Issues in Economics Today 10th Edition Solution Manual | Robert Guell – 2025 Step-by-Step Applied Economics Solutions

SOLUTION MANUAL FOR
g g



IssuesgingEconomicsgTodayg10thgEditiongbygRobertgGuell

Chapterg1-47


Chapterg1
EndgofgChaptergQuestions
QuizgYourself

1. Scarcitygimpliesgthatgthegallocationgdecisiongchosengbygsocietygcan
a) notgmakegmoregofganygoneggood.
b) alwaysgmakegmoregofganyggood.
c) typicallygmakegmoregofgoneggoodgbutgatgthegexpensegofgmakingglessg
ofganother.
d) alwaysgmakegmoregofgallggoodsgsimultaneously.gExpl
anation:gScarcitygimpliesgthatgchoicesginvolvegtrade-offs.

AACSB:gReflectivegThinkinggAccessi
bility:gKeyboardgNavigationgBlooms:g
Understand
Difficulty:g02gMediumgGrade
able:gautomaticgLearninggObj
ective:g01-01
Topic:gEconomicsgandgOpportunitygCost

2. Agproductiongpossibilitiesgfrontiergisgagsimplegmodelgof
a) allocatinggscarceginputsgtogthegproductiongofgalternativegoutputs.
a) pricegandgproduction/consumptiongingagmarket.
b) thegcostgofgproducingggoods.
c) thegnumbergofginputsgrequiredgtogproducegvaryingglevelsgofgoutput.g Explanatio
n:gThegproductiongpossibilitiesgfrontiergshowsgthegquantitygofgtwoggoodsgthatgcangbegpr
oduced.gItgimpliesgthatgscarcitygrequiresgthatgchoicesgbegmadegasgtoghowgtogusegresourc
es.

AACSB:gReflectivegThinkinggAccessi
bility:gKeyboardgNavigationgBlooms:g
Understand
Difficulty:g02gMediumgGrade
able:gautomaticgLearninggObj
ective:g01-01
Topic:gModelinggOpportunitygCostgUsinggthegProductiongPossibilitiesgFrontier

Pageg1
©gMCGRAWgHILLgLLC.gALLgRIGHTSgRESERVED.gNOgREPRODUCTIONgORgDISTRIBUTIONgWITHOUTgTHEgP
RIORg WRITTENgCONSENTgOFgMCGRAWgHILLgLLC.

,3. Thegunderlyinggreasongthatgtheregaregunattainablegpointsgongagproductiongpossibilitie
sgfrontiergisgthatgthere
a. isggovernment.
b. aregalwaysgchoicesgthatgmustgbegmade.
c. aregscarcegresourcesgwithingagfixedglevelgofgtechnology.
d. isgunemploymentgofgresources.
Explanation:gThegpointsgoutsidegthegproductiongpossibilitiesgfrontiergaregunattainable.gThi
sgmeansgthatgcurrentlygavailablegresourcesgandgtechnologygareginsufficientgtogproducegam
ountsggreatergthangthosegillustratedgongthegfrontier.gOngaggraph,geverythinggbeyondgthegfr
ontiergisgunattainable.

AACSB:gReflectivegThinkinggAccessi
bility:gKeyboardgNavigationgBlooms:g
Remember
Difficulty:g01gEasygGradeabl
e:gautomaticgLearninggObject
ive:g01-01
Topic:gModelinggOpportunitygCostgUsinggthegProductiongPossibilitiesgFrontier

4. Thegunderlyinggreasongproductiongpossibilitiesgfrontiersgareglikelygtogbegbowedgo
utg(rathergthanglinear)gisgbecause
a. choicesghavegconsequences.
b. theregaregalwaysgopportunitygcosts.
c. somegresourcesgandgpeoplegcangbegbettergusedgproducinggoneggoodgrathe
rgthanganother.
d. theregisgalwaysgsomeglevelgofgunemployment.
Explanation:gIfgthegproductiongpossibilitiesgfrontiergisgnotgaglinegbutgisgbowedgoutgawaygf
romgthegorigin,gthengopportunitygcostgisgincreasing.gThegreasongforgthisgisgthatgasgwegaddg
moregresourcesgtogthegproductiongof,gforgexample,gpizza,gwegaregusinggfewergresourcesgto
gproducegsoda.gCompoundinggthatgproblem,gatgeachgstagegasgwegtakegthegresourcesgawayg
fromgsodagandgputgthemgintogpizza,gwegaregmovinggworkersgwhogaregworsegatgpizzagprod
uctiongandgbettergatgsodagproductiongthangthosegmovedgingthegpreviousgstage.gThisgmeans
gthatgthegincreasegingpizzagproductiongisgdiminishinggandgtheglossgingsodagproductiongisgin
creasing.gAngeconomistgwouldgcallgthisgangexamplegofgincreasinggopportunitygcost.gIfgthe
gproductiongpossibilitiesgfrontiergisgagstraightglinegthatgisgnotgbowedgoutgawaygfromgthegor
igin,gthengopportunitygcostgisgconstant.

AACSB:gKnowledgegApplicationgAcc
essibility:gKeyboardgNavigationgBloo
ms:gRemember
Difficulty:g01gEasygGradeabl
e:gautomaticgLearninggObject
ive:g01-02
Topic:gAttributesgofgthegProductiongPossibilitiesgFrontier




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©gMCGRAWgHILLgLLC.gALLgRIGHTSgRESERVED.gNOgREPRODUCTIONgORgDISTRIBUTIONgWITHOUTgTHEgP
RIORg WRITTENgCONSENTgOFgMCGRAWgHILLgLLC.

,5. Supposegyougweregmodelinggthegimpactgofgthegintroductiongofgcomputergautomatio
ngintogmanufacturinggongagproductiongpossibilitiesgfrontierg(PPF)gwithgtwogmanufactur
edggoodsgongtheirgrespectivegaxes.gItgwouldgbegmoreglikelygthatgthegresultgwouldgbeg .
a) generalizedggrowthgwithgthegPPFgmovinggbothgupgandgtogthegright.
b) specializedggrowthgwithgthegPPFgmovinggbothgupgandgtogthegright.
c) generalizedggrowthgwithgthegPPFgjustgmovinggupgandgnotgtogthegright.
d) specializedggrowthgwithgthegPPFgjustgmovinggupgandgnotgtogthegright.gExplanati
on:gComputergautomationgisgaggeneralgimprovementgingtechnologygsogitgwouldgimprov
egallgmanufacturing.gAsgagresult,gitgwouldgresultginggeneralizedggrowthgandgmovegthegP
PFgbothgupgandgtogthegright.

AACSB:gKnowledgegApplicationgAcc
essibility:gKeyboardgNavigationgBloo
ms:gRemember
Difficulty:g01gEasygGradeabl
e:gautomaticgLearninggObject
ive:g01-
03gTopic:gEconomicgGrowth

6. Thegoptimizationgassumptiongsuggestsgthatgpeoplegmake
a. irrationalgdecisions.
b. unpredictablegdecisions.
c. decisionsgtogmakegthemselvesgasgwellgoffgasgpossible.
d. decisionsgwithoutgthinkinggveryghard.
Explanation:gThegoptimizationgassumptiongsuggestsgthatgthegpersongingquestiongisgtrying
gtogmaximizegsomegobjective.gConsumersgaregassumedgtogbegmakinggdecisionsgthatgmax
imizegtheirghappinessgsubjectgtogagscarcegamountgofgmoney.

AACSB:gReflectivegThinkinggAccessi
bility:gKeyboardgNavigationgBlooms:g
Remember
Difficulty:g01gEasygGradeabl
e:gautomaticgLearninggObject
ive:g01-01
Topic:gThinkinggEconomically

7. Imaginegangeconomistgorderinggdonutsgone-by-
one.gWhengdecidingghowgmanygdonutsgtogordergtheygwouldgpickgthatgnumbergwheregthege
njoymentgofgtheg
equalsgthegenjoymentgtheygcouldggetgfromgusinggthegmoneygonganotherggood.
a. firstgdonut
b. last/marginalgdonut
c. average/typicalgdonut
d. totalgnumbergofgdonuts
Explanation:gThegenjoymentgofgtheglastgslicegisgthegmarginalgbenefitgofgthatgslice.gIfgthisgenjo
ymentgisgmoregthangthegenjoymentgfromgsomegalternative,gmoregwillgbegconsumed.

AACSB:gReflectivegThinking
Pageg3
©gMCGRAWgHILLgLLC.gALLgRIGHTSgRESERVED.gNOgREPRODUCTIONgORgDISTRIBUTIONgWITHOUTgTHEgP
RIORg WRITTENgCONSENTgOFgMCGRAWgHILLgLLC.

, Accessibility:gKeyboardgNavigationgBl
ooms:gUnderstand
Difficulty:g02gMediumgGrade
able:gautomaticg LearninggObj
ective:g01-
04gTopic:gThinkinggEconomic
ally

8. Ofgcourse,gallgindividualgstudentsgaregbettergoffgifgtheygearngbetterggrades.gIfgyougwer
egtogconcludegthatgallgstudentsgwouldgbegbettergoffgifgeveryonegreceivedgangA,gyougwould
a. havegfallengvictimgtogthegfallacygofgscarcity.
b. begright.
c. havegfallengvictimgtogthegfallacygofgcomposition.
d. begmistakinggcorrelationgwithgcausation.
Explanation:gThegfallacygofgcompositiongisgthegmistakeginglogicgthatgsuggestsgthatgthegtota
lgeconomicgimpactgofgsomethinggisgalwaysgandgsimplygequalgtogthegsumgofgthegindividual
gparts.


AACSB:gReflectivegThinkinggAccessi
bility:gKeyboardgNavigationgBlooms:g
Understand
Difficulty:g02gMediumgGrade
able:gautomaticg LearninggObj
ective:g01-
04gTopic:gThinkinggEconomic
ally

9. Imaginegyougweregtogconclude,gaftergcarefullygexamininggdatagandgusinggpropergeval
uationgtechniques,gthatgagtaxgcreditgforgattendinggcollegegbenefitsglowgincomegearnersgmo
regthangagtaxgdeductiong(ofgequalgtotalgcostgtogtheggovernment)gwould.gYougwouldghavege
ngagedging analysisgtogreachgthatgconclusion.
a. negative
b. positive
c. normative
d. creative
Explanation:gEconomists,gandgsocialgscientistsginggeneral,gdistinguishgviewsgofg―thegwayg
thingsgare‖gfromg―thegwaygthingsgshouldgbe,‖gcallinggthegformergpositiveganalysisgandgthe
glattergnormativeganalysis.gPositiveganalysisgisgagformgofganalysisgthatgseeksgtogunderstan
dgthegwaygthingsgaregandgwhygtheygaregthatgway.gNormativeganalysisgisgagformgofganalysi
sgthatgseeksgtogunderstandgthegwaygthingsgshouldgbe.

AACSB:gReflectivegThinkinggAccessi
bility:gKeyboardgNavigationgBlooms:g
Understand
Difficulty:g02gMediumgGrade
able:gautomaticg LearninggObj
ective:g01-
04gTopic:gThinkinggEconomic
Pageg4
©gMCGRAWgHILLgLLC.gALLgRIGHTSgRESERVED.gNOgREPRODUCTIONgORgDISTRIBUTIONgWITHOUTgTHEgP
RIORg WRITTENgCONSENTgOFgMCGRAWgHILLgLLC.