Microeconomics Chapter 1 HW Answers

A rational​, ​self-interested student decides whether to purchase a textbook required for a particular class based on all of the​ following, except

Rational, self-interested government officials seeking more funding for mass transit through higher taxes should consider

A municipality taxing hotel guests to obtain funding for a new sports stadium should consider all of the​ following, except

To which of the following​ household-type(s) does the phrase​ "unlimited wants and limited resources" ​apply?
I. A​ low-income household
II. A​ middle-income household
III. A​ high-income household

a. The national unemployment rate.
b. The decision of a worker to work overtime or not.
c. A​ family's choice of having a baby.
d. The rate of growth of the money supply.
e. The national​ government's budget deficit.
Macroeconomics
f. A​ student's allocation of study time across two subjects.

Suppose that the U.S. federal government has borrowed​ $500 billion to expand its total spending on goods and services across the entire economy in an effort to boost by​ $500 billion the aggregate production by the​ nation's firms. Would we apply microeconomic or macroeconomic analysis to analyze this policy​ action?

Suppose that the government has raised by​ $10 a​ per-carat tax rate it imposes on diamonds in an effort to influence production of this particular good by each of the firms that produce it and purchases by individual consumers. Would we apply microeconomic or macroeconomic analysis to analyze this policy​ action?

Centralized command and control prevails throughout a certain​ nation's economy. What three key economic questions have been addressed in this​ nation, and what has been the common element of the​ nation's answers to those​ questions?
a. The three key economic questions that have been addressed in this nation​ are:
b. The common element of the​ nation's answers to those key economic questions has​ been:

One of your​ classmates, Sally, is a hardworking​ student, serious about her​ classes, and conscientious about her grades. Sally is also​ involved, however, in volunteer activities and an extracurricular sport. Is Sally displaying
rational behavior?

Which of the following predictions appears to follow from a
model based on the assumption that​ rational, self-interested individuals respond to​ incentives?
a. For every 10 exam points Myrna must earn in order to pass her economics course and meet her graduation​ requirements, she will study one additional hour for her economics test next week.
b. A coin toss will best predict​ Leonardo's decision about whether to purchase an expensive business suit or an inexpensive casual outfit to wear next week when he interviews for a​ high-paying job he is seeking.
c. ​Celeste, who uses earnings from her regularly scheduled hours of​ part-time work to pay for her room and board at​ college, will decide to buy a newly released DVD this week only if she is able to work two additional hours.

During her years of​ college, Dominique discovered that her three favorite subjects were​ astronomy, chemistry, and political science. She chose to major in astronomy because she had seen data indicating that science majors earn​ higher-than-average wages and because she liked astronomy better than both chemistry and political science. Upon​ graduation, however, she learned that average wages in chemistry fields were 20 percent higher than average wages earned by astronomers. Did​ Dominique's behavior violate the rationality​ assumption?
​Dominique's decision to major in astronomy

Some people claim that the​ "economic way of​ thinking" does not apply to issues such as health care. All of the following choices clearly demonstrate how economics applies to this​ issue, except when

​Recently, a bank was trying to decide what fee to charge for​ "expedited payments"—payments that the bank would transmit extra speedily to enable customers to avoid late fees on cable TV​ bills, electric​ bills, and the like. To try to determine what fee customers were willing to pay for expedited​ payments, the bank conducted a survey. It was able to determine that many of the people surveyed already paid fees for services that exceeded the maximum fees that they said they were willing to pay. This illustrates that

a. The notion that people do not intentionally make decisions that would leave them worse off is known
as
b. The hypothesis that people are nearly​,but not​ fully, rational, so that they cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them is known as

The assumption of bounded rationality suggests that people might use rules of thumb to guide their decision making because

People may appear to use rules of​ thumb, as suggested by the assumption of bounded​ rationality, even though they may really be behaving in a manner suggested by the rationality assumption if

To make predictions about how many apps a person will download onto her tablet​ device, an economist presumes that the individual faces limitations that make it impossible for her to examine every possible choice among relevant apps.
a. In examining the above​ decision-making process, the approach that the economist is following can best be described as the one that relies on
In evaluating the price that an individual will be willing to pay for a given quantity of a particular type of health care​ service, a researcher assumes that the person considers all relevant health care options in pursuit of his own​ long-term satisfaction with resulting health outcomes.
b. In examining the above​ decision-making process, the approach that the researcher is following can best be described as the one that relies on
To determine the amount of time that a person will decide to devote to watching online videos each​ week, an economist makes the assumption that the individual will feel overwhelmed by the sheer volume of videos available online and will
respond by using a rule of thumb.
c. In examining the above​ decision-making process, the approach that the economist is following can best be described as the one that relies on

An economic study of the number of online searches that individuals conduct before selecting a particular item to purchase online presumes that people are interested only in their own​ satisfaction, pursue their ultimate​ objectives, and consider every relevant option.
a. In examining the above​ decision-making process, the approach that the economist is following can best be described as the one that relies on
An economist seeking to predict the effect that an increase in a​ state's sales tax rate will have on​ consumers? Purchases of goods and services presumes that people are limited in their ability to process information about how the​ tax-rate increase will influence the​ after-tax prices those consumers will pay.
b. In examining the above​ decision-making process, the approach that the economist is following relies on
To evaluate the impact of an increase in the range of choices that an individual confronts when deciding among devices for accessing the​ internet, an economic researcher makes the assumption that the individual is unable to take into account every new​ internet-access option available to her.
c. In examining the above​ decision-making process, the approach that the economist is following can best be described as the one that relies on

Sebastian is a financial analyst who is convinced that his clients do not always make choices that are consistent with their​ long-term objectives. He has also determined that his clients do not consider every relevant choice and often fail to act in their own​ self-interest. Does Sebastian perceive that his​ clients' behavior accords with the rationality assumption or the assumption of bounded​ rationality?
Sebastian perceives that his​ clients' behavior accords with the assumption of

Which one of the following is a positive​ statement?

Categorize each of the following conclusions as being the result of
positive analysis or normative analysis.
a. A higher minimum wage will reduce employment opportunities for minimum wage workers.
b. Increasing the earnings of minimum wage employees is​ desirable, and raising the minimum wage is the best way to accomplish this.
c. Everyone should enjoy open access to healthcare.
d. Healthcare subsidies will increase the consumption of health care.

Consider the following​ statements, based on a positive economic analysis that assumes that all other things remain constant. For​ each, list one other thing that might change and thus offset the outcome stated.
a. Increased demand for laptop computers will drive up their price.
b. Falling gasoline prices will result in additional vacation travel.
c. A reduction of income tax rates will result in more people working.

Maneesha has completed an analysis of the market for a prescription medication. She has determined that the policymaker should act to prevent an increase in the price of this drug on the grounds that the mainly elderly consumers of the medication already have spent their lives paying too much for pharmaceuticals. They ought not to have to pay higher​ prices, Maneesha has​ concluded, so the government should act to halt any further price increases in this market. Has Maneesha applied positive or normative economic​ analysis?
a. Maneesha has applied BLANK economic analysis
b. because her finding BLANK a value judgment or a statement of her subjective feelings.