Question 1

An economic theory:

Accepted Answer

The answer of An economic theory:
...

Question 2

Table 1.1
 $$\begin{array}{l}
\text { Table } 1.1\
\begin{array} { | l | l | } 
\hline \text { Hours } & \text { Revenue } \
\hline 1 & 10 \
\hline 2 & 20 \
\hline 3 & 30 \
\hline 4 & 40 \
\hline 5 & 50 \
\hline
\end{array}
\end{array}$$
-Refer to Table 1.1. What is Sergio's marginal benefit if he tutors for two hours instead of one hour?

Accepted Answer

The marginal benefit is the additional revenue from tutoring one more hour. From 1 hour to 2 hours, revenue increases from $10 to $20, so the marginal benefit is $10.

Question 3

Economic models, such as the circular-flow model:

Accepted Answer

The answer of Economic models, such as the circular-flow model:
...

Question 4

Table 1.1
 Table $1.1$
$\begin{array}{|l|l|}
\hline \text { Hours } & \text { Revenue } \
\hline 1 & \$ 10 \
\hline 2 & \$ 20 \
\hline 3 & \$ 30 \
\hline 4 & \$ 40 \
\hline 5 & \$ 50 \
\hline
\end{array}$
Sergio tutors fellow students for $\$ 10$ an hour.
-Refer to Table 1.1. Sergio hires an assistant for $5 per hour. What is his marginal cost if he tutors 5 hours a week and also pays his assistant?

Accepted Answer

The marginal cost of hiring the assistant for one additional hour is $5.

Question 5

Economic fluctuations are also known as:

Accepted Answer

Economic fluctuations refer to the ups and downs in the overall economic activity of a country, and are commonly referred to as business cycles. These cycles are characterized by periods of growth and expansion, followed by contraction and recession, and are influenced by a variety of economic factors such as interest rates, consumer spending, and investment levels.

Question 6

Table 1.1
 Table $1.1$
$\begin{array}{|l|l|}
\hline \text { Hours } & \text { Revenue } \
\hline 1 & \$ 10 \
\hline 2 & \$ 20 \
\hline 3 & \$ 30 \
\hline 4 & \$ 40 \
\hline 5 & \$ 50 \
\hline
\end{array}$
Sergio tutors fellow students for $\$ 10$ an hour.
-Refer to Table 1.1. Sergio hires an assistant for $5 per hour. What is his marginal cost if he tutors 1 hour a week and also pays his assistant?

Accepted Answer

The marginal cost of hiring the assistant for 1 hour is $5, as Sergio pays the assistant $5 per hour.

Question 7

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third. What should determine your decision?

Accepted Answer

When deciding whether to subscribe to a third magazine, the cost of the magazine should certainly be a consideration. However, it is also important to take into account the potential enjoyment you would get from the third magazine. It may be worth paying slightly more if the additional enjoyment is significant. Therefore, option E is the best choice as it balances the cost and enjoyment factors.

Question 8

Macroeconomics is the study of:

Accepted Answer

Macroeconomics is concerned with the behavior and performance of the economy as a whole, including topics such as inflation, unemployment, economic growth, and government policies that affect the overall economy. It is distinct from microeconomics, which focuses on the behavior of individual consumers, firms, and markets.

Question 9

Table 1.1
 Table $1.1$
$\begin{array}{|l|l|}
\hline \text { Hours } & \text { Revenue } \
\hline 1 & \$ 10 \
\hline 2 & \$ 20 \
\hline 3 & \$ 30 \
\hline 4 & \$ 40 \
\hline 5 & \$ 50 \
\hline
\end{array}$
Sergio tutors fellow students for $\$ 10$ an hour.
-Refer to Table 1.1. What is Sergio's marginal benefit if he tutors for five hours instead of three hours?

Accepted Answer

The marginal benefit of tutoring for five hours instead of three hours is the additional revenue earned, which is $50 - $30 = $20.

Question 10

The determination of price and output in specific markets is studied in:

Accepted Answer

Microeconomics studies the determination of price and output in specific markets, while macroeconomics studies the economy as a whole. Normative economics deals with value judgments and what ought to be, while positive economics focuses on what is and how the economy works. Econometrics involves using statistical methods to analyze economic data.

Question 11

Macroeconomists analyze:

Accepted Answer

Macroeconomists focus on the overall performance of the economy, including factors such as unemployment and economic growth. Therefore, option D, which deals with the impact of unemployment on the growth rate of an economy, is the most appropriate choice. The other choices are more related to microeconomics, which focuses on the behavior and decisions of individuals, households, and firms.

Question 12

A rational decision maker will take only those actions for which the expected marginal benefit:

Accepted Answer

A rational decision maker will take an action only if the expected marginal benefit is greater than or equal to the expected marginal cost. This means that the benefit gained from the action needs to outweigh the cost of taking the action. Hence, the correct answer is C.

Question 13

Economic fluctuations are:

Accepted Answer

Economic fluctuations refer to the short-term rise and fall of economic activity in an economy, relative to its long-term growth trend. These fluctuations are often measured by changes in indicators such as gross domestic product (GDP), employment rates, and inflation rates. They are influenced by a range of factors such as business cycles, consumer confidence, government policies, and global economic conditions. Economic fluctuations are different from economic systems (E) which refer to the broader institutions, laws, and regulations that shape how economies operate. Output decisions of individual firms (A), the effect of tariffs on demand (B), and the spending decisions of particular households (C) may all be factors that contribute to economic fluctuations, but they are not synonymous with the concept.

Question 14

You want to sell your old iPad to your cousin, who wants to give you $200 for it. You will have to pay to ship the iPad to your cousin. As a rational decision maker, you should sell your iPad if the shipping fee is:

Accepted Answer

The rational decision is to sell the iPad if the shipping fee is less than the amount your cousin is willing to pay ($200). Therefore, if the shipping fee is $199, you would still profit by $1 after shipping costs. Any amount above $200 would result in a loss, making option E the only rational choice.

Question 15

To say that people make decisions at the margin means that:

Accepted Answer

Making decisions at the margin means people compare the additional cost and benefit of various activities before making a decision. They calculate whether the additional benefit of an activity is worth the additional cost, and then decide whether or not to proceed with the activity.

Question 16

Microeconomics is the study of:

Accepted Answer

Microeconomics focuses on the economic behavior and decision making of individual agents such as households, firms, and markets. It examines how they allocate scarce resources and how they interact with each other to determine the prices and quantities of goods and services consumed and produced. A, B, and E are more related to macroeconomics, which focuses on aggregate economic variables such as national output, inflation, and unemployment, and the role of government in managing them. C is also more related to public finance or welfare economics, which deals with the optimal allocation of public goods and the distribution of income and wealth.

Question 17

Patrick decided to go to class today instead of going to the movies. He made this decision because the additional benefit of going to:

Accepted Answer

Patrick chose to go to class because the additional benefit of going to class exceeded the additional cost of going to class. This means that he felt that he would gain more by going to class than he would lose by not going to the movies. Option A is the only choice that accurately reflects this reasoning.

Question 18

Which of the following would be a topic considered in the field of macroeconomics?

Accepted Answer

Macroeconomics deals with the economy as a whole, including national, regional, and global economies. The growth of the Chinese economy is a macroeconomic topic as it involves the overall economic performance of a country.

Question 19

Table 1.1
 $$\begin{array}{l}
\text { Table } 1.1\
\begin{array} { | l | l | } 
\hline \text { Hours } & \text { Revenue } \
\hline 1 & 10 \
\hline 2 & 20 \
\hline 3 & 30 \
\hline 4 & 40 \
\hline 5 & 50 \
\hline
\end{array}
\end{array}$$
-Refer to Table 1.1. What is Sergio's marginal benefit if he tutors for four hours instead of two hours?

Accepted Answer

Marginal benefit is the additional benefit gained by increasing an activity by one unit. Here, the marginal benefit of tutoring for four hours instead of two hours can be calculated by subtracting the revenue earned from tutoring for 2 hours from the revenue earned from tutoring for 4 hours:
Marginal benefit = Revenue from tutoring for 4 hours - Revenue from tutoring for 2 hours
= $40 - $20
= $20
Therefore, the correct answer is D) $20.

Question 20

Table 1.1
 $$\begin{array}{l}
\text { Table } 1.1\
\begin{array} { | l | l | } 
\hline \text { Hours } & \text { Revenue } \
\hline 1 & 10 \
\hline 2 & 20 \
\hline 3 & 30 \
\hline 4 & 40 \
\hline 5 & 50 \
\hline
\end{array}
\end{array}$$
-Refer to Table 1.1. What is Sergio's marginal benefit if he tutors for three hours instead of two hours?

Accepted Answer

The marginal benefit is the additional revenue from tutoring one more hour, which is $30 (for 3 hours) - $20 (for 2 hours) = $10.

Quiz 1: The Art and Science of Economic Analysis.