Question 1

What is a tradeoff? Give an example.

Accepted Answer

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Question 2

Jerry is studying three nights per week and his grade point average is 3.1. He wants a higher GPA and decides to study an extra night each week. His GPA now rises to 3.5. Had Jerry not decided to study an extra night, he would have spent this night with his friends. What is Jerry's marginal benefit from studying for one additional night a week? What is his marginal cost of increasing the study time by one night per week? Why does Jerry decide to study an extra night?

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Question 3

Define marginal cost and marginal benefit.

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Question 4

Explain whether the statement, "Hillary Clinton was elected President of the United States in 2012," is a normative or positive statement.

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Question 5

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

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Question 6

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 7

If the government raises the tax on cigarettes, what is the effect on people's incentives and choices?

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Question 8

Scarcity affects only those who are in need.

Accepted Answer

Scarcity affects everyone, regardless of their level of need. When something becomes scarce, its price goes up and everyone who wants it is affected by the higher price, not just those in need. Additionally, scarcity can lead to rationing or restrictions on access, which also affects everyone, not just those in need.

Question 9

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

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Question 10

Suppose you are working four nights per week at your courses and your grade point average is 3.5. You want a higher grade and decide to study an extra night each week. Your GPA now rises to 3.8. What is your marginal benefit from studying for one additional night a week?

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Question 11

What is opportunity cost?

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Question 12

Two economists can agree that raising the minimum wage creates unemployment yet one might argue that raising the minimum wage is a good policy and the other that it is a bad policy. Why can this difference exist? Be sure to use the terms positive and normative in your answer.

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Question 13

Explain whether the statement "The government should increase tariffs on Japanese cars to protect the American car industry from competition," is a normative or positive statement.

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Question 14

Your friend is preparing for this exam and in your practice session makes the following statement: "Instead 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." Is your friend's analysis correct or not? Explain your answer.

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Question 15

Scarcity applies to both the rich and the poor.

Accepted Answer

Scarcity is the fundamental economic problem where there are limited resources to satisfy unlimited wants and needs. This applies to both the rich and the poor as everyone has limited resources, even if their wealth varies. The rich may have more resources than the poor, but they still need to make choices and prioritize their spending to meet their needs and wants within the limits of their resources.

Question 16

Explain whether the statement, "There is life on Mars," is a normative or positive statement.

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Question 17

What is the difference between positive and normative statements?

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Question 18

What is a normative statement? Give an example.

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Question 19

"The difference between positive and normative statements is that a positive statement is always true while a normative statement might or might not be true." True or false? Explain.

Accepted Answer

The difference between positive and normative statements is that a positive statement is about what is, while a normative statement is about what ought to be. A positive statement can be tested against the facts and may be proved to be right or wrong, whereas a normative statement depends on values and cannot be tested.

Question 20

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 roommate's comment correct?

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Quiz 1: What Is Economics