Question 1

What is the difference between scarcity and poverty?

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Question 2

What is the difference between microeconomics and macroeconomics? Give an example of an issue each studies.

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Question 3

Below is a studentʹs answer to the question ʺWhat is microeconomics?ʺ If you were the instructor, how would you correct the studentʹs answer?
ʺMicroeconomics is the study of how government influences the choices made by individuals and businesses and of the performance of the whole national economy.ʺ

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Question 4

ʺOPEC should supply more oil so that the worldʹs economies can grow more rapidly.ʺ This is an example of

Accepted Answer

This is a normative statement because it expresses an opinion about what OPEC should do, rather than describing a factual situation. It is based on a value judgment about what the goal of OPEC's actions should be, which is to promote economic growth.

Question 5

What do economists mean when they discuss ʺscarcityʺ?

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Question 6

Chinaʹs population is about 1.5 billion, while the population of the United States is about 300 million. This fact means that China has much more human capital than the U.S. does. True or false? Explain your answer.

Accepted Answer

Population can measure the quantity of a nationʹs labor resource, but the population numbers donʹt tell us anything about skills that this labor force obtained from education, on-the-job training, and work experience, which are called human capital. Thus, the population numbers in the statement only tell us that China is likely to have more labor than the United States, but it does not necessarily mean that it also has more human capital.

Question 7

What is the relationship between wants, factors of production, scarcity, and choices? Discuss the relationship for an individual and for a society.

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Question 8

Define marginal cost and marginal benefit.

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Question 9

What is the difference between microeconomics and macroeconomics?

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Question 10

What is a tradeoff? Give an example.

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Question 11

In New State, the bottling law requires that people get a refund of five cents when they return an empty bottle or can. Why does the state pay people to return bottles? In your answer, be sure to mention the role played by incentives.

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Question 12

Rather than go out to eat by yourself, you decide to stay at home and fix dinner for yourself and your two roommates. Your roommates applaud your decision. Your first roommate tells you that your decision to eat at home has no opportunity cost because you already have all the dinner ingredients in your pantry. Is this roommateʹs comment correct?

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Question 13

Define economics and describe its branches of study.

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Question 14

What is opportunity cost?

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Question 15

An analyst on a local news channel argues that the recent corporate scandals ʺdemonstrated very clearly that self interest always contradicts social interest.ʺ Do you agree or disagree? Substantiate your answer.

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Question 16

Explain what entrepreneurship is and why it is considered a factor of production.

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Question 17

ʺAs part of the financial crisis bailout plan in 2008, the Federal Reserve should not bail out banks that made risky loans.ʺ This is an example of

Accepted Answer

The statement expresses a value judgment about how the Federal Reserve should behave in a certain situation, which is a normative statement.

Question 18

Explain why both rich and poor people experience scarcity.

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Question 19

Your friend is preparing for this exam and in your practice session makes the following statement: ʺInstead of attending microeconomics class for two hours, Kiki could have played tennis or watched a movie. Therefore, the opportunity cost of attending class is the tennis and the movie she had to give up.ʺ Is your friendʹs analysis correct or not? Explain your answer.

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Question 20

Why do economists say that even very rich people face scarcity?

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Quiz 1: What Is Economics