Economics and Social Security
Week 1 Homework Problems Chapter 1
18) You rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You drive it 200 miles. What is the marginal cost of driving the car?
A) A marginal cost is the additional cost to you over and above the costs you have already incurred. Hence here the marginal cost is $7.50
26) State whether the following are microeconomic or macroeconomic policy issues:
a. Should U.S. interest rate be lowered to decrease the amount of unemployment? macroeconomics
b. Will the fact that more and more doctors are selling their practices to managed care networks increase the efficiency of medical providers? Macroeconomics
c. Should the current federal income tax be lowered to reduce unemployment? macroeconomics
d. Should the federal minimum wage be raised? Microeconomics
e. Should Sprint and Verizon both be allowed to build local phone networks? microeconomics
f. Should commercial banks be required to provide loans in all areas of the territory from which they accept deposits? Microeconomics
Chapter 2
18) Lawns produce no crops but occupy more land (25 million acres) in the United States than any single crop, such as corn. This means that the United States is operating inefficiently and hence is at a point inside the production possibility curve. Right? If not, what does it mean?
A) It means that lawns occupy space that could be otherwise productive in some form like a garden so the US is operating below its Productive Possibility Curve.
20) In 2006 the hourly cost to employers per German industrial worker was $33. The hourly cost to employers per U.S. industrial worker was $23.65, while the average cost per Taiwanese industrial worker was $6.38.
a. Give three reasons why firms produce in German rather than in a lower-wage country.
A) outsourcing, trade, comparative advantage.
b. Germany has just entered into an agreement with other EU countries that
18) You rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You drive it 200 miles. What is the marginal cost of driving the car?
A) A marginal cost is the additional cost to you over and above the costs you have already incurred. Hence here the marginal cost is $7.50
26) State whether the following are microeconomic or macroeconomic policy issues:
a. Should U.S. interest rate be lowered to decrease the amount of unemployment? macroeconomics
b. Will the fact that more and more doctors are selling their practices to managed care networks increase the efficiency of medical providers? Macroeconomics
c. Should the current federal income tax be lowered to reduce unemployment? macroeconomics
d. Should the federal minimum wage be raised? Microeconomics
e. Should Sprint and Verizon both be allowed to build local phone networks? microeconomics
f. Should commercial banks be required to provide loans in all areas of the territory from which they accept deposits? Microeconomics
Chapter 2
18) Lawns produce no crops but occupy more land (25 million acres) in the United States than any single crop, such as corn. This means that the United States is operating inefficiently and hence is at a point inside the production possibility curve. Right? If not, what does it mean?
A) It means that lawns occupy space that could be otherwise productive in some form like a garden so the US is operating below its Productive Possibility Curve.
20) In 2006 the hourly cost to employers per German industrial worker was $33. The hourly cost to employers per U.S. industrial worker was $23.65, while the average cost per Taiwanese industrial worker was $6.38.
a. Give three reasons why firms produce in German rather than in a lower-wage country.
A) outsourcing, trade, comparative advantage.
b. Germany has just entered into an agreement with other EU countries that