Homework Chapter 1 Microeconomics

Microeconomics

Homework # 1

Microeconomics

Michael Parkin

Chapter 1: What is Economics?

Review Quiz:

1. List some examples of scarcity in our country today (3)

• When a person with a medium economy level needs to decide to buy a TV or a new computer but can’t afford both.

• When a student wants to go to a nightclub and to study for the exam next day but needs to choose in one. There is no enough time and energy.

• When two parents want to have more children but there is no enough money to put one more child in a good school.

2. Use the headlines in today´s news to provide some examples of scarcity around the world.

“Fears of Renewed Instability as Fed Ends Stimulus” (The New York Times)

“A deal too good to turn down, unless it’s Medicaid” (The New York Times)

“Producer Prices Increase a Small Amount” (The New York Times)

3. Use today´s news to illustrate the distinction between microeconomics and macroeconomics.

“Italy Falls Back Into Recession, Raising Concern for Eurozone Economy” talks about the macroeconomics of Europe and how Italy is affecting it. (The New York Times)

4. Provide three everyday examples of tradeoffs and describe the opportunity cost involved in each.

• When a student decides to take the car to school instead of the bus he is trading money for the parking lot for more sleep. The opportunity cost is more time to sleep.

• When a person decides to go to a restaurant than to eat at home. The opportunity cost is a more expensive but delicious meal and a clean kitchen.

• When a student decides not to shower for more time to sleep. The opportunity cost is the smell the student is going to have for wanting to sleep more.

5. Provide three everyday examples to illustrate what we mean by choosing at the margin.

• When a person is deciding to but an iPhone over an Android. He needs to make...