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Solution Manual for Microeconomics, 13th Edition

Solution Manual for Microeconomics, 13th Edition helps you revise quickly and efficiently with a well-organized collection of exam questions and answers.

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    1 Microeconomics, 13e (Parkin) Chapter 1 What Is Economics? 1 Definition of Economics 1) All economic questions are about A) how to make money. B) what to produce. C) how to cope with scarcity. D) how to satisfy all our wants. Answer: C Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking 2) All economic questions arise because we A) want more than we can get. B) want more than we need. C) have an abundance of resources. D) have limited wants that need to be satisfied. Answer: A Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking 3) Economics is best defined as the study of how people, businesses, governments, and societies A) choose abundance over scarcity. B) make choices to cope with scarcity. C) use their infinite resources. D) attain wealth. Answer: B Topic: Scarcity Skill: Conceptual Status: Old AACSB: Reflective thinking 4) Scarcity is a situation in which A) people cannot satisfy all their wants. B) most people can get only bare necessities. C) people can satisfy all their wants. D) some people can get all they want and some cannot. Answer: A Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking

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    2 5) Economists point out that scarcity confronts A) neither the poor nor the rich. B) the poor but not the rich. C) the rich but not the poor. D) both the poor and the rich. Answer: D Topic: Scarcity Skill: Conceptual Status: Old AACSB: Ethical understanding and reasoning 6) Scarcity is A) our inability to satisfy all our wants. B) a situation that exists during economic recessions but not during economic booms. C) eliminated by choices. D) an economic problem only for poor people. Answer: A Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking 7) When an economist talks of scarcity, the economist is referring to the A) ability of society to employ all of its resources. B) ability of society to consume all that it produces. C) inability of society to satisfy all human wants because of limited resources. D) ability of society to continually make technological breakthroughs and increase production. Answer: C Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking 8) Fundamental economic problems basically arise from A) the fact that society has more than it needs. B) turmoil in the stock market. C) the unequal distribution of income. D) our wants exceeding our scarce resources. Answer: D Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking

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    3 9) Scarcity exists because A) society and people are greedy and wasteful. B) our wants exceed the resources available to satisfy them. C) of the inefficient choices we make. D) poor people need more food and other goods. Answer: B Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking 10) Scarcity can be eliminated through A) the use of market mechanisms. B) exploration that helps us find new resources. C) wise use of our resources. D) None of the above because scarcity cannot be eliminated. Answer: D Topic: Scarcity Skill: Recognition Status: Old AACSB: Reflective thinking 11) As an economic concept, scarcity applies to A) both money and time. B) money but not time. C) time but not money. D) neither time nor money. Answer: A Topic: Scarcity Skill: Conceptual Status: Old AACSB: Reflective thinking 12) In every economic system, choices must be made because resources are ________ and our wants are ________. A) unlimited; limited B) limited; unlimited C) unlimited; unlimited D) limited; limited Answer: B Topic: Scarcity Skill: Conceptual Status: Old AACSB: Reflective thinking

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    4 13) The problem of "scarcity" applies A) only in industrially developed countries because resources are scarce in these countries. B) only in underdeveloped countries because there are few productive resources in these countries. C) only in economic systems that are just beginning to develop because specialized resources are scarce. D) to all economic systems, regardless of their level of development. Answer: D Topic: Scarcity Skill: Conceptual Status: Old AACSB: Reflective thinking 14) Scarcity requires that people must A) cooperate. B) compete. C) trade. D) make choices. Answer: D Topic: Scarcity Skill: Conceptual Status: Old AACSB: Reflective thinking 15) People must make choices because A) most people enjoy shopping. B) of scarcity. C) there are many goods available. D) None of the above answers is correct. Answer: B Topic: Scarcity Skill: Conceptual Status: Old AACSB: Reflective thinking 16) An incentive A) could be a reward but could not be a penalty. B) could be a penalty but could not be a reward. C) could be either a reward or a penalty. D) is the opposite of a tradeoff. Answer: C Topic: Incentive Skill: Recognition Status: Old AACSB: Reflective thinking

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    5 17) An inducement to take a particular action is called A) the marginal benefit. B) the marginal cost. C) opportunity cost. D) an incentive. Answer: D Topic: Incentive Skill: Recognition Status: Old AACSB: Reflective thinking 18) Economics is best defined as A) how people make money and profits in the stock market. B) making choices from an unlimited supply of goods and services. C) making choices with unlimited wants but facing a scarcity of resources. D) controlling a budget for a household. Answer: C Topic: Definition of Economics Skill: Recognition Status: Old AACSB: Reflective thinking 19) The study of economics A) focuses mainly on individual consumers. B) arises from the fact that our wants exceed available resources. C) recognizes that scarcity does not affect rich nations. D) deals mainly with microeconomics. Answer: B Topic: Definition of Economics Skill: Recognition Status: Old AACSB: Reflective thinking 20) Economics is best defined as the science of choice and how people cope with A) differences in wants. B) differences in needs. C) scarcity. D) different economic systems. Answer: C Topic: Definition of Economics Skill: Recognition Status: Old AACSB: Reflective thinking

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    6 21) Economics is the study of A) the distribution of surplus goods to those in need. B) affluence in a morally bankrupt world. C) the choices we make because of scarcity. D) ways to reduce wants to eliminate the problem of scarcity. Answer: C Topic: Definition of Economics Skill: Conceptual Status: Old AACSB: Reflective thinking 22) The study of the choices made by individuals is part of the definition of A) microeconomics. B) positive economics. C) macroeconomics. D) normative economics. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 23) In part, microeconomics is concerned with A) how a business firm decides upon the amount it produces and the price it sets. B) changes in the economy's total output of goods and services over long periods of time. C) factors that explain changes in the unemployment rate over time. D) the Federal Reserve's policy decisions. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 24) The study of the decisions of individual units in the economy is known as A) macroeconomics. B) microeconomics. C) the study of incentives. D) ceteris paribus study. Answer: B Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking

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    7 25) Studying the determination of prices in individual markets is primarily a concern of A) positive economics. B) negative economics. C) macroeconomics. D) microeconomics. Answer: D Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 26) The analysis of the behavior of individual decision-making units is the definition of A) microeconomics. B) positive economics. C) macroeconomics. D) normative economics. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 27) Which of the following is a microeconomic topic? A) how a trade agreement between the United States and Mexico affects both nations' unemployment rates B) comparing inflation rates across countries C) how rent ceilings impact the supply of apartments D) how a tax rate increase will impact total production Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking 28) Which of the following questions is NOT a microeconomic question? A) Can the Federal Reserve keep income growing by cutting interest rates? B) How would a tax on e-commerce affect eBay? C) What is Britney's opportunity cost of having another baby? D) Does the United States have a comparative advantage in information technology services? Answer: A Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking

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    8 29) Which of the following is an example of a microeconomic decision? A) an individual deciding how to allocate the time he or she has for work and leisure B) a small shoe factory deciding how much leather to purchase for the next quarter's production need C) a multinational company deciding where to relocate its world headquarter D) All of the above answers are correct. Answer: D Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 30) Which of the following is a microeconomic topic? A) the reasons why Kathy buys less orange juice B) the reasons for a decline in average prices C) the reasons why total employment decreases D) the effect of the government budget deficit on inflation Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 31) Which of the following questions is a topic that would be studied by microeconomics? A) Why did production and the number of jobs shrink in 2009? B) Will the current budget deficit affect the well-being of the next generation? C) How will a lower price of digital cameras affect the quantity of cameras sold? D) What is the current unemployment rate in the United States? Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking 32) An example of a question that might be explored in microeconomics is to determine A) the number of workers employed by Intel. B) savings by the household sector. C) why the U.S. economy has grown more rapidly than the Japanese economy. D) the total employment within the U.S. economy. Answer: A Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking

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    9 33) In part, microeconomics is concerned with the study of A) unemployment and economic growth. B) the Federal Reserve's policies. C) the effect government regulation has on the price of a product. D) national output of goods and services. Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking 34) The branch of economics that deals with the analysis of the whole economy is called A) macroeconomics. B) marginal analysis. C) microeconomics. D) metroanalysis. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 35) Macroeconomics is concerned with A) individual consumers. B) government decision making concerning farm price supports. C) economy-wide variables. D) the effects on Ford Motor of a strike by the United Auto Workers. Answer: C Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 36) Macroeconomics differs from microeconomics in that A) macroeconomics studies the decisions of individuals. B) microeconomics looks at the economy as a whole. C) macroeconomics studies the behavior of government while microeconomics looks at private corporations. D) macroeconomics focuses on the national economy and the global economy. Answer: D Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking

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    10 37) Which of the following is a macroeconomic decision or concept? A) the price of oil B) how many television sets to produce C) the unemployment rate for the entire economy D) the unemployment rate for each firm Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking 38) Which of the following questions is a macroeconomic issue? A) How many more pounds of cookies will a consumer purchase if the price of cookies decreases? B) What effect would a cure for Mad Cow Disease have on the market for beef? C) What is the future growth prospect for an economy? D) How many workers should the owner of a business hire? Answer: C Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking 39) In broad terms the difference between microeconomics and macroeconomics is that A) they use different sets of tools and ideas. B) microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy. C) macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not. D) microeconomics studies the effects of government taxes on the national unemployment rate. Answer: B Topic: Microeconomics and Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking 40) Which of the following is a macroeconomic issue? A) how a rise in the price of sugar affects the market for sodas B) how federal government budget deficits affect interest rates C) what determines the amount a firm will produce D) the cause of a decline in the price of peanut butter Answer: B Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking

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    11 41) Which of the following is a macroeconomic issue? A) the purchasing decisions that an individual consumer makes B) the effect of increasing the money supply on inflation C) the hiring decisions that a business makes D) the effect of an increase in the tax on cigarettes on cigarette sales Answer: B Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking 42) Macroeconomic topics include A) total, nationwide employment. B) studying what factors influence the price and quantity of automobiles. C) studying the determination of wages and production costs in the software industry. D) the impact of government regulation of markets. Answer: A Topic: Microeconomics and Macroeconomics Skill: Conceptual Status: Old AACSB: Reflective thinking 43) The fact that wants cannot be fully satisfied with available resources reflects the definition of A) the what tradeoff. B) scarcity. C) the big tradeoff. D) for whom to produce. Answer: B Topic: Study Guide Question, Definition of Economics Skill: Recognition Status: Old AACSB: Reflective thinking 44) Studying the effects choices have on the individual markets within the economy is part of A) scarcity. B) microeconomics. C) macroeconomics. D) incentives. Answer: B Topic: Study Guide Question, Macroeconomics Skill: Recognition Status: Old AACSB: Reflective thinking

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    12 45) Economics can be defined as the social science that explains the A) choices made by politicians. B) choices we make when we trade in markets. C) choices that we make as we cope with scarcity. D) choices made by households. Answer: C Topic: MyEconLab Questions Skill: Conceptual Status: Old AACSB: Reflective thinking 46) Scarcity is a situation in which A) some people are poor and others are rich. B) something is being wasted. C) we are unable to satisfy all our wants. D) long lines form at gas stations. Answer: C Topic: MyEconLab Questions Skill: Conceptual Status: Old AACSB: Reflective thinking 47) Microeconomics is the study of A) the choices that individuals and businesses make. B) all aspects of scarcity. C) the global economy. D) the national economy. Answer: A Topic: MyEconLab Questions Skill: Conceptual Status: Old AACSB: Reflective thinking 2 Two Big Economic Questions 1) When an economy produces more houses and fewer typewriters, it is answering the ________ part of one of the two big economic questions. A) "what" B) "how" C) "where" D) "for whom" Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking

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    13 2) When firms in an economy start producing more computers and fewer televisions, they are answering the ________ part of one of the two big economic questions. A) "when" B) "for whom" C) "what" D) "where" Answer: C Topic: What Goods and Services Are Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking 3) If Taco Bell decides to produce more tacos and fewer burritos, Taco Bell is answering the ________ part of one of the two big economic questions. A) "what" B) "why" C) "when" D) "scarcity" Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking 4) When a farmer decides to raise hogs instead of cattle, the farmer is answering the ________ part of one of the two big economic questions. A) "what" B) "for whom" C) "how" D) "why" Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking 5) When a country decides to produce fewer bombers and more public housing projects, it is answering the ________ part of one of the two big economic questions. A) "how" B) "what" C) "defense" D) "for whom" Answer: B Topic: What Goods and Services Are Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking

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    14 6) When a firm decides to produce more electric cars and conventional gas powered cars, it is most directly answering the ________ part of one of the two big economic questions. A) "how" B) "scarcity" C) "what" D) "for whom" Answer: C Topic: What Goods and Services Are Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking 7) U.S. producers decide to produce more compact cars and fewer SUVs as the price of gasoline rises. Producers are answering the ________ part of one of the two big economic questions. A) "what" B) "how" C) "when" D) "how many" Answer: A Topic: What Goods and Services Are Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking 8) Which of the following statements is CORRECT? A) The United States produces more goods than services. B) The United States produces more services than goods. C) The United States produces more agricultural goods than manufactured goods. D) The United States produces an equal amount of goods and services. Answer: B Topic: Trends in Production Skill: Recognition Status: Old AACSB: Reflective thinking 9) In the U.S. economy, which of the following statements is TRUE? A) More goods are produced than services. B) More services are produced than goods. C) Production is divided evenly between goods and services. D) The economy is too complex to determine the proportion of production that is devoted to producing services. Answer: B Topic: Trends in Production Skill: Recognition Status: Old AACSB: Reflective thinking

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    15 10) The largest part of what the United States produces today is ________ such as ________. A) goods; food and electronic equipment B) goods; education and entertainment C) services; trade and health care D) services; textbooks and computers Answer: C Topic: Trends in Production Skill: Recognition Status: Old AACSB: Reflective thinking 11) When China builds a dam using few machines and a great deal of labor, it is answering the ________ part of one of the two big economic questions. A) "what" B) "how" C) "where" D) "for whom" Answer: B Topic: How Are Goods and Services Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking 12) When a textile company keeps track of its inventory using a computer and its competitor uses a pad of paper and a pencil, they are both answering the ________ part of one of the two big economic questions. A) "what" B) "how" C) "for whom" D) "where" Answer: B Topic: How Are Goods and Services Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking 13) When a California farmer decides to harvest lettuce using machines instead of by migrant workers, the farmer is answering the ________ part of one of the two big economic questions. A) "how" B) "for whom" C) "scarcity" D) "what" Answer: A Topic: How Are Goods Produced? Skill: Conceptual Status: Old AACSB: Reflective thinking

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