Solution Manual for Issues in Economics Today 10th Edition by Robert Guell.pdf

SOLUTION MANUAL FOR m m




Issues in Economics Today 10th Edition by Robert Guell
m m m m m m m m




Chapterm1-47


Chapter 1 m




End of Chapter Questions
m m m




QuizmYourself

1. Scarcitymimpliesmthat mthemallocationmdecisionmchosenmbymsocietymcan
a) not mmakemmoremof manymonemgood.
b) alwaysmmakemmoremof manymgood.
c) typicallymmakemmoremof monemgoodmbutmatmthemexpensemof mmakingmless
mof manother.

d) alwaysmmakemmoremof mallmgoodsmsimultaneously.mExp
lanation:mScarcitymimpliesmthat mchoicesminvolvemtrade-offs.

AACSB:mReflectivemThinkingmAccessi
bility:mKeyboard mNavigationmBlooms:m
Understand
Difficulty:m02mMediummGrad
eable:mautomaticmLearningmO
bjective:m01-01
Topic:mEconomicsmand mOpportunitymCost

2. Amproductionmpossibilitiesmfrontiermismamsimplemmodelmof
a) allocatingmscarceminputsmtomthemproductionmof malternativemoutputs.
a) pricemand mproduction/consumptionminmammarket.
b) themcost mof mproducingmgoods.
c) themnumbermof minputsmrequired mtomproducemvaryingmlevelsmof moutput.m Explanati
on:mThemproductionmpossibilitiesmfrontiermshowsmthemquantitymof mtwomgoodsmthat mcanmbe
mproduced.mIt mimpliesmthat mscarcitymrequiresmthat mchoicesmbemmademasmtomhow mtomusemres

ources.

AACSB:mReflectivemThinkingmAccessi
bility:mKeyboard mNavigationmBlooms:m
Understand
Difficulty:m02mMediummGrad
eable:mautomaticmLearningmO
bjective:m01-01
Topic:mModelingmOpportunitymCost mUsingmthemProductionmPossibilitiesmFrontier

Pagem1
©mMCGRAWmHILL mLLC.mALLmRIGHTSmRESERVED. mNOmREPRODUCTIONmORmDISTRIBUTIONmWITHOUT mTHEm
PRIORm WRITTENmCONSENT mOFmMCGRAWmHILL mLLC.

,3. Themunderlyingmreasonmthat mtheremaremunattainablempointsmonmamproductionmpossibiliti
esmfrontiermismthat mthere
a. ismgovernment.
b. aremalwaysmchoicesmthat mmust mbemmade.
c. aremscarcemresourcesmwithinmamfixedmlevelmof mtechnology.
d. ismunemployment mof mresources.
Explanation:mThempointsmoutsidemthemproductionmpossibilitiesmfrontiermaremunattainable.mTh
ismmeansmthat mcurrentlymavailablemresourcesmand mtechnologymareminsufficient mtomproducema
mountsmgreatermthanmthosemillustrated monmthemfrontier.mOnmamgraph,meverythingmbeyond mthe
mfrontiermismunattainable.




AACSB:mReflectivemThinkingmAccessi
bility:mKeyboard mNavigationmBlooms:m
Remember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-01
Topic:mModelingmOpportunitymCost mUsingmthemProductionmPossibilitiesmFrontier

4. Themunderlyingmreasonmproductionmpossibilitiesmfrontiersmaremlikelymtombembowed mo
ut m(rathermthanmlinear)mismbecause
a. choicesmhavemconsequences.
b. theremaremalwaysmopportunitymcosts.
c. somemresourcesmandmpeoplemcanmbembettermusedmproducingmonemgoodmrath
ermthanmanother.
d. theremismalwaysmsomemlevelmof munemployment.
Explanation:mIf mthemproductionmpossibilitiesmfrontiermismnot mamlinembut mismbowed mout mawaym
frommthemorigin,mthenmopportunitymcost mismincreasing.mThemreasonmformthism ismthat masmwemad
d mmoremresourcesmtomthemproductionmof,mformexample,mpizza,mwemaremusingmfewermresource
smtomproducemsoda.mCompoundingmthat mproblem,mat meachmstagemasmwemtakemthemresourcesma
waymfrommsodamand mput mthemmintompizza,mwemaremmovingmworkersmwhomaremworsemat mpizz
amproductionmand mbettermat msodamproductionmthanmthosemmoved minmthempreviousmstage.mThi
smmeansmthat mthemincreaseminmpizzamproductionmismdiminishingmand mthemlossminmsodamproduc
tionmismincreasing.mAnmeconomist mwould mcallmthismanmexamplemof mincreasing mopportunitymc
ost.mIf mthemproductionmpossibilitiesmfrontiermismamstraight mlinemthat mismnot mbowed mout mawaym
frommthemorigin,mthenmopportunitymcost mismconstant.

AACSB:mKnowledgemApplicationmAcc
essibility:mKeyboard mNavigationmBloo
ms:mRemember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-02
Topic:mAttributesmof mthemProductionmPossibilitiesmFrontier




Pagem2
©mMCGRAWmHILL mLLC.mALLmRIGHTSmRESERVED. mNOmREPRODUCTIONmORmDISTRIBUTIONmWITHOUT mTHEm
PRIORm WRITTENmCONSENT mOFmMCGRAWmHILL mLLC.

,5. Supposemyoumweremmodelingmthemimpact mof mthemintroductionmof mcomputermautomati
onmintommanufacturingmonmamproductionmpossibilitiesmfrontierm(PPF)mwithmtwommanufact
ured mgoodsmonmtheirmrespectivemaxes.mIt mwould mbemmoremlikelymthat mthemresult mwould mbem
.
a) generalizedmgrowthmwithmthemPPFmmovingmbothmupmandmtomthemright.
b) specialized mgrowthmwithmthemPPFmmovingmbothmupmand mtomthemright.
c) generalized mgrowthmwithmthemPPFmjust mmovingmupmand mnot mtomthemright.
d) specialized mgrowthmwithmthemPPFmjust mmovingmupmand mnot mtomthemright.mExplana
tion:mComputermautomationmismamgeneralmimprovement minmtechnologymsomit mwould mimpr
ovemallmmanufacturing.mAsmamresult,mit mwould mresult minmgeneralized mgrowthmand mmovemth
emPPFmbothmupmand mtomthemright.

AACSB:mKnowledgemApplicationmAcc
essibility:mKeyboard mNavigationmBloo
ms:mRemember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-
03mTopic:mEconomicmGrowth

6. Themoptimizationmassumptionmsuggestsmthat mpeoplemmake
a. irrationalmdecisions.
b. unpredictablemdecisions.
c. decisionsmtommakemthemselvesmasmwellmoff masmpossible.
d. decisionsmwithout mthinkingmverymhard.
Explanation:mThemoptimizationmassumptionmsuggestsmthat mthempersonminmquestionmismtryin
gmtommaximizemsomemobjective.mConsumersmaremassumed mtombemmakingmdecisionsmthat mm
aximizemtheirmhappinessmsubject mtomamscarcemamount mof mmoney.

AACSB:mReflectivemThinkingmAccessi
bility:mKeyboard mNavigationmBlooms:m
Remember
Difficulty:m01mEasymGradeabl
e:mautomaticmLearningmObject
ive:m01-01
Topic:mThinkingmEconomically

7. Imaginemanmeconomist morderingmdonutsmone-by-
one.mWhenmdecidingmhowmmanymdonutsmtomordermtheymwould mpickmthat mnumbermwheremthe
menjoyment mof mthem

equalsmthemenjoyment mtheymcould mget mfrommusingmthemmoneymonmanothermgood.
a. first mdonut
b. last/marginalmdonut
c. average/typicalmdonut
d. totalmnumbermof mdonuts
Explanation:mThemenjoyment mof mthemlast mslicemismthemmarginalmbenefit mof mthat mslice.mIf mthismenj
oyment mismmoremthanmthemenjoyment mfrommsomemalternative,mmoremwillmbemconsumed.

Pagem3
©mMCGRAWmHILL mLLC.mALLmRIGHTSmRESERVED. mNOmREPRODUCTIONmORmDISTRIBUTIONmWITHOUT mTHEm
PRIORm WRITTENmCONSENT mOFmMCGRAWmHILL mLLC.

, AACSB:mReflectivemThinking




Pagem4
©mMCGRAWmHILL mLLC.mALLmRIGHTSmRESERVED. mNOmREPRODUCTIONmORmDISTRIBUTIONmWITHOUT mTHEm
PRIORm WRITTENmCONSENT mOFmMCGRAWmHILL mLLC.