Microeconomics: Principles, Problems, and Policies

Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn

Chapter 1

Limits, Alternatives, and Choices - all with Video Answers

Educators

Chapter Questions

Problem 1

What is an opportunity cost? How does the idea relate to the definition of economics? Which of the following decisions would entail the greater opportunity cost: allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot? Explain.

Mihir Nayar

Mihir Nayar

Numerade Educator

Problem 2

Cite three examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit.

Mihir Nayar

Numerade Educator

Problem 3

What is meant by the term "utility" and how does the idea relate to purposeful behavior?

Mihir Nayar

Numerade Educator

Problem 4

What are the key elements of the scientific method and how does this method relate to economic principles and laws?

Mihir Nayar

Numerade Educator

Problem 5

State (a) a positive economic statement of your choice, and then (b) a normative economic statement relating to your first statement.

Mihir Nayar

Numerade Educator

Problem 6

How does the slope of a budget line illustrate opportunity costs and trade-offs? How does a budget line illustrate scarcity and the effect of limited incomes?

Kaylee Mcclellan

Kaylee Mcclellan

Numerade Educator

Problem 7

What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?

Lindsay Bur

Numerade Educator

Problem 8

Why is money not considered to be a capital resource in economics? Why is entrepreneurial ability considered a category of economic resource, distinct from labor? What are the major functions of the entrepreneur?

Lindsay Bur

Numerade Educator

Problem 9

Specify and explain the typical shapes of marginal-benefit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product? Explain.

Srikar Katta

Numerade Educator

Problem 10

Suppose that, on the basis of a nation's production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9,000 pizzas. Relate this information to the following statement:
"Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus 'move outside its production possibilities curve."

Mihir Nayar

Numerade Educator

Problem 11

Studies indicate that married men on average earn more income than unmarried men of the same age and education level. Why must we be cautious in concluding that marriage is the cause and higher income is the effect?

Jennifer Stoner

Jennifer Stoner

Numerade Educator