Solution Manual for Microeconomics, 13th Edition

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1Microeconomics, 13e(Parkin)Chapter 1What Is Economics?1 Definition of Economics1) All economic questions are aboutA) how to make money.B) what to produce.C) how to cope with scarcity.D) how to satisfy all our wants.Answer: CTopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking2) All economic questions arise because weA) 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: ATopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking3) Economics is best defined as the study of how people, businesses, governments, and societiesA) choose abundance over scarcity.B) make choices to cope with scarcity.C) use their infinite resources.D) attain wealth.Answer: BTopic: ScarcitySkill: ConceptualStatus: OldAACSB: Reflective thinking4) Scarcity is a situation in whichA) 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: ATopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking

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25) Economists point out that scarcity confrontsA) 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: DTopic: ScarcitySkill: ConceptualStatus: OldAACSB: Ethical understanding and reasoning6) Scarcity isA) 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: ATopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking7) When an economist talks of scarcity, the economist is referring to theA) 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: CTopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking8) Fundamental economic problems basically arise fromA) 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: DTopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking

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39) Scarcity exists becauseA) 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: BTopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking10) Scarcity can be eliminated throughA) 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: DTopic: ScarcitySkill: RecognitionStatus: OldAACSB: Reflective thinking11) As an economic concept, scarcity applies toA) both money and time.B) money but not time.C) time but not money.D) neither time nor money.Answer: ATopic: ScarcitySkill: ConceptualStatus: OldAACSB: Reflective thinking12) In every economic system, choices must be made because resources are ________ and our wants are________.A) unlimited; limitedB) limited; unlimitedC) unlimited; unlimitedD) limited; limitedAnswer: BTopic: ScarcitySkill: ConceptualStatus: OldAACSB: Reflective thinking

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413) The problem of "scarcity" appliesA) 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: DTopic: ScarcitySkill: ConceptualStatus: OldAACSB: Reflective thinking14) Scarcity requires that people mustA) cooperate.B) compete.C) trade.D) make choices.Answer: DTopic: ScarcitySkill: ConceptualStatus: OldAACSB: Reflective thinking15) People must make choices becauseA) most people enjoy shopping.B) of scarcity.C) there are many goods available.D) None of the above answers is correct.Answer: BTopic: ScarcitySkill: ConceptualStatus: OldAACSB: Reflective thinking16) An incentiveA) 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: CTopic: IncentiveSkill: RecognitionStatus: OldAACSB: Reflective thinking

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517) An inducement to take a particular action is calledA) the marginal benefit.B) the marginal cost.C) opportunity cost.D) an incentive.Answer: DTopic: IncentiveSkill: RecognitionStatus: OldAACSB: Reflective thinking18) Economics is best defined asA) 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: CTopic: Definition of EconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking19) The study of economicsA) 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: BTopic: Definition of EconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking20) Economics is best defined as the science of choice and how people cope withA) differences in wants.B) differences in needs.C) scarcity.D) different economic systems.Answer: CTopic: Definition of EconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking

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621) Economics is the study ofA) 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: CTopic: Definition of EconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking22) The study of the choices made by individuals is part of the definition ofA) microeconomics.B) positive economics.C) macroeconomics.D) normative economics.Answer: ATopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking23) In part, microeconomics is concerned withA) 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: ATopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking24) The study of the decisions of individual units in the economy is known asA) macroeconomics.B) microeconomics.C) the study of incentives.D)ceteris paribusstudy.Answer: BTopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking

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725) Studying the determination of prices in individual markets is primarily a concern ofA) positive economics.B) negative economics.C) macroeconomics.D) microeconomics.Answer: DTopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking26) The analysis of the behavior of individual decision-making units is the definition ofA) microeconomics.B) positive economics.C) macroeconomics.D) normative economics.Answer: ATopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking27) Which of the following is a microeconomic topic?A) how a trade agreement between the United States and Mexico affects both nations' unemploymentratesB) comparing inflation rates across countriesC) how rent ceilings impact the supply of apartmentsD) how a tax rate increase will impact total productionAnswer: CTopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking28) 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: ATopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking

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829) 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 leisureB) a small shoe factory deciding how much leather to purchase for the next quarter's production needC) a multinational company deciding where to relocate its world headquarterD) All of the above answers are correct.Answer: DTopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking30) Which of the following is a microeconomic topic?A) the reasons why Kathy buys less orange juiceB) the reasons for a decline in average pricesC) the reasons why total employment decreasesD) the effect of the government budget deficit on inflationAnswer: ATopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking31) 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: CTopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking32) An example of a question that might be explored in microeconomics is to determineA) 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: ATopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking

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933) In part, microeconomics is concerned with the study ofA) 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: CTopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking34) The branch of economics that deals with the analysis of the whole economy is calledA) macroeconomics.B) marginal analysis.C) microeconomics.D) metroanalysis.Answer: ATopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking35) Macroeconomics is concerned withA) 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: CTopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking36) Macroeconomics differs from microeconomics in thatA) 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 privatecorporations.D) macroeconomics focuses on the national economy and the global economy.Answer: DTopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking

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1037) Which of the following is a macroeconomic decision or concept?A) the price of oilB) how many television sets to produceC) the unemployment rate for the entire economyD) the unemployment rate for each firmAnswer: CTopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking38) 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: CTopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking39) In broad terms the difference between microeconomics and macroeconomics is thatA) they use different sets of tools and ideas.B) microeconomics studies decisions of individual people and firms and macroeconomics studies theentire national economy.C) macroeconomics studies the effects of government regulation and taxes on the price of individualgoods and services whereas microeconomics does not.D) microeconomics studies the effects of government taxes on the national unemployment rate.Answer: BTopic: Microeconomics and MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking40) Which of the following is a macroeconomic issue?A) how a rise in the price of sugar affects the market for sodasB) how federal government budget deficits affect interest ratesC) what determines the amount a firm will produceD) the cause of a decline in the price of peanut butterAnswer: BTopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking

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1141) Which of the following is a macroeconomic issue?A) the purchasing decisions that an individual consumer makesB) the effect of increasing the money supply on inflationC) the hiring decisions that a business makesD) the effect of an increase in the tax on cigarettes on cigarette salesAnswer: BTopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking42) Macroeconomic topics includeA) 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: ATopic: Microeconomics and MacroeconomicsSkill: ConceptualStatus: OldAACSB: Reflective thinking43) The fact that wants cannot be fully satisfied with available resources reflects the definition ofA) the what tradeoff.B) scarcity.C) the big tradeoff.D) for whom to produce.Answer: BTopic: Study Guide Question, Definition of EconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking44) Studying the effects choices have on the individual markets within the economy is part ofA) scarcity.B) microeconomics.C) macroeconomics.D) incentives.Answer: BTopic: Study Guide Question, MacroeconomicsSkill: RecognitionStatus: OldAACSB: Reflective thinking

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1245) Economics can be defined as the social science that explains theA) 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: CTopic: MyEconLab QuestionsSkill: ConceptualStatus: OldAACSB: Reflective thinking46) Scarcity is a situation in whichA) 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: CTopic: MyEconLab QuestionsSkill: ConceptualStatus: OldAACSB: Reflective thinking47) Microeconomics is the study ofA) the choices that individuals and businesses make.B) all aspects of scarcity.C) the global economy.D) the national economy.Answer: ATopic: MyEconLab QuestionsSkill: ConceptualStatus: OldAACSB: Reflective thinking2 Two Big Economic Questions1) When an economy produces more houses and fewer typewriters, it is answering the ________ part ofone of the two big economic questions.A) "what"B) "how"C) "where"D) "for whom"Answer: ATopic: What Goods and Services Are Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking

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132) When firms in an economy start producing more computers and fewer televisions, they are answeringthe ________ part of one of the two big economic questions.A) "when"B) "for whom"C) "what"D) "where"Answer: CTopic: What Goods and Services Are Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking3) If Taco Bell decides to produce more tacos and fewer burritos, Taco Bell is answering the ________ partof one of the two big economic questions.A) "what"B) "why"C) "when"D) "scarcity"Answer: ATopic: What Goods and Services Are Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking4) When a farmer decides to raise hogs instead of cattle, the farmer is answering the ________ part of oneof the two big economic questions.A) "what"B) "for whom"C) "how"D) "why"Answer: ATopic: What Goods and Services Are Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking5) When a country decides to produce fewer bombers and more public housing projects, it is answeringthe ________ part of one of the two big economic questions.A) "how"B) "what"C) "defense"D) "for whom"Answer: BTopic: What Goods and Services Are Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking

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146) When a firm decides to produce more electric cars and conventional gas powered cars, it is mostdirectly answering the ________ part of one of the two big economic questions.A) "how"B) "scarcity"C) "what"D) "for whom"Answer: CTopic: What Goods and Services Are Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking7) 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: ATopic: What Goods and Services Are Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking8) 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: BTopic: Trends in ProductionSkill: RecognitionStatus: OldAACSB: Reflective thinking9) 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 producingservices.Answer: BTopic: Trends in ProductionSkill: RecognitionStatus: OldAACSB: Reflective thinking

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1510) The largest part of what the United States produces today is ________ such as ________.A) goods; food and electronic equipmentB) goods; education and entertainmentC) services; trade and health careD) services; textbooks and computersAnswer: CTopic: Trends in ProductionSkill: RecognitionStatus: OldAACSB: Reflective thinking11) 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: BTopic: How Are Goods and Services Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking12) When a textile company keeps track of its inventory using a computer and its competitor uses a padof paper and a pencil, they are both answering the ________ part of one of the two big economicquestions.A) "what"B) "how"C) "for whom"D) "where"Answer: BTopic: How Are Goods and Services Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking13) 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: ATopic: How Are Goods Produced?Skill: ConceptualStatus: OldAACSB: Reflective thinking

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