,ACCESS Test Bank for Macroeconomics 23rd Edition McConnel
m m m m m m m
Chapterm01 m-mLimits,mAlternatives,mChoices
Chapterm01m-
Limits,mAlternatives,mandmChoicesmMcConnellmBrue
m
m Flynnm23e
DISCUSSION mQUESTIONS
1. What mismanmopportunitymcost?mHow mdoesmthemideamrelatemtomthemdefinitionmof meconomi
cs?mWhichmof mthemfollowingmdecisionsmwould mentailmthemgreatermopportunitymcost:mallo
catingmamsquaremblockminmthemheart mof mNew mYorkmCitymformamsurfacemparkingmlot mormall
ocatingmamsquaremblockmat mthemedgemof mamtypicalmsuburbmformsuchmamlot?mExplain.mLO1
.1
Answer:mAnmopportunitymcost mismwhat mwasmsacrificed mtomdomormacquiremsomething
melse.mThemconditionmof mscarcitymcreatesmopportunitymcost.mIf mtheremwasmnomscarcity
,mtheremwould mbemnomneed mtomsacrificemonemthingmtomacquiremanother.mThemopportun
itymcost mwould mbemmuchmhigherminmNew mYorkmCitymasmthemalternativemusesmformthat
msquaremblockmaremmuchmmoremvaluablemthanmformamtypical msuburbanmcitymblock.
2. Citemthreemexamplesmof mrecent mdecisionsmthat myoummademinmwhichmyou,mat mle
ast mimplicitly,mweighed mmarginalmcost mand mmarginalmbenefit.mLO1.1
Answer:mAnswersmwillmvary,mbut mmaymincludemthemdecisionmtomcomemtomclass,mtom
skipmbreakfast mtomget mamfew mextramminutesmof msleep,mtomattend mcollege,mormtommakem
ampurchase.mMarginalmbenefitsmof mattendingmclassmmaymincludemthemacquisitionmof m
knowledge,mparticipationminmdiscussion,mand mbettermpreparationmformanmupcomingm
examination.m Marginalmcostsmmaymincludemlost mopportunitiesmformsleep,mmeals, mor
mstudyingmformothermclasses.mInmevaluatingmthemdiscussionmof mmarginalmbenefitsman
d mmarginalmcosts,mbemcarefulmtomwatchmformsunkmcostsmoffered masmamrationalemformm
arginalmdecisions.
3. What mism“utility”mand mhow mdoesmit mrelatemtompurposefulmbehavior?mLO1.1
Answer:m“Utility”mrefersmtomthempleasure,mhappiness,mormsatisfactionmgained mfromm
engagingminmanmactivitym(eatingmammeal,mattendingmamballmgame,metc.).mIt misman mimp
ortant mcomponent mof mpurposefulmbehaviormbecausempeoplemwillmallocatemtheirmscar
cemtime,menergy,mand mmoneyminmanmattempt mtomgainmthemmost mutilitympossible.
4. What maremthemkeymelementsmof mthemscientificmmethod,mand mhow mdoesmthismmethod mrel
atemtomeconomicmprinciplesmand mlaws?mLO1.2
Answer:mThemkeymelementsmincludemthemgatheringmof mdatam(observation),mthemfor
mulationmof mpossiblemexplanationsm(hypothesis),mtestingmthemhypothesis,mdetermini
ngmthemvaliditymof mthemhypothesis,mand mrepeatedmtestingmof mthemhypothesismthat mhav
emappeared mtombemvalid minmpriormtests.
mynursytest.store
, 1-1
© m McGrawm Hill m LLC.m All m rights m reserved.mNo m reproductionm or m distributionm without m them prior m writtenm consent m ofm McGrawm Hill m LLC.
mynursytest.store
, ACCESS Test Bank for Macroeconomics 23rd Edition McConnel
m m m m m m m
Chapterm01 m-mLimits,mAlternatives,mChoices
Themscientificmmethod mismthemtechniquemused mbymeconomistsmtomdeterminemeconomi
cmlawsmormprinciples.mThesem lawsmormprinciplesm aremformulated mtomexplainmand/ormp
redict mbehaviormof mindividualsmorminstitutions.
5. Makem(a)mampositivemeconomicmstatement mof myourmchoice,mand mthenm(b)mamnormati
vemeconomicmstatement mrelatingmtomyourmfirst mstatement.mLO1.3
Answer:mAnswersmwillmvary.m Example:m(a)mThemunemployment mratemism4.8 mpercent;
(b)mthemunemployment mratemismtoomhigh.mInmgeneral,mwemtreat m“what mis”mstatementsm
asmpositive,m“what mshould mbe”masmnormative,mbut mkeepmanmeyemout mformstatementsml
ikem“at mfullmemployment manmincreaseminmthemproductionmof mpizzasmshouldmcomemat m
themcost mof mlessmrobots.”mSomemstudentsmmaymincorrectlymidentifymthemstatement mas
mnormativembecausemof mthemtermm“should.”
6. How mdoesmthemslopemof mambudget mlinemillustratemopportunitymcost mand mtrade-
offs?m How mdoesmambudget mlinemillustratemscarcitymand mthemeffect mof mlimited mincomes
?mLO1.4
Answer:mBudget mlinesmaremalwaysmsloped mdownward.m Thismdownward mslopemsho
wsmanminversemrelationshipmbetweenmthemtwomgoods,mmeaningmthat masmyoumincrease
mone,mthemothermmust mdecrease.m Thismdecreasemismwhat myoumaremgivingmup,mormthemo
pportunitymcost,mof mthemgood myoumaremgettingmmoremof.
Budget mlinesmillustratemscarcityminmthat mtheymshowmyoumaremlimited mbymyourmincome
.mSincemtheymslopemdownward,mtheymshowmyoumcannot mkeepmgettingmmoremand mmore
mof mbothmgoods.mTheremismalwaysmamtrade-
off.m Themareambeyond mthembudget mlinemrepresentsmcombinationsmof mthemgoodsmthat m
arembeyond myourmincome.
7. What maremeconomicm resources?mWhat mcategoriesmdomeconomistsmusemtomclassifymthe
m?mWhymaremresourcesm alsomcalled mfactorsmof mproduction?mWhymaremtheymcalled minp
uts?mLmO1.5
Answer:mEconomicmresourcesmaremthemnatural,mhuman,mand mmanufactured minputsmu
sed mtomproducemgoodsmand mservices.
Economicmresourcesmfallmintomfourmmainmcategories:m labor,mland m(naturalmresources
),mrealmcapitalm(machines,mfactories,mbuildings,metc.,)mand mentrepreneurs.
Economicmresourcesmaremalsomcalled mfactorsmofmproductionmbecausemtheymaremused mt
omproducemgoodsmand mservices.mTheymaremcalled minputsmbecausemtheymgomintomampro
ductionmprocessm(likemingredientsmgomintomambowlmtommakemamcake),mwithmthemresult
ingmgoodsmand mservicesmalsombeingmreferred mtomasmoutput.
mynursytest.store
m m m m m m m
Chapterm01 m-mLimits,mAlternatives,mChoices
Chapterm01m-
Limits,mAlternatives,mandmChoicesmMcConnellmBrue
m
m Flynnm23e
DISCUSSION mQUESTIONS
1. What mismanmopportunitymcost?mHow mdoesmthemideamrelatemtomthemdefinitionmof meconomi
cs?mWhichmof mthemfollowingmdecisionsmwould mentailmthemgreatermopportunitymcost:mallo
catingmamsquaremblockminmthemheart mof mNew mYorkmCitymformamsurfacemparkingmlot mormall
ocatingmamsquaremblockmat mthemedgemof mamtypicalmsuburbmformsuchmamlot?mExplain.mLO1
.1
Answer:mAnmopportunitymcost mismwhat mwasmsacrificed mtomdomormacquiremsomething
melse.mThemconditionmof mscarcitymcreatesmopportunitymcost.mIf mtheremwasmnomscarcity
,mtheremwould mbemnomneed mtomsacrificemonemthingmtomacquiremanother.mThemopportun
itymcost mwould mbemmuchmhigherminmNew mYorkmCitymasmthemalternativemusesmformthat
msquaremblockmaremmuchmmoremvaluablemthanmformamtypical msuburbanmcitymblock.
2. Citemthreemexamplesmof mrecent mdecisionsmthat myoummademinmwhichmyou,mat mle
ast mimplicitly,mweighed mmarginalmcost mand mmarginalmbenefit.mLO1.1
Answer:mAnswersmwillmvary,mbut mmaymincludemthemdecisionmtomcomemtomclass,mtom
skipmbreakfast mtomget mamfew mextramminutesmof msleep,mtomattend mcollege,mormtommakem
ampurchase.mMarginalmbenefitsmof mattendingmclassmmaymincludemthemacquisitionmof m
knowledge,mparticipationminmdiscussion,mand mbettermpreparationmformanmupcomingm
examination.m Marginalmcostsmmaymincludemlost mopportunitiesmformsleep,mmeals, mor
mstudyingmformothermclasses.mInmevaluatingmthemdiscussionmof mmarginalmbenefitsman
d mmarginalmcosts,mbemcarefulmtomwatchmformsunkmcostsmoffered masmamrationalemformm
arginalmdecisions.
3. What mism“utility”mand mhow mdoesmit mrelatemtompurposefulmbehavior?mLO1.1
Answer:m“Utility”mrefersmtomthempleasure,mhappiness,mormsatisfactionmgained mfromm
engagingminmanmactivitym(eatingmammeal,mattendingmamballmgame,metc.).mIt misman mimp
ortant mcomponent mof mpurposefulmbehaviormbecausempeoplemwillmallocatemtheirmscar
cemtime,menergy,mand mmoneyminmanmattempt mtomgainmthemmost mutilitympossible.
4. What maremthemkeymelementsmof mthemscientificmmethod,mand mhow mdoesmthismmethod mrel
atemtomeconomicmprinciplesmand mlaws?mLO1.2
Answer:mThemkeymelementsmincludemthemgatheringmof mdatam(observation),mthemfor
mulationmof mpossiblemexplanationsm(hypothesis),mtestingmthemhypothesis,mdetermini
ngmthemvaliditymof mthemhypothesis,mand mrepeatedmtestingmof mthemhypothesismthat mhav
emappeared mtombemvalid minmpriormtests.
mynursytest.store
, 1-1
© m McGrawm Hill m LLC.m All m rights m reserved.mNo m reproductionm or m distributionm without m them prior m writtenm consent m ofm McGrawm Hill m LLC.
mynursytest.store
, ACCESS Test Bank for Macroeconomics 23rd Edition McConnel
m m m m m m m
Chapterm01 m-mLimits,mAlternatives,mChoices
Themscientificmmethod mismthemtechniquemused mbymeconomistsmtomdeterminemeconomi
cmlawsmormprinciples.mThesem lawsmormprinciplesm aremformulated mtomexplainmand/ormp
redict mbehaviormof mindividualsmorminstitutions.
5. Makem(a)mampositivemeconomicmstatement mof myourmchoice,mand mthenm(b)mamnormati
vemeconomicmstatement mrelatingmtomyourmfirst mstatement.mLO1.3
Answer:mAnswersmwillmvary.m Example:m(a)mThemunemployment mratemism4.8 mpercent;
(b)mthemunemployment mratemismtoomhigh.mInmgeneral,mwemtreat m“what mis”mstatementsm
asmpositive,m“what mshould mbe”masmnormative,mbut mkeepmanmeyemout mformstatementsml
ikem“at mfullmemployment manmincreaseminmthemproductionmof mpizzasmshouldmcomemat m
themcost mof mlessmrobots.”mSomemstudentsmmaymincorrectlymidentifymthemstatement mas
mnormativembecausemof mthemtermm“should.”
6. How mdoesmthemslopemof mambudget mlinemillustratemopportunitymcost mand mtrade-
offs?m How mdoesmambudget mlinemillustratemscarcitymand mthemeffect mof mlimited mincomes
?mLO1.4
Answer:mBudget mlinesmaremalwaysmsloped mdownward.m Thismdownward mslopemsho
wsmanminversemrelationshipmbetweenmthemtwomgoods,mmeaningmthat masmyoumincrease
mone,mthemothermmust mdecrease.m Thismdecreasemismwhat myoumaremgivingmup,mormthemo
pportunitymcost,mof mthemgood myoumaremgettingmmoremof.
Budget mlinesmillustratemscarcityminmthat mtheymshowmyoumaremlimited mbymyourmincome
.mSincemtheymslopemdownward,mtheymshowmyoumcannot mkeepmgettingmmoremand mmore
mof mbothmgoods.mTheremismalwaysmamtrade-
off.m Themareambeyond mthembudget mlinemrepresentsmcombinationsmof mthemgoodsmthat m
arembeyond myourmincome.
7. What maremeconomicm resources?mWhat mcategoriesmdomeconomistsmusemtomclassifymthe
m?mWhymaremresourcesm alsomcalled mfactorsmof mproduction?mWhymaremtheymcalled minp
uts?mLmO1.5
Answer:mEconomicmresourcesmaremthemnatural,mhuman,mand mmanufactured minputsmu
sed mtomproducemgoodsmand mservices.
Economicmresourcesmfallmintomfourmmainmcategories:m labor,mland m(naturalmresources
),mrealmcapitalm(machines,mfactories,mbuildings,metc.,)mand mentrepreneurs.
Economicmresourcesmaremalsomcalled mfactorsmofmproductionmbecausemtheymaremused mt
omproducemgoodsmand mservices.mTheymaremcalled minputsmbecausemtheymgomintomampro
ductionmprocessm(likemingredientsmgomintomambowlmtommakemamcake),mwithmthemresult
ingmgoodsmand mservicesmalsombeingmreferred mtomasmoutput.
mynursytest.store
