Chapter 1, Economics and Economic Reasoning Video Solutions, Microeconomics

02:34

Problem 1

Why does the textbook author focus on coordination rather than on scarcity when defining economics?

Crystal Wang

Numerade Educator

03:42

State whether the following are primarily microeconomic or macroeconomic policy issues: $(L O I-1)$
a. Should U.S. interest rates be lowered to decrease the amount of unemployment?
b. Will the fact that more and more doctors are selling their practices to managed care networks increase the efficiency of medical providers?
c. Should the current federal income tax be lowered to reduce unemployment?
d. Should the federal minimum wage be raised?
e. Should Sprint and Verizon both be allowed to build local phone networks?
f. Should commercial banks be required to provide loans in all areas of the territory from which they accept deposits?

Jennifer Stoner

Numerade Educator

02:09

Problem 3

List two microeconomic and two macroeconomic problems.

Ulysses Ng

Numerade Educator

03:01

Problem 4

Calculate, using the best estimates you can:
a. Your opportunity cost of attending college.
b. Your opportunity cost of taking this course.
c. Your opportunity cost of attending yesterday's lecture in this course.

Noor Almesad

Numerade Educator

02:45

Problem 5

List one recent choice you made and explain why you made the choice in terms of marginal benefits and marginal costs.

Mihir Nayar

Numerade Educator

00:16

Problem 6

You rent a car for $\$ 29.95 .$ The first 100 miles are free, but each mile thereafter costs 10 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car?

Amy Jiang

Numerade Educator

01:12

Problem 7

Economists Henry Saffer of Kean University, Frank J. Chaloupka of the University of Illinois at Chicago, and Dhaval Dave of Bentley College estimated that the government must spend $\$ 4,170$ on drug control to deter one person from using drugs and that the cost one drug user imposes on society is $\$ 897$. Based on this information alone, should the government spend the money on drug control?

Sunanda Adibhatla

Numerade Educator

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Problem 8

What is the opportunity cost of buying a $\$ 20,000$ car?

Donna Densmore

Numerade Educator

00:59

Problem 9

Suppose you currently earn $\$ 60,000$ a year. You are considering a job that will increase your lifetime earnings by $\$ 600,000$ but that requires an MBA. The job will mean also attending business school for two years at an annual cost of $\$ 50,000$. You already have a bachelor's degree, for which you spent $\$ 160,000$ in tuition and books. Which of the above information is relevant to your decision on whether to take the job?

Lucas Finney

Numerade Educator

03:09

Problem 10

Suppose your college has been given $\$ 5$ million. You have been asked to decide how to spend it to improve your college. Explain how you would use the economic decision rule and the concept of opportunity costs to decide how to spend it.

Oluwadamilola Ameobi

Numerade Educator

05:20

Problem 11

Give two examples of social forces and explain how they keep economic forces from becoming market forces.

Noor Almesad

Numerade Educator

01:16

Problem 12

Give two examples of political or legal forces and explain how they might interact with economic forces.

Kara Merfeld

Numerade Educator

01:57

Problem 13

Individuals have two kidneys, but most of us need only one. People who have lost both kidneys through accident or disease must be hooked up to a dialysis machine, which cleanses waste from their bodies. Say a person who has two good kidneys offers to sell one of them to someone whose kidney function has been totally destroyed. The seller asks $\$ 30,000$ for the kidney, and the person who has lost both kidneys accepts the offer. $(L O I-3)$
a. Who benefits from the deal?
b. Who is hurt?
c. Should a society allow such market transactions? Why?

Achintya Suden

Numerade Educator

00:51

Problem 14

What is an economic model? What besides a model do economists need to make policy recommendations?

Daniel Cisneros

Numerade Educator

04:05

Problem 15

Does economic theory prove that the free market system is best? Why? (Difficult)

Kevin Corkran-Itagaki

Numerade Educator

01:05

Problem 16

Distinguish between theorems and precepts. Is it possible for two economists to agree about theorems but disagree about precepts? Why or why not?

Kaylee Mcclellan

Numerade Educator

02:21

Problem 17

What is the difference between normative and positive statements?

Mihir Nayar

Numerade Educator

01:48

Problem 18

State whether the following statements belong in positive economics, normative economics, or the art of economics. $(L O I-5)$
a. In a market, when quantity supplied exceeds quantity demanded, price tends to fall.
b. When determining tax rates, the government should take into account the income needs of individuals.
c. Given society's options and goals, a broad-based tax is generally preferred to a narrowly based tax.
d. California currently rations water to farmers at subsidized prices. Once California allows the trading of water rights, it will allow economic forces to be a market force.

Oluwadamilola Ameobi

Numerade Educator

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