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Homework answers / question archive / University of Waterloo MICROECONO AFM101 Chapter 1 1)For the past year, Andre has played tennis once a month

University of Waterloo MICROECONO AFM101 Chapter 1 1)For the past year, Andre has played tennis once a month

Economics

University of Waterloo

MICROECONO AFM101

Chapter 1

1)For the past year, Andre has played tennis once a month. He now decides to play tennis twice a month.

You infer that for Andre,

.

 

has decreased

B.            either the marginal cost of a game of tennis has increased or the marginal benefit has decreased

C.            the marginal benefit from a game of tennis must have increased

D.            the marginal cost of a game of tennis must have decreased

 

2.            A rational choice               .

A.            is always the best choice for society

B.            will turn out to have been the best choice after the event

C.            achieves the greatest benefit over cost for the person making the choice

D.            has the lowest opportunity cost

 

 

3.            Consider the earnings of economics majors in comparison to the earnings of other majors. The earnings of economics majors are    .

A.            less than business and math majors but greater than engineering majors

B.            less than political science, computer science and math majors

C.            greater than finance, engineering, math, and business majors

D.            less than business majors but greater than finance majors

 

4.            You want to play the piano and read a good book.

You think hard about how to allocate the next hour between playing the pianoplaying the piano and reading and decide to play the piano for the first 35 minutes and then spend 25minutes reading.

Your decision is an example of   .

a.            the choice with the greatest marginal benefit

b.            making a choice at the margin

c.             wasting timewasting time

d.            good time management

 

5.            A person who majors in economics, completes a PhD, and gets a job as an economist would expect to earn                .

a.            about $80,000 by mid-career

b.            less than an analyst

c.             about $100,000 by mid-career

d.            about $62,000 by mid-career

 

6.            Complete the following sentence. Human capital             .

A.            includes the machines and buildings that businesses use to produce goods and services

B.            measured by the amount of income a person earns

C.            determines the quality of labour

D.            includes money, stocks, and bonds

 

7.            Economics is       .

a.            a subject that tells countries what goods they must trade

b.            a subject that tells governments what they must do

c.             a subject that studies how individuals cope with scarcity

d.            a subject that teaches us how to eliminate scarcity

 

8.            Which of the following is an example of a tradeoff?

a.            You spend more on textbooks and less on movies.

b.            You spend the same amount on textbooks and movies.

c.             You spend less on textbooks and less on movies.

d.            You spend more on textbooks and more on movies.

 

9.            Every day, we make many choices. We can't avoid having to make choices because         .

a.            there is too much variety

 

b.            we can't afford to do all the things we'd like to do

c.             there are too many TV channels

d.            we have too much time on our hands

e.            we can't find enough things to do to fill our day

f.             we can’t afford to buy all the things we’d like

 

10.          Choose the correct statement.

a.            For a given goal, economics compares the total benefit from achieving the goal with its total cost to find the best use of the available resources.

b.            Governments can make better decisions by using the tools of economics, but businesses require the tools of business administration, not economics.

c.             Policy questions involve a blend of positive and normative questions.

d.            Economics can help with the normative part of a policy goal.

 

11.          When you make a choice in your self-interest,   .

a.            that choice is inappropriate if it causes someone else to lose their job

b.            that choice is the one you think is best for you

c.             that choice is the one you think is best for everyone else but not for you

d.            that choice is a selfish choice because it increases your income at the the expense of someone else

 

12.          Suppose you always study 5 evenings for an exam, but this week you decide to study for one evening.

The        of one more evening of studying is          .

a.            marginal increase; an evening not spent with your friends, and missing your favourite TV program

b.            marginal increase; 6 evenings spent studying

c.             marginal cost; an evening not spent with your friends, missing your favourite TV program, and missing a game of pick-up basketball

d.            marginal cost; an evening not spent with your friends, if that is your best alternate use of the time

 

 

13.          Choose the correct statement

a.            Social interest and self-interest do not conflict.

b.            What we do in pursuit of our self-interest is independent of the social interest.

c.             Choices that are the best for society as a whole are said to be in the social interest.

d.            You make choices based on what you think is best for society as a whole.

 

 

14.          Suppose that when you study 4 hours for an exam, your mark is 80 percent. If you study for an extra hour, your mark is 85 percent.

Choose the correct statement.

a.            The total benefit from studying one more hour is 15 percent.

b.            The marginal benefit from studying one more hours is 80 percent.

c.             The marginal benefit from studying one more hour is 5 percent.

d.            The marginal cost of studying one more hour is 85 percent.

 

15.          Choose the statement about incentives that is incorrect.

A.            If the price of pop falls, a child has an incentive to buy more pop.

B.            With stiffer penalties for fraud, company directors have an incentive to play by the rules.

C.            Incentives create scarcity.

D.            An incentive can be a penalty that discourages an action.

 

16.          Complete the following sentence. Entrepreneurship      .

A.            earns wages

B.            is the work time and work effort that people devote to producing goods and services

C.            earns the greatest proportion of income

D.            includes people who come up with new ideas about what and how to produce

 

17.          Macroeconomics is the study of

a.            how prices are determined in markets.

b.            the national economy and the global economy.

c.             the choices that businesses make.

d.            The choices that individuals and businesses make as they interact in markets.

 

18.          What is your opportunity cost of remaining in school?

By remaining in school, you are paying an opportunity cost that includes               .

A.            the time you spend doing laundry

B.            the money you spend on lattes and hot chocolate

C.            the money you spend on food and drink

D.            the free time you could have every evening to watch movies

 

19.          Complete the following sentence.           is an example of               .

a.            Niagara Falls; labour

b.            Computers in the lab at your university; land

c.             Michael Lazaridis, founder of RIM; entrepreneurship

d.            The mayor of your city, capital

 

20.          Goods and services are .

A.            the things that one person produces or performs purely for the benefit of other people

B.            any objects that get produced or tasks that get performed

C.            the objects that people value and produce to satisfy human wants

D.            the gifts of nature

 

 

21.          Economics explains the choices that end up determining              goods and services get produced.

A.            what, how, and when

B.            why, where, and how

C.            what, how, and for whom

D.            where, when, and how

 

22.          The income earned by the people who sell the services of the factor of production         is called .

a.            capital; profit

b.            labour; wages

c.             land; wages

d.            entrepreneurship; rent

 

 

23.          Are either or both of these newspaper headlines positive or normative?

1.            Flex-time, which allows employees to shift, their work hours over a two- week period, will allow workers to better meet family needs.

Statement 1 is a                statement because it     be tested.

A.            positive; cannot

B.            normative; cannot

C.            positive; can

D.            normative; can

 

2.            Gasoline engines pollute urban air.

Statement 2 is a                statement because it     be tested.

A.            normative; cannot

B.            positive; can

C.            positive; cannot

D.            normative; can

 

24.          Resource use is efficient when  .

a.            workers receive an income equal to that made by their employers

b.            wealth is spread equally throughout society

c.             new resources are constantly being discovered and no resource depletion occur

d.            it is not possible to make someone better off without making someone else worse off

 

25.          Choose the statement about incentives that is incorrect.

a.            An incentive can be a reward that encourages an action

b.            Incentives have no effect on choices.

 

c.             Roger Federer has an incentive to train diligently because the prize money is large.

d.            With low computer prices, school boards have an incentive to connect more classrooms to the Internet

 

26.          The graph shows              .

A.            a positive relationship becoming steeper

B.            a negative relationship becoming less steep

C.            a positive relationship becoming less steep

D.            a negative relationship becoming steeper

 

 

 

 

 

 

 

27.          Are either or both of these newspaper headlines positive or normative?

1.            Gasoline powered vehicles should be replaced with a cleaner technology. Statement 1 is a          statement because it           be tested.

A.            Normative; cannot

B.            Positive; can

C.            Normative; can

D.            Positive; cannot

2.            Our planet is warming because we burn too much coal. Statement 2 is   statement because it     be tested. A. Positive; can

B.            Normative; cannot

C.            Positive; cannot

D.            Normative; can

 

28.          The graph shows.

a.            a positive linear relationship

b.            a negative linear relationship

c.             a negative relationship becoming less steep

d.            a negative relationship becoming steeper

 

 

 

29.          Which of the following is NOT a macroeconomic question?

A.            Why is the economy of India growing?

B.            Will a cut in the interest rate increase Canadian output?

C.            Can a tax cut lead to a government budget surplus?

D.            Would a higher tax on alcohol decrease the quantity of alcohol that people buy?

 

30.          Which of the following is an example of a tradeoff?

A)           The government spends more on a national security and less on health care.

B)            The government spends more on national security and more on health care.

C)            The government spends the same amount on national security and health care.

D)           The government spends less on national security and less on health care.

 

 

31.          Draw a curve that shows that the number of tickets sold at Disneylandtickets sold at Disneyland and the quantity of wine produced in British Columbia are unrelated.

No matter what happens to the number of tickets sold at Disneyland, the quantity of wine produced in British Columbia is         .

a.            unaffected. If the quantity of wine produced in British Columbia

is changing, it continues to change. If it is constant, it remains constant.

b.            at its minimum

c.             at its maximum

d.            zero

 

 

 

32.          A relationship with a minimum  .

A.            indicates that two variables become less related over time

B.            starts out sloping upward comma and then slopes downward

C.            starts out sloping downward comma and then slopes upward

D.            becomes less steep as you move to the right along the curve

 

 

 

 

 

33.          Consider the relationship in the graph on the right. Then complete the statements. The graph shows     .

An example of a relationship like this is the relationship between             .

A.            a positive relationship becoming steeper; hours studying and hours playing squash when you have 5 hours a day to allocate between the two activities

B.            a positive linear relationship; speed and distance travelled

C.            a positive relationship becoming less steep; study time and your GPA

D.            a positive relationship becoming steeper; hours spent watching movies and your GPA

 

 

 

 

34.          The relationship between two variables that are unrelated can be shown by       .

A.            an upward dash sloping curve that becomes less steep

B.            a horizontal line

C.            a downward dash sloping curve that becomes steeper

D.            a curve with a minimum

 

35.          The table shows some data on the quantity of ice cream consumed at different prices and in different weather conditions.

To draw a graph of the relationship between the quantity of ice cream consumed and the temperature, we must                .

A.            decrease the price as the temperature rises

B.            pick the price that prevailed when the temperature was 25 degrees

C.            increase the price as the temperature rises

D.            hold the price of ice cream constant at any of the five levels shown

 

 

36.          Is the relationship between x and y shown by the curve positive or negative?

The relationship is negative

.

How does the relationship change as the value of x increases?

A.            The curve becomes less steep.

B.            The curve becomes steeper.

C.            The curve initially becomes steeper and then becomes less steep.

D.            The relationship does not change.

An economic example of a relationship like this is             .

A.            x is the depth of the ocean and y is the cost of getting oil from beneath the ocean bed

B.            x is quantity bought and y is total amount paid

 

C.            x is leisure time and y is the number of economics problems worked

D.            x is speed and y is the cost per kilometre

 

37.          A curve on a graph shows the relationship between apartment rent in a town and the quantity of apartments that people want at each rent.

If the rent rises,                .

A.            we can no longer isolate the variable of interest

B.            there is a movement along the curve

C.            the curve shifts

D.            no one will rent an apartment

 

 

38.          Consider the big economic questions.

When Nike decides to produce running shoes by using more labour and less capital, it is answering          question.

When Gap decides to produce athletic wear rather than business suits, it is answering 

question.

a.            a whether or nota whether or not; a how

b.            a how; a what

c.             a how; an incentive

d.            a how; a why

Whether Gap gets a larger profit or its workers get higher wages is          question.

A.            a where

B.            a how

C.            a for whom

D.            an efficient

 

39.          Choose the correct statement or statements.

1.

An economic model is a description of some aspect of the economic world that includes only those featuresAn economic model is a description of some aspect of the economic world that includes only t hose features

that are needed for the purpose at hand.that are needed for the purpose at hand.

2.

An economic model is tested by comparing its predictions with

theAn economic model is tested by comparing its predictions with the facts.facts.

3.

Testing an economic model is difficult because we observe the outcomes of the

simultaneousTesting an economic model is difficult because we observe the outcomes of the simultan eous

operations of many factors.operations of many factors.

4.

An economic model is more complex than the economic world it

describes.An economic model is more complex than the economic world it describes. nothing

A.            statements 1 and 2 are correct

B.            correct statements 1, 2 and 3 are correct

C.            statements 2 and 3 are correct

D.            statements 2 comma 3 and 4 are correct

 

40.          When you make economic choices

that result in what, how, and for whom goods and services are produced,

                .

a.            you are making choices that are in your self-interest and possibly also in the social interest

b.            your choice is neither in your self dash interest nor in the social interest

c.             you are making choices that are in the social interest but not in your self dash interest

d.            D.you are making choices that are in your self-interest but not in the social interest

 

41.          An economics major opens the door to a job such as      , which is a person who .

A.            market research analyst; studies trends and fluctuations in interest rates and stock and bond prices and tries to predict the cost of borrowing and the returns on investments

B.            financial analyst; keeps track of an organization's cash flow

C.            budget analyst; studies trends and fluctuations in interest rates and stock and bond prices and tries to predict the cost of borrowing and the returns on investments

D.            market research analyst; works with data on buying patterns and tries to forecast the likely success of a product and the price that buyers are willing to pay for it

 

42.          If the price of camping at the beach rises by a large amount, you have an incentive to     .

A.            camp more at the beach and camp more in the mountains

B.            go camping somewhere other than at the beach

C.            not change your camping plans

D.            buy more camping equipment

 

43.          Which of the following statements are normative and which are positive?

1.

Drugs used to treat terminally ill patients should be free.Drugs used to treat terminally ill patients should be free. 2.

Goldfish are the best pets for children.Goldfish are the best pets for children.

3.

Canada imports more than it exports.Canada imports more than it exports.

4.

Hurricanes cause damage to the Gulf Coast every year.Hurricanes cause damage to the Gulf Coast every year.

 

A.

statements 1 and 4 are positive, statements 2 and 3 are normative B.

statements 2 and 3 are positive, statements 1 and 4 are normative C.

statements 1 and 2 are positive, statements 3 and 4 are normative D.

statements 3 and 4 are positive, statements 1 and 2 are normative

 

44.          Of the following jobs for economics majors, which is expected to grow the most from 2014 to 2024?

A.            market research analysts

B.            financial analysts

C.            budget analysts

D.            government jobs

 

45.          Becky has been spending six nights studying for her engineering tests and her

current grade in the course is 80 percent. She decides to take a part-time job and study only five nights for her next test.As a result, after her next test, her grade falls to 75 percent.

The marginal cost to Becky of working one night a week is            .

a.            greater than 75 percentage points and less than 80 percentage points

b.            80 percentage points

c.             75 percentage points

d.            5 percentage points

 

46.          Which of the following go together?

A.            entrepreneurship; an Air Chief Marshall

B.            labour; station the owner of your local radio station

C.            capital; a computer

D.            land; the Confederation bridge

 

47.          When a gym club chooses to spend more on cardio equipment and less on free weights, its choice illustrates                .

A.            that some things are free

B.            the absence of a tradeoff

C.            that scarcity does not always exist

D.            a tradeoff

 

48.          Which of the following is a microeconomic question?

A.            Will a shortage of plumbers lead to a rise in the wage rate received by plumbers?

B.            What is the cause of a government budget deficit?

C.            Will the value of the euro rise in the foreign exchange market?

D.            Will a rise in tax rates result in a decrease in economic growth?

 

49.          What is the fundamental fact of life from which all economic problems arise?

A.            Our wants can be satisfied by the incomes we earn, provided we earn enough.

B.            The taxes that we pay are too high.

C.            Society faces scarcity.

D.            The rich do not give enough money to the poor

 

50.          The amount paid each month by a fish farmer to the owner of the lake he uses is called                .

A.            interest

B.            profit

C.            wages

D.            rent

 

51.          Sophia wants to study economics tonight and also to visit her friend William.

She thinks hard about how to allocate the evening between studying and visiting William and decides to spend the first hour studying and then spend 5 hours visiting William.

Sophia's decision is an example of            .

A.            making an all-or-nothing choice

B.            marginal incentives

C.            making the choice with the greatest marginal benefit

D.            making a choice at the margin

 

52.          Explain how the following headlines concern self-interest and the social interest:

1.            Wal-mart, the world's biggest store is opening in China, and BeaverTails is expanding into the United States.

2.            All automobiles must be fitted with seat belts.

A.            Wal mart and BeaverTails make decisions in their self-interest. Seat belts are in the

social interest, but people decide whether to wear them in their self-interest.

B.            Wal-mart and BeaverTails make decisions in the social-interest. Seat belts are in people's self- interest.

C.            Wal-mart makes decisions in the social interest but BeaverTails thinks only of its self-interest.

Seat belts are in the social interest only if people behave in the social interest.

D.            Wal-mart makes decisions in its self-interest but BeaverTails takes the social interest into account. Seat belts infringe individual choice and are against both self-interest and the social interest.

 

53.          An incentive is   .

A.            a reward that encourages an action or a penalty that discourages an action

B.            an opportunity to gamble at Las Vegas

C.            grade a boost in every student's grade

D.            always positive

 

54.          Choose the correct statement.

A.            Human capital is needed only in academic-type jobs.

B.            Human capital earns profit.

C.            Human capital is the knowledge and skill that people obtain from education, on the

job training, and work experience.

D.            Human capital includes all the tools and instruments that businesses use to produce goods and services.

 

55.          People make rational choices by comparing         .

A.            the firms that make two similar goods

B.            the countries in which a good is produced

C.            benefits and costs

D.            whether a purchase should be made during an economic expansion or an economic recession

 

56.          Resource use is efficient when  .

A.            retail stores sell goods and services at a price that results in them just covering their costs

B.            shortages do not occur

C.            a situation cannot be improved upon

D.            everyone who wants a job has a job

 

57.          Byron normally spends four nights studying for his math test and his current grade in the course is 75 percent. He decides to spend five nights studying for his next math test and

his grade after that test rises to 95 percent. The marginal benefit to Byron of studying one more night for his math test is    .

A.            greater than 75 percentage points and less than 95 percentage points

B.            75 percentage points

C.            95 percentage points

 

D.            20 percentage points

 

58.          Choose the definition that gives the best overview of economics. Economics is the social science that studies the choices         .

A.            that individuals, businesses, governments, and entire societies make as they cope with scarcity

B.            made by businesses

C.            that we make when we trade in markets

D.            made by individuals

 

59.          You plan to go to school this summer.

If you do, you won't be able to take your usual summer job that pays $12,000 for the summer. The cost of tuition is $2,000 and textbooks cost $100. You live with your family, which covers your living expenses of $1,100.

What is your opportunity cost of going to school this summer?

Your opportunity cost of going to summer school is the goods and services you could have purchased with_________

 

60.          Choose the correct statement.

A.            Entrepreneurs produce goods but not services.

B.            Entrepreneurs are a 'gift of nature'.

C.            Entrepreneurship earns profit.

D.            Entrepreneurship ist he knowledge and skill that people obtain from education and on-the job- training.

 

 

 

 

 

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