Chapter 1 Homework

Chapter 1 Homework - Stephanie Chin ECON-203 9/13/07...

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Stephanie Chin ECON-203 9/13/07 Chapter 1 Homework 1. Opportunity cost is when society wants to obtain more of one thing it forgoes the opportunity of getting the next best thing. Economics is defined as the social science that studies how individuals and society make the best decisions under scarcity. Allocating a parking lot for the edge of a suburb would probably create the larger opportunity cost because parking is rarer in NYC than in suburbs where most families own driveways and garages and therefore by choosing to put a parking lot at the edge of a suburb you are giving up more than if you were to put a parking lot in NYC. 2. Utility means the satisfaction we obtain from using a good or service. Purposeful behavior includes the decisions people make to increase utility. 3. Marginal cost vs. marginal benefit a. When I decided whether it was more important that I spend $10 to go to the cafeteria for frozen yogurt or not spend any money and not get my frozen yogurt b. Buying a used vs. new book and whether I could handle clean vs. highlighted pages c. Deciding whether to keep shoes I bought online or send them back 4. Scientific method a. Observing b. Hypothesizing c. Testing the hypothesis d. Changing or disregarding the hypothesis e. Continued testing f. Hypothesis then evolve into theories that, once widely accepted, are referred to as an economic principles 5. Microeconomics or macroeconomics; a. The unemployment rate in the U.S. was 5.2 percent in Jan. 2005- Micro b. A U.S. software firm discharged 15 workers last month and transferred the work to India- Micro c. An unexpected freeze in central Florida reduced the citrus crop and caused the
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Chapter 1 Homework - Stephanie Chin ECON-203 9/13/07...

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