Exam 1: The Economic Problem

Explain how microeconomics differs from macroeconomics and then categorize the following questions as either microeconomic or macroeconomic questions: (a)How will interest rates change when the Federal Reserve Bank increases the money supply? (b)How will Nike's share of the market change when Reebok increases their marketing expenditures? (c)How does a tariff on imported steel affect the U.S.steel industry? (d)Should Wal-Mart renovate its stores nationwide? (e)Should the government lower income taxes to stimulate consumption?

Scarcity implies choice.Explain

Consider a farmer's production possibilities curve,with corn measured on the vertical axis,and soybeans on the horizontal.Describe the impact of each of the following on the curve: (a)The farmer buys or rents more land. (b)A higher yielding variety of corn seed is developed. (c)The farmer hires 50 percent more farm workers. (d)The price of soybeans increases.

Suppose two identical economies with the same production possibility curve.If country A produces more capital goods relative to country B,which country will grow faster? Explain.

Below is a list of resources.Indicate whether each is labour (L),capital (K),land (N),or enterprise (E). a)A shopping mall. b)A shoal of salmon on the high seas. c)Lumber in a lumber yard. d)The work of a brain surgeon. e)The work done by Todd Bertuzzi,hockey player.

Below is a production possibilities curve for a large tract of prairie farm land. -Refer to the graph above to answer this question.Which of the following statements would be correct if the land was producing 200 units of rye and 100 units of wheat?

Below is a production possibilities curve involving tea and videos. -Refer to the graph above to answer this question.What is indicated by the shift from PPI to PPII?

All of the following except one are macroeconomic topics.Which is the exception?

What is the definition of opportunity cost?

Meridith had only $16 to spend this last weekend.She was,at first,uncertain about whether to go to two movies she had been wishing to see or to buy a new CD she had recently heard.In the end she went to the movies.Which of the following statements is correct?

Choice implies opportunity cost.Explain.

All of the following,except one,are capital goods.Which is the exception?

Which of the following statements describes the law of increasing costs?

The fact that the typical movie theatre charges people for popcorn but does not charge them to use the restrooms is an example of which of the four Cs?

In general,how to produce depends most on which of the following?

What fundamental question is implied by the following statement: The appropriate technology in one country can be quite different from the appropriate technology in another country.