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Solution Manual for Issues in Economics Today 10th Edition by Robert Guell
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Solution Manual for Issues in Economics Today 10th Edition by Robert Guell. Chapter 1: Economics: The Study of Opportunity Cost Chapter 2: Supply and Demand Chapter 3: The Concept of Elasticity and Consumer and Producer Surplus Chapter 4: Firm Production, Cost, and Revenue Chapter 5: Perfect Compet...
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Page 1 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HIL L LLC. Solution Manual for Issues in Economics Today 10th Edition by Robert Guell Chapter 1 -47 Chapter 1 End of Chapter Questions Quiz Yourself 1. Scarcity implies that the allocation decision chosen by society can a) not make more of any one good. b) always make more of any good. c) typically make more of one good but at the expense of making less of another. d) always make more of all goods simultaneously. Explanation: Scarcity implies that choices involve trade -offs. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 02 Medium Gradeable: automatic Learning Objective: 01 -01 Topic: Economics and Opportunity Cost 2. A production possibilities frontier is a simple model of a) allocating scarce inputs to the production of alternative outputs. a) price and production/consumption in a market. b) the cost of producing goods. c) the number of inputs required to produce varying levels of output. Explanation: The production possibilities frontier shows the quantity of two goods that can be produced. It implies that scarcity requires that choices be made as to how to use resources. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 02 Medium Gradeable: automatic Learning Objective: 01 -01 Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier MEDCONNOISSEUR Page 2 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HIL L LLC. 3. The underlying reason that there are unattainable points on a production possibilities frontier is that there a. is government. b. are always choices that must be made. c. are scarce resources within a fixed level of technology. d. is unemployment of resources. Explanation: The points outside the production possibilities frontier are unattainable. This means that currently available resources and technology are in sufficient to produce amounts greater than those illustrated on the frontier. On a graph, everything beyond the frontier is unattainable. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 01 Easy Gradeable: automat ic Learning Objective: 01 -01 Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier 4. The underlying reason production possibilities frontiers are likely to be bowed out (rather than linear) is because a. choices have consequences. b. there are always opportunity costs. c. some resources and people can be better used producing one good rather than another. d. there is always some level of unemployment. Explanation: If the production possibilities frontier is not a line but is bowed out away from the origin, then opportunity cost is increasing. The reason for this is that as we add more resources to the production of, for example, pizza, we are using fewer resources to produce soda. Compounding that problem, at each stage as we take the resources away from soda and put them into pizza, we are moving workers who are worse at pizza production and better at soda production than those moved in the previous stage. This means that the increase in pizza production is diminishing and the loss in soda productio n is increasing. An economist would call this an example of increasing opportunity cost. If the production possibilities frontier is a straight line that is not bowed out away from the origin, then opportunity cost is constant. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 01 Easy Gradeable: automatic Learning Objective: 01 -02 Topic: Attributes of the Production Possibilities Frontier MEDCONNOISSEUR Page 3 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HIL L LLC. 5. Suppose you were modeling the impact of the introduction of computer automation into manufacturing on a production possibilities frontier (PPF) with two manufactured goods on their respective axes . It would be more likely that the result would be ______. a) generalized growth with the PPF moving both up and to the right. b) speci alized growth with the PPF moving both up and to the right. c) generalized growth with the PPF just moving up and not to the right. d) specialized growth with the PPF just moving up and not to the right. Explanation: Computer automation is a general improvement in technology so it would improve all manufacturing. As a result, it would result in generalized growth and move the PPF both up and to the right. AACSB: Knowledge Application Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 01 Easy Gradeabl e: automatic Learning Objective: 01 -03 Topic: Economic Growth 6. The optimization assumption suggests that people make a. irrational decisions. b. unpredictable decisions. c. decisions to make themselves as well off as possible . d. decisions without thinking very hard. Explanation: The optimization assumption suggests that the person in question is trying to maximize some objective. Consumers are assumed to be making decisions that maximize their happiness subject to a scarce amount of money. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 01 Easy Gradeable: automatic Learning Objective: 01 -01 Topic: Thinking Economically 7. Imagine an economist ordering donuts one -by-one. When deciding how many donuts to order they would pick th at number where the enjoyment of the _____ equals the enjoyment they could get from using the money on another good. a. first donut b. last/marginal donut c. average /typical donut d. total number of donuts Explanation: The enjoyment of the last slice is the marginal b enefit of that slice. If this enjoyment is more than the enjoyment from some alternative, more will be consumed. AACSB: Reflective Thinking MEDCONNOISSEUR Page 4 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HIL L LLC. Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 02 Medium Gradeable: automatic Learning Objective: 01-04 Topic: Thinking Economically 8. Of course, all individual students are better off if they earn better grades. If you were to conclude that all students would be better off if everyone received an A , you would a. have fallen victim to the fallacy of scarcity. b. be right. c. have fallen victim to the fallacy of composition. d. be mistaking correlation with causation. Explanation: The fallacy of composition is the mistake in logic that suggests that the total economic impact of something is always and simply eq ual to the sum of the individual parts. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 02 Medium Gradeable: automatic Learning Objective: 01 -04 Topic: Thinking Economically 9. Imagine you were to conclude, after carefully examining data and using proper evaluation techniques, that a tax credit for attending college benefits low income earners more than a tax deduction (of equal total cost to the government) would . You would have engaged in _________ analysis to r each that conclusion. a. negative b. positive c. normative d. creative Explanation: Economists, and social scientists in general, distinguish views of ―the way things are‖ from ―the way things should be,‖ calling the former positive analysis and the latter normative analysis. Positive analysis is a form of analysis that seeks to understand the way things are and why they are that way. Normative analysis is a form of analysis that seeks to understand the way things should be. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 02 Medium Gradeable: automatic Learning Objective: 01 -04 Topic: Thinking Economically MEDCONNOISSEUR
