Question.737 - Name of Student: _______________________________________ ECONOMICS Chapter 1 Study Questions and Problems worksheet Instructions: Download and complete this worksheet. 10 points Check the due date of this worksheet in D2L Assignments. Read the Questions 1 -- 8, then answer each question in this document. Read the Multiple Choice Questions 9 29, then select the correct answer by writing an asterisk * after that answer. Save your document with the name {Your name} ECON 1101 Chapter 1 -Study Questions and Problems-worksheet. Upload your completed document in D2L to Assignments: Worksheets--Analyzing Economic Concepts and Problems - ECONOMICS Chap-1-Study Questions and Problems-worksheet. ******************************************** ****************** Study Questions and Problems Explain why both nations with high living standards and nations with low living standards face the problem of scarcity. If you won $1 million in a lottery, would you escape the scarcity problem? Answer: Why is money not considered capital in economics? Explain the difference between macroeconomics and microeconomics. Give 2 examples of the areas of concern to each branch of economics. Write or type in the space after each question whether the issue is microeconomic or macroeconomic. How will an increase in the price of Coca-Cola affect the quantity of Pepsi Cola sold? Micro What will cause the nations inflation rate to fall? How does a quota on textile imports affect the textile industry? Does a large federal budget deficit reduce the rate of unemployment in the economy? Explain why it is important for an economic model to be an abstraction from the real world. [Hint: What will be the result if the economic model is NOT an abstraction?] Explain the importance of the ceteris paribus assumption for an economic model. Suppose Congress cuts much spending for the military, and then unemployment rises in the U.S. defense industry. Is there causation in this situation, or are we observing a simple association by chance between events? [Hint: What do private companies and businesses in the U.S. defense industry that make weapons and provide services to the U.S military depend on?] Analyze the positive versus normative arguments in the following case. Should the Government Require Air Bags? Technological advances continuously provide new high-tech options to save lives that add to the price of cars, such as cameras, radar, and airbags. Air bag advocates say air bags will save lives and the government should require them in all cars. Air bags add an estimated $600 to the cost of a car, compared to about $100 for a set of regular seat belts. Opponents argue that air bags are electronic devices subject to failure and have produced injuries and death. For example, air bags have killed both adults and children whose heads were within the inflation zone at the time of deployment. Opponents therefore believe the government should leave the decision of whether to spend an extra $600 or so for an air bag to the consumer. The role of the government should be limited to providing information on the risks of having versus not having air bags. List two positive statements from the paragraph above: a. Technological advances continuously provide new high-tech options to save lives that add to the price of cars, such as b. List two normative statements from the paragraph: ******* *********************** Multiple Choice Questions: Type an asterisk after the correct answer. right25082500Question: Multiple Choice. What kind of resource land, labor, or capital --is a herd of dairy cows that produce milk? [Read carefully! This is a trick question!] A herd of dairy cows is in the category of land, because a cow is a living being, like wild buffaloes, fish, or forests. Modern dairy cows come directly out of nature, like fish out of the ocean, or like wild deer out of the forests. A herd of dairy cows is in the category of labor, because it requires labor to milk cows with the dairy equipment. A herd of dairy cows is in the category of capital, because dairy herds have been developed, improved, and maintained over many centuries. Modern dairy cows are very different from their wild ancestors. Which of the following illustrates the concept of scarcity? More clean air is wanted than is available in large polluted metropolitan areas such as Mexico City. There is usually more than one use of your free time in the evening. There are many competing uses for the annual budget of your city, county, or state. All of the above are correct. Which of the following are factors of production? The outputs generated by the production process transforming land, labor, and capital into goods and services Resources restricted to the land, such as natural resources that are unimproved by human economic activity Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories) Just labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services Which of the following is?not?an example of a capital input? A persons skills and abilities, which can be employed to produce valuable goods and services Factories and offices where goods and services are produced Tools and equipment Computers used by a company to record inventory, sales, and payroll Which of the following is the best definition of economics? Economics is the study of how to manage corporations to generate the greatest return on shareholder investment. Economics is the study of how to manage city and county government to generate the greatest good to its citizens. Economics is the study of how society chooses to allocate its scarce resources. Economics is the study of how to track revenues and costs in a business. Which of the following?best?illustrates the application of the model-building process to economics? On a Sunday morning talk show, two economists with differing political agendas argue about the best way to solve the economic recession caused by the 2020 Covid-19. A labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypotheses in the model. A Ph.D. student in economics makes up (falsifies) data on the lumber market and develops a model for his dissertation that seems to be consistent with the data. Economists come to believe that some economic models are true simply because prominent leading economists say they are true. Which of the following represents causality rather than association? In years that fashion dictates wider lapels on mens jackets, the stock market grows by at least 5 percent. Interest rates are higher in years ending with a 1 or a 6. Unemployment falls when the AFC champion wins the Super Bowl. Quantity demanded goes up when price falls because lower prices increase consumer purchasing power and because some consumers of substitute goods switch. Which of the following describes the ceteris paribus assumption? If we increase the price of a good, reduce consumer income, and lower the price of substitutes and if quantity demanded is observed to fall, we know that the price increase caused the decline in quantity demanded. If the federal government increases government spending and the Federal Reserve Bank lowers interest rates, we know that the increase in government spending caused unemployment to fall. If a company reduces its labor costs, negotiates lower materials costs from its vendors, and advertises, we know that the reduced labor costs are why the companys profits are higher. We observe an increase in the quantity demanded when the price of the good decreases and when, at the same time, all other factors are held constant. The condition of scarcity cannot be eliminated. prevails in poor economies. prevails in rich economies. all of the above are correct. Which of the following?best?describes an entrepreneur? A person who works as an office clerk at a major corporation and receives a salary A person who combines the factors of production to produce innovative products A special type of physical capital Wealthy individuals who provide savings and buy/sell stocks and bonds that stimulate the economy Which of the following is?true?about renewable natural resources? They are a type of land resource (for example, oil, coal, and natural gas) that has a fixed stock. They are a type of capital resource (for example, irrigation networks and wastewater treatment plants) that utilize water. They are a type of capital resource (for example, air filtration systems in buildings) that renew and refresh polluted air from the outside. They are a type of land resource (for example, forests, rangelands, and marine fisheries) that naturally regenerate and thus can tolerate a sustained harvest but can be depleted from excessive harvest. Because of scarcity, it is impossible to satisfy every desire and choices must be made. the available supply of time, goods, and resources is greater than human wants. every desire is fulfilled. there are no limits on the economys ability to satisfy unlimited wants. Which of the following represents positive economics? Policy X is fair. Outcome Y is the best objective to achieve. If policy X is followed, then outcome Y results. All of the above are positive economic analyses. Which of the following is the last step in the model-building process? Collect data and test the model. Develop a model based on simplified assumptions. Identify the problem. Formulate an assumption. Which of the following is?not?a type of economic analysis? Positive Resources Normative None of the above Which word or words indicate that an economist is using positive economic analysis? Good Bad If-then Should Which of the following is a realistic method to eliminate scarcity as an economic problem? Moderation of peoples competitive instincts Discovery of new, sufficiently large energy reserves Resumption of steady productivity growth None of the above is correct Which of the following is?not?an example of economic capital? Equipment Machinery Physical plants Money, stocks and bonds Which of the following is the first step in the model-building process? Collect data and test the model. Develop a model based on simplified assumptions. Identify the problem. Include all possible variables that affect the model. Which of the following is a type of economic analysis? Positive Resources Association None of the above is correct Which of the following careers could result from majoring in economics? Management Banking Government All of the above are correct. ******************************** ******

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