CHAPTER 1
THE ART AND SCIENCE OF ECONOMIC ANALYSIS
SOLUTIONS TO END OF CHAPTER PROBLEMS
1. 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
2.
a. Individuals will compare the expected benefits of attending college full time with the
expected costs. One benefit might be that the individual’s stock of knowledge and
choose to go to college full time.
b. Individuals will compare the expected benefits of a new textbook with the higher costs of
c. Individuals will compare the expected benefits and costs associated with both colleges
4. By increasing its delivery radius, the store will have greater sales. However, these marginal
5. Rational decision makers will continue to acquire information as long as the benefit of the
6. This question highlights the fact that economics, like all social sciences, attempts to describe
and explain human behavior. In doing so, it cannot measure and control for all factors
7.
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 100 percent, for example, no one
8. You are committing the fallacy that association is causation. The causality is undoubtedly in
9. Answers may vary. Students select college majors for a variety of reasons and the expected