessary to make good decisions. Yet your own interests can be best served by rationally weighing all options available to you. This requires informed decision making. Does this mean that making uninformed decisions is irrational? How do you determine how much information is the right amount?

1-4 IDENTIFY SOME PITFALLS OF ECONOMIC ANALYSIS

7.) (Pitfalls of Economic Analysis) Review the discussion of pitfalls in economic thinking in this chapter. Then identify the fallacy, or mistake in thinking, in each of the following statements.

a.) Raising taxes always increases government revenues.

b.) Whenever there is a recession, imports decrease. Therefore, to stop a recession, we should increase imports.

c.) Raising the tariff on imported steel helps the U.S. steel industry. Therefore, the entire economy is helped.

d. Gold sells for about $1,200 per ounce. Therefore, the U.S. government could sell all the gold in Fort Knox at $1,300 per ounce to reduce the national debt.

8.) (Association Versus Causation) Suppose I observe that communities with lots of doctors tend to have relatively high rates of illness. I conclude that doctors cause illness. What wrong with this reasoning?