Macro-Economics Homework Chapter 1

Emmanuel Ukoh

Macro-Economics Homework Chapter 1:

1-2

•        Self-pay with no insurance. But you will either pay out of pocket or a charity will help you pay for it.

•        Top quality insurance. You can go to any doctor you want to go to. However, if you are costing them a lot of money they might let you die.

•        Lower quality insurance you cannot go to whatever doctor you want. You have to go to someone that is on your plan. You will have to pay for half of the visit cost.

•        Government provided healthcare is paid by tax payers. Not every doctor’s office takes the government insurance card.

•        No healthcare and no one to pay for any medical assistance means that if you have a serious problem you probably are going to die. Since people what to get paid or if you get fixed you’re going to be in debt forever.

•        Also people don’t have enough money or they have to make choices on what they are going to spend their money on. Like do I pay for food, clothes, school, car, electric bill; or do I pay for healthcare.

1-4

a)        The national unemployment rate - macro                

b)        the decision of a worker to work overtime or not- micro

c)        A family’s choice to have a baby- micro

d)        The rate of growth of the money supply- macro

e)        The national government’s budget deficit- macro

f)        A student’s allocation of study time across two subjects- micro

Macro is the study of a national economy as a whole. Micro is the study of an individual, group, or a company that focuses on issues that affect individuals and companies.

1-6

People always say that they will not pay for something that is too expensive because it is overpriced. However, many people go back on their word because they rather pay a fee to take money out then be late on an electric bill or there house bill, etc. People will pay a higher amount if they are desperate. As well people just see a price and pay it and won’t look up other bank prices for getting money fast. People are hard to read because they will do anything to save themselves or to help their family or to pay bills even though if they don’t want to do it. But, if they don’t pay the bills they could be without water or electricity, etc. People do what they have to do to survive and they will pay whatever amount they have too.

1-10

a) The assumption of bounded rationality

b) Rationality assumption

c) The assumption of bounded rationality

1-12

a) Based on the rationally assumption

b) Not based on the rationally assumption

c) Based on the rationally assumption

1-14Contrasting positive and normative economic analysis: Positive economics is an objective and is fact based. The statements do not have to be correct but they must be also tested and proved or disapproved. Normative is subjective and valued based opinion based and cannot be proved or disapproved.

Chapter 2 Homework

2-2 If anything the next best activity that can’t be done while attending the concert. Say you go to the concert instead of working a part time job. At the job you could have made 50 dollars during the time of the game but you went to the game so you missed out on 50 dollars. But you got free tickets to a game and that is pretty cool. However, if the weather is bad and you have to leave the event early and takes longer to get home because it is so bad you lost out on 50 dollars or more and didn’t get to see the concert either. However, there probably wasn’t anything you has to do so you wouldn’t lose anything. The opportunity cost of attending the concert if the weather is bad increases.

2-4

The opportunity cost of something is the highest-valued alternative that must be given up to get it.

The opportunity cost of going to a live concert is well if you bought the ticket with your money that you don’t have to spend on which is definitely not the case is since they were free. However, the things you can’t do with your time if you attend the concert is what you are missing out of.

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2-6

I think it does illustrate the law of increasing additional cost

2-7 The more you study for biology and the less you study for econ can change your grades. If you want a 100 in bio and right now you have a 90 and you take time from studying economics you will do better in bio. The economics class will struggle a little more than usual because you are using less time on that subject.