Problems and Applications
Chapter 1/Ten Principles of Economics
4. If you spend $100 now instead of saving it for a year and earning 5 percent interest, you are
giving up the opportunity to spend $105 one year from now.
5. The fact that you have already
1. A simplifying assumption
a. affects the important conclusions of an economic model.
b. increases the level of detail in an economic model.
c. limits the validity of an economic models conclusion.
d. eliminates unnecessary details from an economic model
1. The commercial jetliner industry, consisting of Boeing and Airbus, represents
a. perfect competition.
d. None of the above are correct.
2. In a perfectly competitive market,
a. advertising is widely used to influence demand a
1. Choices must be made in the use of resources
a. because they are in finite supply.
b. because they are in finite demand.
c. only if the resources are nonrenewable.
d. because they are in infinite supply.
2. The cost to an airline of letting its employe
1. If price elasticity of demand is 2.0, this implies that consumers would
a. buy twice as much of the good if price falls by 10 percent.
b. require a 2 percent cut in price to raise quantity demanded of the good by 1 percent.
c. buy 2 percent more of the
1. The interaction of the IS curve and the LM curve together determine:
A) the price level and the inflation rate.
B) the interest rate and the price level.
C) investment and the money supply.
D) the interest rate and the level of output.
Use the followin
1. In the Solow growth model, an economy in the steady state with a population growth
rate of n but no technological growth will exhibit a growth rate of output per worker at
D) (n + ).
2. In the Solow growth model, with a given pro
Aggregation: the process of adding individual economic variables to obtain
Average labor productivity: the amount of output produced per unit of labor
Unemployment: the number of people who are available for work and ac
(1) Find the interval of convergence for the series. (Here n 1)
x / loge (n + 2)
(1)n (x 2)n /nn
P n(n + 1)(n + 2) n
(2) Show that for |x| < 1,
Also show that for |x| > 1,