Chapter 1 – question 5, page 17 #5 (Micro Versus Macro) determine whether each o

Question

Chapter 1 – question 5, page 17
#5
(Micro Versus Macro) determine whether each of the following is primarily a microeconomic or a macroeconomic issue:
a. What price to charge for an automobile
b. Measuring the impact of tax policies on total consumer spending in the economy
c. A household’s decision regarding how much to work each week
d. Designing a government policy to increase total employment
Chapter 1 – question 11, page 18
#11
(marginal Analysis) the owner of a small pizzeria is deciding whether to increase the radius of delivery area by one mile. What considerations must be taken into account if such a decision is to increase profitability?
Chapter 3 – question 12, page 68
#12
( Objectives of the economic decision makers) In economic analysis, what are the assumed objectives of household’s, firm, and the government?
Chapter 3 – question 15, page 69
#15
(Evolution of the household) Determine whether each of the following would increase or decrease the opportunity costs for mothers who choose not to work outside the home. Explain your answer.
a. Higher levels of education for women
b. Higher unemployment rates for women
c. Higher average pay levels for women
d. Lower demand for labor in industries that traditionally employ large numbers of women

Explanation / Answer

5 a. micro b. macro c. micro d. macro 11. the cost of increasing delivery area by one mile (cost of gas, extra labor, quality of service) the change in revenue from increasing delivery area. (number of additional customers) 12 In economic analysis the objectives of the household are to maximize utility from their consumption purchases subject to a their budget constraints. The objectives of a firm are to maximize profit in the long run The objectives of the government are to maximize long-run economic growth and providing citizens with the optimum level of services (provision of public goods) 15 a. increase (the higher level of education means they could potentially earn more if they worked rather than stayed at home) b. decrease (their chance of getting a job and thus earning would be lower under higher unemployment rates, therefore they are giving up less with their decision to stay home than if the unemployment rate were lower) c. increase (higher average pay levels mean they could potentially earn more if they worked rather than stayed at home) d. decrease (lower demand for labor in these industries mean fewer jobs and lower wages, which means they are sacrificing less by staying at home than they would be if the demand for labor in these industries was higher)

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