SOLUTION MANUAL FOR ISSUES IN
ECONOMICS TODAY 10TH EDITION B
Y ROBERT GUELL
Quiz cYourself
1. Scarcity cimplies cthat cthe callocation cdecision cchosen cby csociety ccan
a) not cmake cmore cof cany cone cgood.
b) always cmake cmore cof cany cgood.
c) typically cmake cmore cof cone cgood cbut cat cthe cexpense cof cmaking
cless cof canother.
d) always cmake cmore cof call cgoods csimultaneously.
cExplanation: cScarcity cimplies cthat cchoices cinvolve ctrade-
offs.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cUnderstand
Page c1
© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
,Difficulty: c02 cMedium
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cEconomics cand cOpportunity cCost
2. A cproduction cpossibilities cfrontier cis ca csimple cmodel cof
a) allocating cscarce cinputs cto cthe cproduction cof calternative coutputs.
a) price cand cproduction/consumption cin ca cmarket.
b) the ccost cof cproducing cgoods.
c) the cnumber cof cinputs crequired cto cproduce cvarying clevels cof coutput.
c Explanation: cThe cproduction cpossibilities cfrontier cshows cthe cquantity cof ctwo
cgoods cthat ccan cbe cproduced. cIt cimplies cthat cscarcity crequires cthat cchoices cbe
cmade cas cto chow cto cuse cresources.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cUnderstand
Difficulty: c02 cMedium
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cModeling cOpportunity cCost cUsing cthe cProduction cPossibilities cFrontier
Page c2
© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
,3. The cunderlying creason cthat cthere care cunattainable cpoints con ca cproduction
cpossibilities cfrontier cis cthat cthere
a. is cgovernment.
b. are calways cchoices cthat cmust cbe cmade.
c. are cscarce cresources cwithin ca cfixed clevel cof ctechnology.
d. is cunemployment cof cresources.
Explanation: cThe cpoints coutside cthe cproduction cpossibilities cfrontier care cunattainable.
cThis cmeans cthat ccurrently cavailable cresources cand ctechnology care cinsufficient cto
cproduce camounts cgreater cthan cthose cillustrated con cthe cfrontier. cOn ca cgraph,
ceverything cbeyond cthe cfrontier cis cunattainable.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cModeling cOpportunity cCost cUsing cthe cProduction cPossibilities cFrontier
4. The cunderlying creason cproduction cpossibilities cfrontiers care clikely cto cbe
cbowed cout c(rather cthan clinear) cis cbecause
a. choices chave cconsequences.
b. there care calways copportunity ccosts.
c. some cresources cand cpeople ccan cbe cbetter cused cproducing cone cgood
crather cthan canother.
d. there cis calways csome clevel cof cunemployment.
Explanation: cIf cthe cproduction cpossibilities cfrontier cis cnot ca cline cbut cis cbowed cout
caway cfrom cthe corigin, cthen copportunity ccost cis cincreasing. cThe creason cfor cthis cis
cthat cas cwe cadd cmore cresources cto cthe cproduction cof, cfor cexample, cpizza, cwe care
cusing cfewer cresources cto cproduce csoda. cCompounding cthat cproblem, cat ceach cstage
cas cwe ctake cthe cresources caway cfrom csoda cand cput cthem cinto cpizza, cwe care cmoving
cworkers cwho care cworse cat cpizza cproduction cand cbetter cat csoda cproduction cthan
cthose cmoved cin cthe cprevious cstage. cThis cmeans cthat cthe cincrease cin cpizza
cproduction cis cdiminishing cand cthe closs cin csoda cproduction cis cincreasing. cAn
ceconomist cwould ccall cthis can cexample cof cincreasing copportunity ccost. cIf cthe
cproduction cpossibilities cfrontier cis ca cstraight cline cthat cis cnot cbowed cout caway cfrom
cthe corigin, cthen copportunity ccost cis cconstant.
AACSB: cKnowledge cApplication
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-02
Topic: cAttributes cof cthe cProduction cPossibilities cFrontier
Page c3
© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
, 5. Suppose cyou cwere cmodeling cthe cimpact cof cthe cintroduction cof ccomputer
cautomation cinto cmanufacturing con ca cproduction cpossibilities cfrontier c(PPF) cwith
ctwo cmanufactured cgoods con ctheir crespective caxes. cIt cwould cbe cmore clikely cthat
cthe cresult cwould cbe c .
a) generalized cgrowth cwith cthe cPPF cmoving cboth cup cand cto cthe cright.
b) specialized cgrowth cwith cthe cPPF cmoving cboth cup cand cto cthe cright.
c) generalized cgrowth cwith cthe cPPF cjust cmoving cup cand cnot cto cthe cright.
d) specialized cgrowth cwith cthe cPPF cjust cmoving cup cand cnot cto cthe cright.
cExplanation: cComputer cautomation cis ca cgeneral cimprovement cin ctechnology cso cit
cwould cimprove call cmanufacturing. cAs ca cresult, cit cwould cresult cin cgeneralized
cgrowth cand cmove cthe cPPF cboth cup cand cto cthe cright.
AACSB: cKnowledge cApplication
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-03
cTopic: cEconomic cGrowth
6. The coptimization cassumption csuggests cthat cpeople cmake
a. irrational cdecisions.
b. unpredictable cdecisions.
c. decisions cto cmake cthemselves cas cwell coff cas cpossible.
d. decisions cwithout cthinking cvery chard.
Explanation: cThe coptimization cassumption csuggests cthat cthe cperson cin cquestion cis
ctrying cto cmaximize csome cobjective. cConsumers care cassumed cto cbe cmaking
cdecisions cthat cmaximize ctheir chappiness csubject cto ca cscarce camount cof cmoney.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cThinking cEconomically
7. Imagine can ceconomist cordering cdonuts cone-by-one. cWhen cdeciding chow cmany
cdonuts cto corder cthey cwould cpick cthat cnumber cwhere cthe cenjoyment cof cthe c
equals cthe cenjoyment cthey ccould cget cfrom cusing cthe cmoney con canother cgood.
a. first cdonut
b. last/marginal cdonut
c. average/typical cdonut
d. total cnumber cof cdonuts
Explanation: cThe cenjoyment cof cthe clast cslice cis cthe cmarginal cbenefit cof cthat cslice. cIf cthis
cenjoyment cis cmore cthan cthe cenjoyment cfrom csome calternative, cmore cwill cbe cconsumed.
AACSB: cReflective cThinking
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© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
ECONOMICS TODAY 10TH EDITION B
Y ROBERT GUELL
Quiz cYourself
1. Scarcity cimplies cthat cthe callocation cdecision cchosen cby csociety ccan
a) not cmake cmore cof cany cone cgood.
b) always cmake cmore cof cany cgood.
c) typically cmake cmore cof cone cgood cbut cat cthe cexpense cof cmaking
cless cof canother.
d) always cmake cmore cof call cgoods csimultaneously.
cExplanation: cScarcity cimplies cthat cchoices cinvolve ctrade-
offs.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cUnderstand
Page c1
© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
,Difficulty: c02 cMedium
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cEconomics cand cOpportunity cCost
2. A cproduction cpossibilities cfrontier cis ca csimple cmodel cof
a) allocating cscarce cinputs cto cthe cproduction cof calternative coutputs.
a) price cand cproduction/consumption cin ca cmarket.
b) the ccost cof cproducing cgoods.
c) the cnumber cof cinputs crequired cto cproduce cvarying clevels cof coutput.
c Explanation: cThe cproduction cpossibilities cfrontier cshows cthe cquantity cof ctwo
cgoods cthat ccan cbe cproduced. cIt cimplies cthat cscarcity crequires cthat cchoices cbe
cmade cas cto chow cto cuse cresources.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cUnderstand
Difficulty: c02 cMedium
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cModeling cOpportunity cCost cUsing cthe cProduction cPossibilities cFrontier
Page c2
© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
,3. The cunderlying creason cthat cthere care cunattainable cpoints con ca cproduction
cpossibilities cfrontier cis cthat cthere
a. is cgovernment.
b. are calways cchoices cthat cmust cbe cmade.
c. are cscarce cresources cwithin ca cfixed clevel cof ctechnology.
d. is cunemployment cof cresources.
Explanation: cThe cpoints coutside cthe cproduction cpossibilities cfrontier care cunattainable.
cThis cmeans cthat ccurrently cavailable cresources cand ctechnology care cinsufficient cto
cproduce camounts cgreater cthan cthose cillustrated con cthe cfrontier. cOn ca cgraph,
ceverything cbeyond cthe cfrontier cis cunattainable.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cModeling cOpportunity cCost cUsing cthe cProduction cPossibilities cFrontier
4. The cunderlying creason cproduction cpossibilities cfrontiers care clikely cto cbe
cbowed cout c(rather cthan clinear) cis cbecause
a. choices chave cconsequences.
b. there care calways copportunity ccosts.
c. some cresources cand cpeople ccan cbe cbetter cused cproducing cone cgood
crather cthan canother.
d. there cis calways csome clevel cof cunemployment.
Explanation: cIf cthe cproduction cpossibilities cfrontier cis cnot ca cline cbut cis cbowed cout
caway cfrom cthe corigin, cthen copportunity ccost cis cincreasing. cThe creason cfor cthis cis
cthat cas cwe cadd cmore cresources cto cthe cproduction cof, cfor cexample, cpizza, cwe care
cusing cfewer cresources cto cproduce csoda. cCompounding cthat cproblem, cat ceach cstage
cas cwe ctake cthe cresources caway cfrom csoda cand cput cthem cinto cpizza, cwe care cmoving
cworkers cwho care cworse cat cpizza cproduction cand cbetter cat csoda cproduction cthan
cthose cmoved cin cthe cprevious cstage. cThis cmeans cthat cthe cincrease cin cpizza
cproduction cis cdiminishing cand cthe closs cin csoda cproduction cis cincreasing. cAn
ceconomist cwould ccall cthis can cexample cof cincreasing copportunity ccost. cIf cthe
cproduction cpossibilities cfrontier cis ca cstraight cline cthat cis cnot cbowed cout caway cfrom
cthe corigin, cthen copportunity ccost cis cconstant.
AACSB: cKnowledge cApplication
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-02
Topic: cAttributes cof cthe cProduction cPossibilities cFrontier
Page c3
© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
, 5. Suppose cyou cwere cmodeling cthe cimpact cof cthe cintroduction cof ccomputer
cautomation cinto cmanufacturing con ca cproduction cpossibilities cfrontier c(PPF) cwith
ctwo cmanufactured cgoods con ctheir crespective caxes. cIt cwould cbe cmore clikely cthat
cthe cresult cwould cbe c .
a) generalized cgrowth cwith cthe cPPF cmoving cboth cup cand cto cthe cright.
b) specialized cgrowth cwith cthe cPPF cmoving cboth cup cand cto cthe cright.
c) generalized cgrowth cwith cthe cPPF cjust cmoving cup cand cnot cto cthe cright.
d) specialized cgrowth cwith cthe cPPF cjust cmoving cup cand cnot cto cthe cright.
cExplanation: cComputer cautomation cis ca cgeneral cimprovement cin ctechnology cso cit
cwould cimprove call cmanufacturing. cAs ca cresult, cit cwould cresult cin cgeneralized
cgrowth cand cmove cthe cPPF cboth cup cand cto cthe cright.
AACSB: cKnowledge cApplication
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-03
cTopic: cEconomic cGrowth
6. The coptimization cassumption csuggests cthat cpeople cmake
a. irrational cdecisions.
b. unpredictable cdecisions.
c. decisions cto cmake cthemselves cas cwell coff cas cpossible.
d. decisions cwithout cthinking cvery chard.
Explanation: cThe coptimization cassumption csuggests cthat cthe cperson cin cquestion cis
ctrying cto cmaximize csome cobjective. cConsumers care cassumed cto cbe cmaking
cdecisions cthat cmaximize ctheir chappiness csubject cto ca cscarce camount cof cmoney.
AACSB: cReflective cThinking
cAccessibility: cKeyboard cNavigation
cBlooms: cRemember
Difficulty: c01 cEasy
cGradeable: cautomatic
cLearning cObjective: c01-01
Topic: cThinking cEconomically
7. Imagine can ceconomist cordering cdonuts cone-by-one. cWhen cdeciding chow cmany
cdonuts cto corder cthey cwould cpick cthat cnumber cwhere cthe cenjoyment cof cthe c
equals cthe cenjoyment cthey ccould cget cfrom cusing cthe cmoney con canother cgood.
a. first cdonut
b. last/marginal cdonut
c. average/typical cdonut
d. total cnumber cof cdonuts
Explanation: cThe cenjoyment cof cthe clast cslice cis cthe cmarginal cbenefit cof cthat cslice. cIf cthis
cenjoyment cis cmore cthan cthe cenjoyment cfrom csome calternative, cmore cwill cbe cconsumed.
AACSB: cReflective cThinking
Page c4
© cMCGRAW cHILL cLLC. cALL cRIGHTS cRESERVED. cNO cREPRODUCTION cOR cDISTRIBUTION cWITHOUT
cTHE cPRIOR c WRITTEN cCONSENT cOF cMCGRAW cHILL cLLC.
