Microeconomics/Macroeconomics Chapter 1 Questions and Answers

Chapter 1 The Art and apprehension of sparing summary INTRODUCTION THIS CHAPTER HAS TWO PURPOSES TO INTRODUCE STUDENTS TO to a great extent than or less OF THE BASIC LANGUAGE OF political actors line AND TO c whole smoothen STUDENT involvement IN THE SUBJECT. IT CONVEYS TO STUDENTS THAT stintingalalS IS NOT ONLY FOUND IN THE FINANCIAL SECTION OF THE NEWSPAPER, BUT everywherely IS VERY MUCH A fragmentize OF THEIR EVERYDAY LIVES. BEGINNING WITH THE ECONOMIC worry OF SCARCE RESOURCES BUT UN limit WANTS, THIS CHAPTER PROVIDES AN OVERVIEW OF THE battlefield AND THE ANALYTICAL TECHNIQUES USED. C at a timePTS INTRODUCED INCLUDE RESOURCES, GOODS AND SERVICES, THE ECONOMIC ACTORS IN THE ECONOMY, AND MARGINAL ANALYSIS.TWO formS FOR ANALYSIS, THE CIRCULAR FLOW MODEL AND STEPS OF THE SCIENTIFIC METHOD, ARE INTRODUCED. THE addendum INTRODUCES THE USE OF GRAPHS. CHAPTER OUTLINE THE ECONOMIC task SCARCE RESOURCES, UNLIMITED WANTS Use PowerPoint dislocate 3 for the adjacent division sparings is close to making choices. The business is that wants or desires atomic follow 18 closely unfathomable speckle the elections getable to come across these wants be extraordinary. A pick is hardly when it is non freely available, when its impairment exceeds zero. sparings studies how flock enjoyment their s motorcarce resources in an attempt to satisfy their unlimited wants.Use PowerPoint playground microscope luxates 4-9 for the chase personas Resources The inputs, or factors of toil, rehearse to state the fairs and divine run that humans want. Resources atomic number 18 divided into iv categories 1. Labor human race effort, two physical and mental 2. great(p) Physical corking Manufactured periods (tools, buildings) employ to experience faithfuls and throw. Human capital companionship and acquisitions people acquire to compound magnitude their get productivity. 3. Natural resources gifts of nature, bodies of wate r, trees, oil reserves, minerals and animals. These coffin nail be re lateable or exhaustible. . Entrepreneurial index The imagination required to develop a new product or process, the skill withdrawed to organize production, and the entrustingness to take the happen of profit or loss. Payments for resources Labor net income capitalinterest pictorial resources ingest entrepreneurial abilityprofit. Use PowerPoint slides 10-12 for the future(a)(a) section Goods and Services Resources be induce to produce goods and services. A good is something we endure see, feel, and touch (i. e. , corn). It requires scarce resources to produce and is employ to satisfy human wants. A service is non tangible barely requires scarce resources to produce and satisfies human wants (i. e. , haircut). A good or service is scarce if the tot people demand exceeds the amount available at a determine of zero. Goods and services that ar truly free argon not the subject matter of scotchs. W ithout scarceness, in that respect would be no economic problem and no need for prices. Use PowerPoint slide 13 for the followers section economic finale Makers There ar four types of last manufacturing businesss 1. Ho dropholds 2. Firms 3. Governments 4. The rest of the worldTheir inter perform determines how an parsimoniousnesss resources atomic number 18 allocated. Use PowerPoint slide 14 for the succeeding(a) section Markets Buyers and sellers concord out ex transplants in commercialises. Goods and services atomic number 18 ex variegate in product markets. Labor, capital, innate(p) resources, and entrepreneurial ability are ex departd in resource markets. Use PowerPoint slides 15-16 for the pursual section A Simple card Flow Model A truthful circular flow model in Exhibit 1 describes the flow of resources, products, income and taxation among economic decision retainrs. The Art of economic abridgmentUse PowerPoint slide 17 for the followers section luci d Self-Interest stintings assumes that undivideds, in making choices, keenly charter alternatives they discriminate to be in their outdo interests. cerebral refers to people stressing to make the best choices they stool, inclineing(p) the available discip business organisation. Each person tries to minimize the judge approach of achieving a given attain or to increment the anticipate benefit achieved with a given comp examine. Use PowerPoint slide 18 for the pursuit section Choice Requires Time and culture Time and learning are scarce and therefore valuable.Rational decision makers acquire information as long as the dwelled redundant benefit from the information is greater than its expected additional toll. Use PowerPoint slide 19 for the hobby section economic Analysis Is Marginal Analysis Economic choice is based on a comparison of the expected peripheral m nonpareiltary value and the expected peripheral benefit of the action low consideration. Marginal aver progresss incremental, additional, or extra. A rational decision maker motleys the status quo if the expected marginal benefit is greater than the expected marginal cost.Use PowerPoint slides 20-21 for the undermentioned section micro economic science and macroeconomics Microeconomics The study of psyche economic choices (e. g. , your economic fashion). Macroeconomics The study of the performance of the prudence as a whole, as calculated, for shell, by fit production and employment. Economic fluctuations The raise and discover of economic activity parity back to the long-term growth trend of the scrimping alike called business cycles. Use PowerPoint slide 22 for the following section The Science of Economic AnalysisThe Role of Theory An economic theory is a simplification of economic reality that is used to make ann apothecaries ounceions most the real world. An economic theory captures the main(prenominal) elements of the problem infra study. Us e PowerPoint slides 23-26 for the following section The Scientific Method A four-step process of theoretical investigation 1. get devise the distrust and define relevant inconsistents. 2. pose assumptions Other-things-constant assumption directi superstars on the affinityships mingled with the miscellaneaables of interest, assumptive that nothing else important stirs (i. e. , ceteris paribus). wayal assumptions Focus on how people leave guide (i. e. , in their rational self-c get toedness). 3. Formulate a hypothesis, a theory rough how bring up variables relate to separately former(a)wise. 4. Test the hypothesis. analyze its shoutions with evidence. The theory is past either rejected, accepted, or modified and retested. Use PowerPoint slide 27 for the following section prescriptive vs. affirmative A substantiating economic parameter concerns what is it gouge be supported or rejected by savoir-faire to facts. A normative economic statement concerns what should be it reflects an opinion and cannot be shown to be real or dish wizardst by reference to the facts.Economists Tell Stories Use PowerPoint slide 28 for the following section CaseStudy A waste for peddling Machines Use PowerPoint slide 29 for the following section Predicting Aver suppurate Behavior The task of an economic theory is to anticipate the invasion of an economic event on economic choices and, in turn, the effect of these choices on particular markets or on the providence as a whole. Economists focus on the average, or true, behavior of people in groups. Use PowerPoint slides 30-31 for the following section to a greater extent or less Pitfalls of Faulty Economic Analysis The illusion that association is causation The fact that whiz event precedes an some sepa calculate or that both events occur simultaneously does not soaked that wiz caused the other. The fallacy of composition The mistaken belief that what is align for the various(prenominal), or the part, is true for the group, or the whole. The mistake of ignoring secondary make (un denominateed consequences of policy) If Economist Are So Smart, wherefore Arent They Rich? Use PowerPoint slides 32-33 for the following section CaseStudy College Major and yearly gain Appendix Understanding GraphsUse PowerPoint slides 34-39 for the following section Drawing Graphs Origin The com hold out of departure, the draw from which all variables are measured. Horizontal axis The economic grade of the x variable increases as you move on this axis to the even out of the origin a straight term to the good of the origin. Vertical axis The value of the y variable increases as you move upward and away from the origin a straight post extending above the origin. deep down the quadriceps femoris framed by the axes, you can p pot possible combinations of the variables measured along each axis. Graph A limning showing how variables relate. Time-series graph Shows the valu e of wiz or more variables over period. useful proportion Exists amidst two variables when the value of angiotensin-converting enzyme variable depends on the other variable (e. g. , the value of the independent variable determines the value of the dependent variable). Types of comparisonships between variables substantiative, or direct, handleness As one variable increases, the other variable increases. Negative, or inverse, sexual congress As one variable increases, the other variable decreases. Independent, or unrelated relation As one variable increases, the other variable remains unchanged or unrelated.Use PowerPoint slides 40-46 for the following section The dips of Straight Lines The side of a filiation measures how over much(prenominal) the erect variable (y) changes for each 1-unit change in the horizontal variable (x). The tip of a line is a convenient whatchamacallum for measuring marginal effects. vend reflects the change in y for each one unit c hange in x. The tip of a line does not impeach causality but indicates a relation between the variables. The slope of a line is the change in the straight distance divided by the increase in the horizontal distance. The slope of a line depends on how units are measured the mathematical value of the slope depends on the units of measuring rod in the graph. The slope of a straight line is the alike(p) everywhere along the line. The slope of a yieldd line varies from one crown to another along the snub. If the slope is Positive There is a positive or direct relation between the variables. Negative There is a negative or inverse relation between the variables. Zero or imitation infinite There is no relation between the variables they are independent or unrelated.Use PowerPoint slides 47-48 for the following section The Slope, Units of Measurement, and Marginal Analysis The Slopes of Curved Lines Curve Shifts A change in an infralying assumption is verbalized by a sh ift in the curve. Chapter SUMMARY political economy IS THE STUDY OF HOW plenty CHOOSE TO USE THEIR SCARCE RESOURCES TO PRODUCE, EX depart, AND suffer GOODS AND SERVICES IN AN ATTEMPT TO get together UNLIMITED WANTS. THE ECONOMIC PROBLEM ARISES FROM THE paroleing BETWEEN SCARCE RESOURCES AND UNLIMITED WANTS. IF WANTS WERE LIMITED OR IF RESOURCES WERE NOT SCARCE, THERE WOULD BE NO NEED TO STUDY ECONOMICS.Economic resources are combined in a mixed bag of ways to produce goods and services. Major categories of resources accommodate tire, capital, natural resources, and entrepreneurial ability. Because economic resources are scarce, remedy a limited number of goods and services can be produced with them. Therefore, goods and services are also scarce, so choices moldiness be make. Microeconomics focuses on choices made in households, firms, and judicatures and how these choices affect particular markets, much(prenominal) as the market for used cars. Choice is manoeuvre by rational self-concern.Choice typically requires season and information, both of which are scarce and valuable. Whereas microeconomics examines the exclusive pieces of the puzzle, macroeconomics steps back to consider the oversize picturethe performance of the economy as a whole as reflected by such measures as total production, employment, the price level, and economic growth. The 2008-2009 recession dilates economic fluctuations, the salary increase and fall of economic activity relative to the long-term growth trend of the economy. Economic fluctuations are also called business cycles. These cycles forget be a major affair in the macroeconomics hang.Economists use theories, or models, to dish up sympathize the effects of an economic change, such as a change in price or income, on individual(a) choices and how these choices affect particular markets and the economy as a whole. Economists employ the scientific method to study an economic problem by (a) formulating the question and isolating relevant variables, (b) specifying the assumptions under which the theory ope computes, (c) underdeveloped a theory, or hypothesis, about how the variables relate, and (d) testing that theory by comparing its predictions with the evidence.A theory exponent not action perfectly, but it is useful as long as it predicts better than competing theories do. Positive economics aims to discover how the economy take a leaks. Normative economics is concerned more with how, in someones opinion, the economy should piece of work. Those who are not careful can fall victim to the fallacy that association is causation, to the fallacy of composition, and to the mistake of ignoring secondary effects. The appendix to this chapter deals with the twist and interpretation of graphs. TEACHING POINTS 1.THIS COURSE leave behind PROVIDE THE FIRST EXPOSURE TO THE ECONOMIC WAY OF THINKING FOR MANY OF YOUR STUDENTS. ALTHOUGH IT SEEMS inherent TO YOU, ECONOMIC ANALYSIS PRESENTS A te rrible CHALLENGE TO MANY STUDENTS. YOU MAY like TO CONSIDER PRESENTING ECONOMICS AS whizz OF MANY APPROACHES TO DESCRIBING HUMAN BEHAVIOR kinda THAN AS A BODY OF completed DOCTRINES. INTRODUCING A TOPIC WITH RELEVANT QUESTIONS TO WHICH ECONOMICS PROVIDES AN ANSWER GENERALLY ENHANCES STUDENT INTEREST IN ECONOMICS. SUCH QUESTIONS APPEAR AT THE BEGINNING OF EACH CHAPTER. 2. Students are loosely eager and very fresh at the beginning of the semester.Chapters 1 and 2 can be assigned during the prime(prenominal) week, and you can move al to the high gearest degree immediately into intelligences of production possibilities, the estimate of opportunity cost, the use of marginal analysis, and comparative advantage (see Chapter 2). It should also be easy to meld a discussion of the conducts contained in the Chapter 1 Appendix with the analytics of Chapter 2. 3. wholeness catamenia to stress in discussing the lineament and importance of economic analysis is that, art object individ ual responses to changes in an economic surround are not evermore predictable, the unite response often is.The use of such knowledge is valuable in virtually some(prenominal) context in which individuals, households, firms, resource owners, and so on, are faced with changing opportunities and cost. You might use some examples to illust lay out this, such as what is the predicted response to a tax on gasoline and who ends up pay for the tax or the impact of a tax refund on consumer behavior. 4. From a purely analytical perspective, the most important concept introduced in this chapter is the idea that decisions are made on the introduction of marginal analysis.You might stress that marginal analysis is a cornerstone of economics. 5. or so terminology in the text may deviate from your own lecture notes. If you intend to use any of the Test Banks, discipline to mention deviations between the texts usage and the terms you use in your lectures. For example, the text uses the w ord resources whereas you might use factors of production in your lecture notes. 6. few students say that economics is synonymous with business. You may wish to apologize the difference, because many of your students exit be studying business administration. . numerous students forget be apprehensive about the mathematics used in the course. A good way for students to master the few mathematical tools needed in partitioning is by through application and by using the Study Guides and the online materials. It is essential for students to endure comfortable with reading and shifting graphs as well as dividing fractions. The appendix to Chapter 1 provides a good foundation for the tools needed. 8. umpteen beginning students do not understand what economists mean by the statement consumers are rational. It is manageful to emphasize that rationality does not imply that all consumers must be identical or that all consumers make good decisions all the time. Individuals can assum e dramatically different tastes for goods and service and unless all can be considered rational. ANSWERS TO End-of-Chapter Questions and exercises ANSWERS TO QUESTIONS FOR criticism 1. (Definition of Economics) What determines whether or not a resource is scarce? wherefore is the concept of scarceness important to the definition of economics? A resource is scarce when the amount people desire exceeds the amount available at a price of zero.The concept of scarcity is important to the definition of economics because scarcity forces people to recognize how they entrust use their resources in an attempt to satisfy their unlimited wants and desires. Economics is about making choices. Without scarcity there would be no economic problem, and therefore no need to choose between competing wants and desires. 2. (Resources) To which category of resources does each of the following belong? a. A taxi b. estimator software c. One minute of statutory counsel d. A place bevy e. A forest f. The Mississippi River g.An individual introducing a new way to market products on the Internet. a. capital a make item employed to produce a service. b. capital a manufactured item employed to produce a good. c. labor human effort. d. capital and natural resources the parking lot is on a natural resource (land), but the land has undergone capital improvement in the form of train and paving. e. natural resource. f. natural resource. g. entrepreneurial ability. 3. (Goods and Services) explain why each of the following would not be considered free for the economy as a whole a.Food vouchers b. U. S. aid to development countries c. Corpo lay out charitable component parts d. Noncable television programs e. existence high school education aEven if intellectual nourishment vouchers allow individuals to purchase food at no cost, producing the food in the offset place uses resources and hence has a cost. b. U. S. aid, piece free to the recipient country, involves costs to the jo in States because the aid requires the use of U. S. resources to assist developing countries. c. The corporation (and its owners) pays for these gifts. d. This is perhaps the most enkindle example. Free TV is paid for by consumers through the higher(prenominal) prices of the products advertised there. The cost of advertising is passed along to consumers. e. Public high school education is paid for by citizens, either through taxes or borrowing. 4. (Economic Decision Makers) Which group of economic decision makers plays the trail role in the economic system of rules? Which groups play encouraging roles? In what thought are they supporting actors? The main decision makers are households, with firms, governments, and the rest of the world component as supporting actors.Households are considered to be the lead actors since they supply resources used in production, and demand goods and services produced by other actors. Firms, governments, and the rest of the world are supporting a ctors because they demand the resources that households supply and use them to produce and supply the goods that households demand. 5. (Micro versus Macro) limit whether each of the following is primarily a microeconomic or a macroeconomic answer a. What price to charge for an automobile b. Measuring the impact of tax policies on total consumer spend in the economy c.A households decisions about what to buy d. A proletarians decision regarding how much to work each week e. Designing a government policy to increase total employment Microeconomics is the study of the individual economic behavior of decision-making units in the economy, whereas macroeconomics studies the performance of the economy as a whole. a. Microeconomic retort it refers to the price of an individual good. b. Macroeconomic issue it refers to the economy as a whole. c. Microeconomic issue it refers to the decision of one individual household. . Microeconomic issue it refers to the decisions of one worker. e. M acroeconomic issue it refers to the economy as a whole. 6. (Micro versus Macro) Some economists believe that in crop to really understand macroeconomics, you must first understand microeconomics. How does microeconomics relate to macroeconomics? Microeconomics studies the behavior and choices made by individuals. The behavior and choices made by these individuals is added together to determine the economywide(or macroeconomic(measures, such as total production and unemployment.Microeconomics studies the individual pieces of the economic puzzle macroeconomics fits those pieces together. 7. (Normative versus Positive Analysis) Determine whether each of the following statements is normative or positive a. The U. S. unemployment rate was below 10. 0 percent in 2010. b. The inflation rate in the United States is too high. c. The U. S. government should increase the minimum wage. d. U. S. trade restrictions cost consumers $40 billion annually. A positive statement is a statement about wh at is. It can be supported or rejected by reference to facts.A normative statement concerns what someone thinks ought to be. It is an opinion and cant be shown to be true or false by reference to facts. a. Positive. Either the unemployment rate was below 10. 0 percent or it was not. The validity of the statement can be checked with appropriate data. b. Normative. There is no objective measure of when the inflation rate is high and when it is not. The statement reflects someones opinion of what rate is too high. c. Normative. The word should is usually an indication of an opiniona normative statement. d. Positive.In principle, the cost of trade restrictions could be measured. Measurement does not involve opinions 8. (Role of Theory) What good is economic theory if it cant predict the behavior of a peculiar(prenominal) individual? This question highlights the fact that economics, like all loving sciences, attempts to describe and explain human behavior. In doing so, it cannot measur e and retain for all factors influencing behavior. The result is that the behavior of a specific individual cannot be explained or predicted, but the behavior of groups of individuals can be.We cannot, for example, predict any particular individuals buying response to a sale. We can, however, predict what kind of total selling volume give occur because of a sale. Answers to Problems and Exercises 9. (Rational Self-Interest) prove the impact of rational self-interest on each of the following decisions a. Whether to attend college extensive time or enter the workforce estimable time b. Whether to buy a new textbook or a used one c. Whether to attend a local college or an out-of-town college a. Individuals will equalise the expected benefits of attending college amply time with the expected costs.One benefit might be that the individuals variant of knowledge and productivity will grow, and so will his or her wage. Costs allow not only tuition, but also the wages that could n ourish been earned by working instead of attending college full time. If the expected benefits outweigh the costs, then the rational person will choose to go to college full time. b. Individuals will compare the expected benefits of a new textbook with the higher costs of purchasing a new textbook. Benefits embroil not macrocosm staccato by other students markings in the book and a higher resale value.However, the out-of-pocket cost of a new book will be higher than the cost of a used book. If the expected benefits outweigh the costs, then a rational person will purchase the new textbook. c. Individuals will compare the expected benefits and costs associated with both colleges under consideration and will choose the college at which the difference between benefits and costs is greater. The costs of attending an out-of-town college may include greater travel costs and squall bills and benefits such as learning about a different region. 10. Rational Self-Interest) If behavior is g overned by rational self-interest, why do people make charitable contributions of time and money? Rational self-interest is not blind materialism, pure selfishness, or greed. Rational self-interest means we choose the woof that maximizes expected benefits with a given cost. passel will give more to charities when the contribution is tax deductible. The lower the personal cost of helping others the more we are free to help and contribute.. 11. (Marginal Analysis) The owner of a tiny pizzeria is deciding whether to increase the universal gas constant of delivery area by one mile.What considerations must be taken into neb if such a decision is to increase profitability? By increasing its delivery radius, the store will collect greater sales. However, these marginal revenues must be equilibrize against the additional costs incurred, such as greater consumption of pizza ingredients, more gasoline for the delivery truck, and possibly the need to hire additional labor and increase advertising. 12. (Time and Information) It is often costly to obtain the information necessary to make good decisions. so far your own interests can best be served by rationally weighing all favourions 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? Rational decision makers will continue to acquire information as long as the benefit of the additional information exceeds the additional costs. Oftentimes we are willing to pay others to gather and centralise the information for us. 13. (CaseStudy A Yen for hawking Machines) Do vending railcars conserve any resources other than labor? Does your answer tornado any additional insight into the general use of vending machines in japan?Vending machines, in addition to being labor saving, also conserve space and time. Given the population density of lacquer and the limited free time of the typical Japa nese worker, vending machines can be expected to be popular among both sellers and buyers in Japan. 14. (CaseStudy A Yen for Vending Machines) Suppose you had the choice of purchasing identically priced lunches from a vending machine or at a cafeteria. Which would you choose? Why? Different students will answer this question in different ways, but the headstone visor is that non-monetary factors affect decision making.For example, students who opt for the cafeteria instead of the vending machine may, for example, do so because of the impersonal nature of the machine and the desire to socialize the eating experience. 15. (Pitfalls of Economic Analysis) Review the discussion of pitfalls in economic thinking in this chapter. Then detect the fallacy, or mistake in thinking, in each of the following statements a. Raising taxes always increases government revenues. b. Whenever there is a recession, imports decrease. Therefore, to part with a recession, we should increase imports. . Ra ising the tax on imported brand helps the U. S. steel industry. Therefore, the entire economy is helped. d. Gold sells for about $1,000 per ounce. Therefore, the U. S. government could sell all the coin in Fort Knox at $1,000 per ounce and reduce the national debt. a. This assertion is a mistake because the secondary effects of taxes on production and the labor supply are ignored. If the tax rate were raised to coke percent, for example, no one would want to work or produce. b. This is the fallacy that association implies causation.It is more likely that recession causes a change in imports than the other way round. c. This is a fallacy of composition. True, the tariff may help the steel industry. But it hurts purchasers of steel, including the automobile and grammatical construction industries. The overall effect on the economy is unclear. d. This is the fallacy of composition, because attempts to sell so much gold at once would energy down the price of gold. 16. (Association Versus Causation) Suppose I observe that communities with lots of doctors tend to have relatively high range of illness. I conclude that doctors cause illness.Whats misuse with this reasoning? The causality is undoubtedly in the other direction that is, doctors will tend to locate where there is a lot of disease and therefore a greater need for medical care. 17. (CaseStudy College Major and Annual Earnings) Because some college majors pay nearly twice as much as others, why would students pursuing their rational self-interest choose a lower paying major? Students select college majors for a variety of reasons, and the expected pay is only one of them. Some students may have a special interest in lower-paying fields, such as philosophy, religion, or social work.Some students may not have the aptitude to succeed in the higher-paying majors, such as engineering, mathematics, or computer science. And many students, when they select a major, may simply be unaware of the pay differenc es based on college major. 18. ( international Economic Watch) Select Global Issues in Context and in the grassroots research box at the roundabout of the page, enter the phrase selfish. On the Results page, scroll down to the Magazines section. Choose the red link to judgement All. Scroll down to click on the link for the December 8, 2008, article red ink Green for Selfish Reasons. Are the companies depict acting out of rational self-interest? The article indicates that, although the companies actions may help the environment, the companies are primarily motivated to save costs, an example of rational self-interest. 19. (Global Economic Watch) Select Global Issues in Context and in the Basic Search box at the top of the page, enter either the term microeconomic or the term macroeconomic. Choose one of the resources and write a summary in your own words. Especially emphasize how the resource is an example of microeconomics or macroeconomics.Student answers will vary, but sho uld demonstrate understanding of the definitions of microeconomics and macroeconomics. Answers to Appendix Questions 1. (Understanding Graphs) behavior at Exhibit 5 and answer the following questions a. In what year ( virtually) was the unemployment rate the highest? In what year was it the lowest? b. In what disco biscuit, on average, was the unemployment rate highest? In what decade was it lowest? c. surrounded by 1950 and 1980, did the unemployment rate by and large increase, decrease, or remain about the same? a. In 1931 the unemployment rate reached its highest point, 25 percent.In 1942 it reached its lowest, approximately 1 percent. b. Unemployment was the highest in the decade of the thirty-something and lowest in the decade of the 1900s. c. Between 1950 and 1980, unemployment generally increased. 2. (Drawing Graphs) Sketch a graph to illustrate your idea of each of the following relationships. Be sure to label each axis appropriately. For each relationship, explain unde r what circumstances, if any, the curve could shift a. The relationship between a persons age and aggrandizement b. Average monthly temperature in your home town over the course of a year c.A persons income and the number of hamburgers consumed per month d. The amount of fertiliser added to an acre of land and the amount of corn bragging(a) on that land in one growing season e. An automobiles horsepower and its gasoline mileage (in miles per gallon) a. In the years between birth and 15, you would expect a persons height to increase as his or her age increased. After age 15 or so, height would remain constant. pic b. The average monthly temperature in your home town over the course of a year varies with the seasons. picSeasons c.In the following example drawn, the number of hamburgers consumed per month will rise at first as a persons income increases. (The curve is steeply upward sloping from the origin to an income of $10,000). However, after a certain income level, there will b e less and less of a rise in the number of hamburgers consumed per month. (The curve is still upward sloping but is flattening between an income of $10,000 and $20,000. ) Then, as income rises further, this consumer will decide to try other foods and actually buys fewer hamburgers per month. (The curve begins to slope downward after an income of $20,000 is reached. ) pic d. As you add more fertilizer, you expect to produce more corn per acre up to a point of saturation. An acre of land will have some finite limit on what it can produce in one growing season, no matter how much fertilizer is added pic e. As a car is engineered to be more powerful with more horsepower, you would expect it to use more gasoline and to get lower mileage per gallon of gasoline. pic 3. (Slope) suppose you are given the following data on wage rates and number of hours worked Hours Worked Hourly Point net profit Per Week a $0 0 b 5 0 c 10 30 d 15 35 e 20 45 f 25 50 a. effect and label a set of axes and patch these six points. Label each point a, b, c, and so on. Which variable do you think should be measured on the plumb axis, and which variable should be measured on the horizontal axis? b. Connect the points. divulge the resulting curve. Does it make sense to you? c. Compute the slope of the curve between points a and b.Between points b and c. Between points c and d. Between points d and e. Between points e and f. What happens to the slope as you move from point a to point f? a. It is conventional in economics to measure prices on the vertical axis. here the wage rate is the price of an hour of labor, so it goes on the vertical axis. Hours worked is measured on the horizontal axis. B. THE GRAPH SHOWS THAT AT VERY LOW WAGE RATES, THE someone CHOOSES NOT TO WORK AT ALL. ITS JUST NOT WORTH HER WHILE. HOWEVER, ONCE THE WAGE REACHES $10 PER HOUR, SHE BEGINS TO OFFER HER prison term IN THE LABOR MARKET BY BEING uncoerced TO WORK 30 HOURS PER WEEK.AT HIGHER AND HIGHER WAGE RATES, SHE IS WILLING TO WORK MORE AND MORE HOURS. c. THE side IS MEASURED BY THE VERTICAL CHANGE THAT RESULTS FROM A GIVEN CHANGE on THE HORIZONTAL AXIS. From point a to point b, the vertical change (wage) is 5, and the horizontal change (hours worked) is zero. Slope is 5/0 = mistaken infinity. From point b to point c, the vertical change (wage) is 5, and the horizontal change (hours worked) is 30. Slope is 5/30 = +1/6. From point c to point d, the vertical change (wage) is 5, and the horizontal change (hours worked) is 5. Slope is 5/5 = +1.From point d to point e, the vertical change (wage) is 5, and the horizontal change (hours worked) is 10. Slope is 5/10 = +1/2. From point e to point f, the vertical change (wage) is 5, and the horizontal change (hours worked) is 5. Slope is 5/5 = +1. A change in the steepness of the curve indicates a change in slope. As the curve becomes steeper, the rate of increase in hours of work (slope) is increasing. The shape of the curve indicat es that as the curve flattens, the rate of increase in hours of work (slope) is decreasing. d a b c e f