Complete Chapters Included ✅
Chap 01 4e - Perloff Complete Answers Included ✅
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Microeconomics studies the allocation of 1)
A) scarce resources. B) unlimited resources.
C) models. D) decision makers.
2) Society faces trade-offs because of 2)
A) price setting by firms. B) government regulations.
C) the profit motive. D) scarcity.
3) Managerial economics 3)
A) explains which products consumers will buy.
B) describes how pay for managers is set.
C) ensures managers always make good decisions.
D) helps managers make decisions in the face of scarcity.
4) CEOs should focus on 4)
A) beating their competitors.
B) getting the best pay package for the senior management team.
C) maximizing firm profits.
D) minimizing costs.
5) Profit is 5)
A) the difference between a firm's revenues and its costs.
B) maximized when revenue is maximized.
C) used to beat a company's rivals.
D) maximized when the marketing department coordinates with the production department.
6) Firms face trade-offs because 6)
A) markets set prices of goods they sell.
B) managers don't know which inputs to use.
C) inputs are scarce.
D) marginal reasoning leads to uncertainty.
7) A firm's managers are constrained by 7)
A) government. B) consumers.
C) workers. D) All of the above.
8) A market 8)
A) always takes place at a physical location.
B) always involves the personal exchange of goods for money.
C) has no influence on prices.
D) allows interactions between consumers and firms.
1
, 9) In a market, 9)
A) government policies play a very small part.
B) decision makers always maximize.
C) the primary participants are consumers and firms.
D) the goods sold are not closely related.
10) Which of the following would NOT be considered part of a firm's strategy? 10)
A) sales strategy
B) price
C) production levels
D) None of the aboveall are part of a firm's strategy.
11) Raising the price of a good by one dollar 11)
A) decreases profits.
B) leaves profits unchanged.
C) increases profits.
D) leads to an indeterminant change in profits.
12) Most private firms seek to 12)
A) maximize profit. B) maximize employee salaries.
C) maximize revenue. D) minimize headcount.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
13) What is the purpose of having a strategy?
14) Explain what the statement "We can't have everything we want" means.
15) What is profit?
16) Give an example of a tradeoff a pizza restaurant might face.
17) Why might raising the price of a good by a dollar lead to lower profits?
18) Why might raising the price of a good by a dollar lead to higher profits?
For the following, please answer "True" or "False" and explain why.
19) Managers have to understand the decision making of others.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
20) The purpose of making assumptions in economic model building is to 20)
A) force the model to yield the correct answer.
B) simplify the model while keeping important details.
C) minimize the amount of work an economist must do.
D) express the relationship mathematically.
2
,21) Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." 21)
When it comes to economic models this means that
A) models shouldn't be too complex.
B) models should have a level of abstraction appropriate to the topic investigated.
C) models shouldn't be too simple.
D) All of the above.
22) If a model's predictions are correct, then 22)
A) its assumptions must have been correct.
B) it is proven to be correct.
C) Both A and B above.
D) None of the above.
23) Economists tend to judge a model based upon 23)
A) the accuracy of its predictions. B) the reality of its assumptions.
C) its complexity. D) its simplicity.
24) Economic models are most useful in 24)
A) predicting the direction of the stock market.
B) explaining outcomes resulting from management decisions.
C) explaining the future with the past.
D) generating untestable hypotheses.
25) If an important assumption is omitted from an economic model, 25)
A) the model's predictions will only be accurate 50% of the time.
B) the model will not predict anything.
C) the model's predictions may be inaccurate.
D) the model is not simple enough.
26) Economic models are most often tested 26)
A) using logic alone. B) using computer simulations.
C) using data from the distant past. D) using data from the real world.
27) A microeconomic model CANNOT be used to 27)
A) predict the impact of an increase in the minimum wage on unemployment.
B) evaluate the fairness of a proposal to nationalize health insurance.
C) evaluate the effect of an increase in stadium size on the price of a sport team's tickets.
D) evaluate the impact of a price change on a firm's revenue.
28) Economic models are only useful in analyzing government policy. 28)
A) True, individuals are irrational and therefore economic models are useless.
B) False, economic models are not even useful in analyzing government policy.
C) False, economic models can be used to predict individual and firm behavior.
D) True, economists only model those questions for which they are hired.
29) Microeconomic models are used to 29)
A) make predictions. B) evaluate production alternatives.
C) explain real-life phenomena. D) All of the above.
3
, 30) If a theory's predictions are incorrect, 30)
A) then the data used was clearly faulty.
B) then economists will likely reduce their confidence in the theory.
C) then the model must be too simple.
D) then economists always reject it.
31) Which of the following is an example of a normative statement? 31)
A) A higher price for a good causes people to want to buy less of that good.
B) A lower price for a good causes people to want to buy more of that good.
C) If you decrease the amount of sugar in soda drinks, sales to children will decrease.
D) To make the good available to more people, a lower price should be set.
32) Which of the following is an example of a normative statement? 32)
A) If you consume this food, you will get sick.
B) People usually get sick after consuming this food.
C) Since this food is bad for you, you should not consume it.
D) This food has negative health effects.
33) Which of the following is an example of a positive statement? 33)
A) If this food is bad for you, you should not consume it.
B) Since this food is bad for you, you should not consume it.
C) If you consume this food, you will get sick.
D) None of the above.
34) Behavioral economics is the study of why people 34)
A) optimize. B) sometimes don't optimize.
C) behave badly when buying and selling. D) choose not to optimize.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
35) Legislators argue that a minimum wage law is instituted to help poor people. Economists can attack the
minimum wage law on two fronts. First, some argue that government should not help the poor. Second, some
argue that minimum wage laws actually hurt the poor because it creates unemployment. Which argument is
normative and which is positive?
36) Explain why a model that delivers good enough approximations is a good model.
37) Explain why economists might disagree on the content of a model.
For the following, please answer "True" or "False" and explain why.
38) Normative analysis offers decision makers the most valuable information when choosing among alternatives.
39) If a model fits reality but doesn't generate testable predictions, it is of little value to economists.
40) If actual experience supports two competing theories, then both theories are proven to be true.
4
Chap 01 4e - Perloff Complete Answers Included ✅
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Microeconomics studies the allocation of 1)
A) scarce resources. B) unlimited resources.
C) models. D) decision makers.
2) Society faces trade-offs because of 2)
A) price setting by firms. B) government regulations.
C) the profit motive. D) scarcity.
3) Managerial economics 3)
A) explains which products consumers will buy.
B) describes how pay for managers is set.
C) ensures managers always make good decisions.
D) helps managers make decisions in the face of scarcity.
4) CEOs should focus on 4)
A) beating their competitors.
B) getting the best pay package for the senior management team.
C) maximizing firm profits.
D) minimizing costs.
5) Profit is 5)
A) the difference between a firm's revenues and its costs.
B) maximized when revenue is maximized.
C) used to beat a company's rivals.
D) maximized when the marketing department coordinates with the production department.
6) Firms face trade-offs because 6)
A) markets set prices of goods they sell.
B) managers don't know which inputs to use.
C) inputs are scarce.
D) marginal reasoning leads to uncertainty.
7) A firm's managers are constrained by 7)
A) government. B) consumers.
C) workers. D) All of the above.
8) A market 8)
A) always takes place at a physical location.
B) always involves the personal exchange of goods for money.
C) has no influence on prices.
D) allows interactions between consumers and firms.
1
, 9) In a market, 9)
A) government policies play a very small part.
B) decision makers always maximize.
C) the primary participants are consumers and firms.
D) the goods sold are not closely related.
10) Which of the following would NOT be considered part of a firm's strategy? 10)
A) sales strategy
B) price
C) production levels
D) None of the aboveall are part of a firm's strategy.
11) Raising the price of a good by one dollar 11)
A) decreases profits.
B) leaves profits unchanged.
C) increases profits.
D) leads to an indeterminant change in profits.
12) Most private firms seek to 12)
A) maximize profit. B) maximize employee salaries.
C) maximize revenue. D) minimize headcount.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
13) What is the purpose of having a strategy?
14) Explain what the statement "We can't have everything we want" means.
15) What is profit?
16) Give an example of a tradeoff a pizza restaurant might face.
17) Why might raising the price of a good by a dollar lead to lower profits?
18) Why might raising the price of a good by a dollar lead to higher profits?
For the following, please answer "True" or "False" and explain why.
19) Managers have to understand the decision making of others.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
20) The purpose of making assumptions in economic model building is to 20)
A) force the model to yield the correct answer.
B) simplify the model while keeping important details.
C) minimize the amount of work an economist must do.
D) express the relationship mathematically.
2
,21) Einstein was quoted saying "Everything should be made as simple as possible, but not simpler." 21)
When it comes to economic models this means that
A) models shouldn't be too complex.
B) models should have a level of abstraction appropriate to the topic investigated.
C) models shouldn't be too simple.
D) All of the above.
22) If a model's predictions are correct, then 22)
A) its assumptions must have been correct.
B) it is proven to be correct.
C) Both A and B above.
D) None of the above.
23) Economists tend to judge a model based upon 23)
A) the accuracy of its predictions. B) the reality of its assumptions.
C) its complexity. D) its simplicity.
24) Economic models are most useful in 24)
A) predicting the direction of the stock market.
B) explaining outcomes resulting from management decisions.
C) explaining the future with the past.
D) generating untestable hypotheses.
25) If an important assumption is omitted from an economic model, 25)
A) the model's predictions will only be accurate 50% of the time.
B) the model will not predict anything.
C) the model's predictions may be inaccurate.
D) the model is not simple enough.
26) Economic models are most often tested 26)
A) using logic alone. B) using computer simulations.
C) using data from the distant past. D) using data from the real world.
27) A microeconomic model CANNOT be used to 27)
A) predict the impact of an increase in the minimum wage on unemployment.
B) evaluate the fairness of a proposal to nationalize health insurance.
C) evaluate the effect of an increase in stadium size on the price of a sport team's tickets.
D) evaluate the impact of a price change on a firm's revenue.
28) Economic models are only useful in analyzing government policy. 28)
A) True, individuals are irrational and therefore economic models are useless.
B) False, economic models are not even useful in analyzing government policy.
C) False, economic models can be used to predict individual and firm behavior.
D) True, economists only model those questions for which they are hired.
29) Microeconomic models are used to 29)
A) make predictions. B) evaluate production alternatives.
C) explain real-life phenomena. D) All of the above.
3
, 30) If a theory's predictions are incorrect, 30)
A) then the data used was clearly faulty.
B) then economists will likely reduce their confidence in the theory.
C) then the model must be too simple.
D) then economists always reject it.
31) Which of the following is an example of a normative statement? 31)
A) A higher price for a good causes people to want to buy less of that good.
B) A lower price for a good causes people to want to buy more of that good.
C) If you decrease the amount of sugar in soda drinks, sales to children will decrease.
D) To make the good available to more people, a lower price should be set.
32) Which of the following is an example of a normative statement? 32)
A) If you consume this food, you will get sick.
B) People usually get sick after consuming this food.
C) Since this food is bad for you, you should not consume it.
D) This food has negative health effects.
33) Which of the following is an example of a positive statement? 33)
A) If this food is bad for you, you should not consume it.
B) Since this food is bad for you, you should not consume it.
C) If you consume this food, you will get sick.
D) None of the above.
34) Behavioral economics is the study of why people 34)
A) optimize. B) sometimes don't optimize.
C) behave badly when buying and selling. D) choose not to optimize.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
35) Legislators argue that a minimum wage law is instituted to help poor people. Economists can attack the
minimum wage law on two fronts. First, some argue that government should not help the poor. Second, some
argue that minimum wage laws actually hurt the poor because it creates unemployment. Which argument is
normative and which is positive?
36) Explain why a model that delivers good enough approximations is a good model.
37) Explain why economists might disagree on the content of a model.
For the following, please answer "True" or "False" and explain why.
38) Normative analysis offers decision makers the most valuable information when choosing among alternatives.
39) If a model fits reality but doesn't generate testable predictions, it is of little value to economists.
40) If actual experience supports two competing theories, then both theories are proven to be true.
4
