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

SOLUTION xc MANUAL xc FOR
Issues xcin xcEconomics xcToday xc10th xcEdition xcby xcRobert xcGuell

Chapter xc1-47


Chapter xc1
End xcof xcChapter xcQuestions
Quiz xcYourself

1. Scarcity xcimplies xcthat xcthe xcallocation xcdecision xcchosen xcby xcsociety xccan
a) not xcmake xcmore xcof xcany xcone xcgood.
b) always xcmake xcmore xcof xcany xcgood.
c) typically xcmake xcmore xcof xcone xcgood xcbut xcat xcthe xcexpense xcof
xcmaking xcless xcof xcanother.
d) always xcmake xcmore xcof xcall xcgoods
xcsimultaneously. xcExplanation: xcScarcity xcimplies xcthat
xcchoices xcinvolve xctrade-offs.


AACSB: xcReflective xcThinking
xcAccessibility: xcKeyboard
xcNavigation xcBlooms: xcUnderstand
Difficulty: xc02 xcMedium
xcGradeable: xcautomatic
xcLearning xcObjective: xc01-01
Topic: xcEconomics xcand xcOpportunity xcCost

2. A xcproduction xcpossibilities xcfrontier xcis xca xcsimple xcmodel xcof
a) allocating xcscarce xcinputs xcto xcthe xcproduction xcof xcalternative xcoutputs.
a) price xcand xcproduction/consumption xcin xca xcmarket.
b) the xccost xcof xcproducing xcgoods.
c) the xcnumber xcof xcinputs xcrequired xcto xcproduce xcvarying xclevels xcof
xcoutput. x c Explanation: xcThe xcproduction xcpossibilities xcfrontier xcshows xcthe
xcquantity xcof xctwo xcgoods xcthat xccan xcbe xcproduced. xcIt xcimplies xcthat xcscarcity
xcrequires xcthat xcchoices xcbe xcmade xcas xcto xchow xcto xcuse xcresources.


AACSB: xcReflective xcThinking
xcAccessibility: xcKeyboard
xcNavigation xcBlooms: xcUnderstand
Difficulty: xc02 xcMedium
xcGradeable: xcautomatic
xcLearning xcObjective: xc01-01
Topic: xcModeling xcOpportunity xcCost xcUsing xcthe xcProduction xcPossibilities xcFrontier
Page xc1
© xcMCGRAW xcHILL xcLLC. xcALL xcRIGHTS xcRESERVED. xcNO xcREPRODUCTION xcOR xcDISTRIBUTION
xcWITHOUT xcTHE xcPRIOR x c WRITTEN xcCONSENT xcOF xcMCGRAW xcHILL xcLLC.

,3. The xcunderlying xcreason xcthat xcthere xcare xcunattainable xcpoints xcon xca xcproduction
xcpossibilities xcfrontier xcis xcthat xcthere
a. is xcgovernment.
b. are xcalways xcchoices xcthat xcmust xcbe xcmade.
c. are xcscarce xcresources xcwithin xca xcfixed xclevel xcof xctechnology.
d. is xcunemployment xcof xcresources.
Explanation: xcThe xcpoints xcoutside xcthe xcproduction xcpossibilities xcfrontier xcare
xcunattainable. xcThis xcmeans xcthat xccurrently xcavailable xcresources xcand xctechnology
xcare xcinsufficient xcto xcproduce xcamounts xcgreater xcthan xcthose xcillustrated xcon xcthe
xcfrontier. xcOn xca xcgraph, xceverything xcbeyond xcthe xcfrontier xcis xcunattainable.


AACSB: xcReflective xcThinking
xcAccessibility: xcKeyboard
xcNavigation xcBlooms: xcRemember
Difficulty: xc01 xcEasy
xcGradeable: xcautomatic
xcLearning xcObjective: xc01-01
Topic: xcModeling xcOpportunity xcCost xcUsing xcthe xcProduction xcPossibilities xcFrontier

4. The xcunderlying xcreason xcproduction xcpossibilities xcfrontiers xcare xclikely xcto xcbe
xcbowed xcout xc(rather xcthan xclinear) xcis xcbecause
a. choices xchave xcconsequences.
b. there xcare xcalways xcopportunity xccosts.
c. some xcresources xcand xcpeople xccan xcbe xcbetter xcused xcproducing xcone
xcgood xcrather xcthan xcanother.
d. there xcis xcalways xcsome xclevel xcof xcunemployment.
Explanation: xcIf xcthe xcproduction xcpossibilities xcfrontier xcis xcnot xca xcline xcbut xcis
xcbowed xcout xcaway xcfrom xcthe xcorigin, xcthen xcopportunity xccost xcis xcincreasing. xcThe
xcreason xcfor xcthis xcis xcthat xcas xcwe xcadd xcmore xcresources xcto xcthe xcproduction xcof,
xcfor xcexample, xcpizza, xcwe xcare xcusing xcfewer xcresources xcto xcproduce xcsoda.
xcCompounding xcthat xcproblem, xcat xceach xcstage xcas xcwe xctake xcthe xcresources xcaway
xcfrom xcsoda xcand xcput xcthem xcinto xcpizza, xcwe xcare xcmoving xcworkers xcwho xcare
xcworse xcat xcpizza xcproduction xcand xcbetter xcat xcsoda xcproduction xcthan xcthose
xcmoved xcin xcthe xcprevious xcstage. xcThis xcmeans xcthat xcthe xcincrease xcin xcpizza
xcproduction xcis xcdiminishing xcand xcthe xcloss xcin xcsoda xcproduction xcis xcincreasing.
xcAn xceconomist xcwould xccall xcthis xcan xcexample xcof xcincreasing xcopportunity xccost.
xcIf xcthe xcproduction xcpossibilities xcfrontier xcis xca xcstraight xcline xcthat xcis xcnot xcbowed
xcout xcaway xcfrom xcthe xcorigin, xcthen xcopportunity xccost xcis xcconstant.


AACSB: xcKnowledge xcApplication
xcAccessibility: xcKeyboard
xcNavigation xcBlooms: xcRemember
Difficulty: xc01 xcEasy
xcGradeable: xcautomatic
xcLearning xcObjective: xc01-02
Topic: xcAttributes xcof xcthe xcProduction xcPossibilities xcFrontier


Page xc2
© xcMCGRAW xcHILL xcLLC. xcALL xcRIGHTS xcRESERVED. xcNO xcREPRODUCTION xcOR xcDISTRIBUTION
xcWITHOUT xcTHE xcPRIOR x c WRITTEN xcCONSENT xcOF xcMCGRAW xcHILL xcLLC.

,5. Suppose xcyou xcwere xcmodeling xcthe xcimpact xcof xcthe xcintroduction xcof
xccomputer xcautomation xcinto xcmanufacturing xcon xca xcproduction xcpossibilities
xcfrontier xc(PPF) xcwith xctwo xcmanufactured xcgoods xcon xctheir xcrespective xcaxes. xcIt
xcwould xcbe xcmore xclikely xcthat xcthe xcresult xcwould xcbe xc .
a) generalized xcgrowth xcwith xcthe xcPPF xcmoving xcboth xcup xcand xcto xcthe xcright.
b) specialized xcgrowth xcwith xcthe xcPPF xcmoving xcboth xcup xcand xcto xcthe xcright.
c) generalized xcgrowth xcwith xcthe xcPPF xcjust xcmoving xcup xcand xcnot xcto xcthe xcright.
d) specialized xcgrowth xcwith xcthe xcPPF xcjust xcmoving xcup xcand xcnot xcto xcthe
xcright. xcExplanation: xcComputer xcautomation xcis xca xcgeneral xcimprovement xcin
xctechnology xcso xcit xcwould xcimprove xcall xcmanufacturing. xcAs xca xcresult, xcit xcwould
xcresult xcin xcgeneralized xcgrowth xcand xcmove xcthe xcPPF xcboth xcup xcand xcto xcthe
xcright.


AACSB: xcKnowledge xcApplication
xcAccessibility: xcKeyboard
xcNavigation xcBlooms: xcRemember
Difficulty: xc01 xcEasy
xcGradeable: xcautomatic
xcLearning xcObjective: xc01-03
xcTopic: xcEconomic xcGrowth


6. The xcoptimization xcassumption xcsuggests xcthat xcpeople xcmake
a. irrational xcdecisions.
b. unpredictable xcdecisions.
c. decisions xcto xcmake xcthemselves xcas xcwell xcoff xcas xcpossible.
d. decisions xcwithout xcthinking xcvery xchard.
Explanation: xcThe xcoptimization xcassumption xcsuggests xcthat xcthe xcperson xcin
xcquestion xcis xctrying xcto xcmaximize xcsome xcobjective. xcConsumers xcare xcassumed
xcto xcbe xcmaking xcdecisions xcthat xcmaximize xctheir xchappiness xcsubject xcto xca
xcscarce xcamount xcof xcmoney.


AACSB: xcReflective xcThinking
xcAccessibility: xcKeyboard
xcNavigation xcBlooms: xcRemember
Difficulty: xc01 xcEasy
xcGradeable: xcautomatic
xcLearning xcObjective: xc01-01
Topic: xcThinking xcEconomically

7. Imagine xcan xceconomist xcordering xcdonuts xcone-by-one. xcWhen xcdeciding xchow
xcmany xcdonuts xcto xcorder xcthey xcwould xcpick xcthat xcnumber xcwhere xcthe xcenjoyment
xcof xcthe xc equals xcthe
xcenjoyment xcthey xccould xcget xcfrom xcusing xcthe xcmoney xcon xcanother xcgood.
a. first xcdonut
b. last/marginal xcdonut
c. average/typical xcdonut
d. total xcnumber xcof xcdonuts
Explanation: xcThe xcenjoyment xcof xcthe xclast xcslice xcis xcthe xcmarginal xcbenefit xcof xcthat
Page xc3
© xcMCGRAW xcHILL xcLLC. xcALL xcRIGHTS xcRESERVED. xcNO xcREPRODUCTION xcOR xcDISTRIBUTION
xcWITHOUT xcTHE xcPRIOR x c WRITTEN xcCONSENT xcOF xcMCGRAW xcHILL xcLLC.

, xcslice. xcIf xcthis xcenjoyment xcis xcmore xcthan xcthe xcenjoyment xcfrom xcsome xcalternative,
xcmore xcwill xcbe xcconsumed.


AACSB: xcReflective xcThinking




Page xc4
© xcMCGRAW xcHILL xcLLC. xcALL xcRIGHTS xcRESERVED. xcNO xcREPRODUCTION xcOR xcDISTRIBUTION
xcWITHOUT xcTHE xcPRIOR x c WRITTEN xcCONSENT xcOF xcMCGRAW xcHILL xcLLC.