18eKeyQuestionAnswers_Ch01

18eKeyQuestionAnswers_Ch01 - 1-3(Key Question)Cite three...

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Unformatted text preview: 1-3(Key Question)Cite three examples of recent decisions that you made in which you, at least implicitly, weighed marginal costs and marginal benefits.Student answers will vary, but may include the decision to come to class, to skip breakfast to get a few extra minutes of sleep, to attend college, or to make a purchase. Marginal benefits of attending class may include the acquisition of knowledge, participation in discussion, and better preparation for an upcoming examination. Marginal costs may include lost opportunities for sleep, meals, or studying for other classes. In evaluating the discussion of marginal benefits and marginal costs, be careful to watch for sunk costs offered as a rationale for marginal decisions.1-5(Key Question) Indicate whether each of the following statements applies to microeconomics or macroeconomics:a.The unemployment rate in the United States was 4.9 percent in January 2008.b.A U.S. software firm discharged 15 workers last month and transferred the work to India.c.An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.d.U.S. output, adjusted for inflation, grew by 2.2 percent in 2007.e.Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point.f.The consumer price index rose by 2.8 percent in 2007.Macroeconomics: (a), (d), and (f)Microeconomics: (b), (c), and (e)1-7(Key Question) Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. The price of candy bars is $.75 and the price of peanuts is $1.50.a.Construct a table showing the alternative combinations of the two products that are available.b.Plot the data in your able as a budget line in a graph. What is the slope of the budget line? What is the opportunity cost of one more candy bar? Of one more bag of peanuts? Do these opportunity costs rise, fall, or remain constant as each additional unit of the product is purchased.c.How, in general, would you decide which of the available combinations of candy bars and bags of peanuts to buy?...
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18eKeyQuestionAnswers_Ch01 - 1-3(Key Question)Cite three...

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