Chapter 1, Economics and Economic Reasoning Video Solutions, Macroeconomics

02:34

Problem 1

Why does the textbook author focus on coordination rather than on scarcity when defining economics? LO1

Crystal Wang

Numerade Educator

01:20

Problem 2

Define deduction and give an example of deductive reasoning. LO1

Victor Salazar

Numerade Educator

01:22

Problem 3

Define induction and give an example of inductive reasoning. LO1

Erika Bustos

Numerade Educator

01:22

Problem 4

Your study partner has suggested that deductive reasoning is much more accurate than inductive reasoning. How would you respond? LO1

Erika Bustos

Numerade Educator

00:15

State whether the following is an example of deductive, inductive, or abductive reasoning:
a. The number of rings inside a tree is the age of a tree. This tree has 10 rings. Conclusion: This tree is 10 years old.
b. People spend 80 percent of their income. Susan will earn $\$ 60,000$ this year. Conclusion: Susan will spend $\$ 48,000$.
c. Ten college students are standing in a line to choose either an economics course or an English course. The first student chooses economics. The second student chooses economics and so does the third. Conclusion: All college students prefer economics over English.
d. Ten college students are standing in a line to choose either an economics course or an English course. The first student chooses economics. The second student chooses economics and so does the third. Conclusion: All college students prefer economics over English. The fourth student in line chooses English. The first three students were women; the fourth was a man.
Revised conclusion: Male college students prefer English. Female college students prefer economics. LO1

Ashley High

Numerade Educator

02:45

Problem 6

List one recent choice you made and explain why you made the choice in terms of marginal benefits and marginal costs. $\mathrm{LO} 2$

Mihir Nayar

Numerade Educator

00:16

Problem 7

You rent a car for $$\$ 29.95$$. The first 150 miles are free, but each mile thereafter costs 15 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car? $\mathrm{LO} 2$

Amy Jiang

Numerade Educator

01:12

Problem 8

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 the cost that one drug user imposes on society is $$\$ 897$$. Based on this information alone, should the government spend the money on drug control? $\mathrm{LO} 2$

Sunanda Adibhatla

Numerade Educator

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Problem 9

What is the opportunity cost of buying a $$\$ 20,000$$ car? $\mathrm{LO} 3$

Donna Densmore

Numerade Educator

00:59

Problem 10

Suppose you currently earn $$\$ 30,000$$ a year. You are considering a job that will increase your lifetime earnings by $$\$ 300,000$$ but that requires an MBA. The job will mean also attending business school for two years at an annual cost of $$\$ 25,000$$. You already have a bachelor's degree, for which you spent $$\$ 80,000$ in tuition and books. Which of the above information is relevant to your decision whether to take the job? LO3

Lucas Finney

Numerade Educator

Problem 11

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. $\mathrm{LO}_2, \mathrm{LO} 3$

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Problem 12

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. $\mathrm{LO} 3$

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06:31

Problem 13

In 1999 Royal Philips Electronics paid $$\$ 180$$ million to buy 20-year naming rights of the Atlanta, Georgia, stadium, home of NBA's Atlanta Hawks. University of Massachusetts Professor Timothy D. DeSchriver and Drexel University Professor Paul E. Jensen analyzed naming rights. In their study, what was the likely impact of each of the following on a corporation's willingness to pay to name a stadium? (Difficult)
a. An existing team is relocating to the stadium.
b. The stadium is in a highly populated area.
c. The stadium's current name is the Staples Center and has had that name for 20 years. LO3

Jon Southam

Numerade Educator

05:20

Problem 14

Give two examples of social forces and explain how they keep economic forces from becoming market forces. LO4

Noor Almesad

Numerade Educator

01:16

Problem 15

Give two examples of political or legal forces and explain how they might interact with economic forces. LO4

Kara Merfeld

Numerade Educator

01:57

Problem 16

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.
a. Who benefits from the deal?
b. Who is hurt?
c. Should a society allow such market transactions? Why? LO4

Achintya Suden

Numerade Educator

03:42

Problem 17

State whether the following are primarily microeconomic or macroeconomic policy issues:
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? LO5

Jennifer Stoner

Numerade Educator

Problem 18

List two microeconomic and two macroeconomic problems. LO5

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00:51

Problem 19

What is an economic model? What besides a model do economists need to make policy recommendations? LO1, LO6

Daniel Cisneros

Numerade Educator

Problem 20

Does economic theory prove that the free market system is best? Why? (Difficult) LO6

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01:48

Problem 21

State whether the following statements belong in positive economics, normative economics, or the art of economics.
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. What society feels is fair is determined largely by cultural norms.
d. When deciding which rationing mechanism is best (lottery, price, first-come/first-served), one must take into account the goals of society.
e. 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. LO6

Oluwadamilola Ameobi

Numerade Educator

01:41

Problem 22

Distinguish between theorems and precepts. Is it possible for two economists to agree about theorems but disagree about precepts? Why or why not? LO6

Ian Shi

Numerade Educator

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