ECONOMICS CLASS EXERCISE
CHAPTER 1
1. (Re s o u r c e s ) To which category of resources does each of the following belong?
a. A taxi
b. Computer software
c. One hour of legal counsel
d. A parking lot
e. A forest
f. The Mississippi River
g. An individual introducing a new way to market products on the Internet.
2. (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. Your family’s decisions about what to buy
d. A worker’s decision regarding how much to work each week
e. Designing a government policy to increase total employment
3. (Normative versus Positive Analysis) Determine whether each of the following statements is
normative or positive:
a. The U.S. unemployment rate was below 9.0 percent in 2012.
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 $100 billion annually.
4. (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?
5. (Pitfalls of Economic Analysis) Review the discussion of pitfalls in economic thinking in this
chapter. Then identify 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 stop a recession, we
should increase imports.
