CHAPTER 1 PROBLEMS
LO1 – Explain the economic problem of scarce resources and unlimited wants
1.1. (Definition of Economics) What determines whether or not resource is scarce? Why is the concept of scarcity important to the definition of economics?
LO2 – Describe the forces that shape economic choices
2.3 (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?
2.4. (Time and Information) It is often costly to obtain the information necessary to make good decisions. Yet your own interests can be best served by rationally weighing all options available to you. This requires informed decision making. Does this mean that making uninformed decisions is irrational? How do you determine how much information is the right amount?
LO3 – Explain the relationship between economic theory and economic reality
LO4 – Identify some pitfalls of economic analysis
4.2. (Association Versus Causation) Suppose I observe that communities with lots of doctors tend to have relatively high rates of illness. I conclude that doctors cause illness. What’s wrong with this reasoning?
LO5 – Describe several reasons to study economics
5.1. According to the text, economics majors on average make more money than most other majors and have more job opportunities. Are these the primary motivations one might have for studying economics? What are your motivations for studying economics?
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