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© 2013 Pearson
Getting Started
1
CHECKPOINTS
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Checkpoint 1.1
Checkpoint 1.2
Problem 1
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Problem 1
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Problem 2
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Problem 2
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Problem 3
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Problem 3
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Problem 4
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Problem 4
Problem 5
© 2013 Pearson
CHECKPOINT 1.1
Practice Problem 1
Economics studies choices that arise from one fact.
What is that fact?
Solution
The fact is scarcity—human wants exceed the
resources available.
© 2013 Pearson
CHECKPOINT 1.1
Study Plan Problem
Economics studies choices that arise from
one fact.
What is that fact?
A. Resources are unable to satisfy all our wants.
B. There is too much variety.
C. Global warming
D. We must distinguish between right and wrong.
E. The rich are too rich and the poor are too poor.
© 2013 Pearson
CHECKPOINT 1.1
Practice Problem 2
Provide three examples of wants in the United States
today that are especially pressing but not satisfied.
Solution
Security from international terrorism, cleaner air in our
cities, and better public schools.
© 2013 Pearson
CHECKPOINT 1.1
Study Plan Problem
In the United States, three wants that are
especially pressing but not satisfied are ______.
A. security from international terrorism; a cure for cancer;
less crime in large cities
B. security from international terrorism; cleaner air in our
cities; better public schools.
C. less crime in large cities; cleaner air in our cities;
cheaper MP3 downloads
D. less chewing gum on sidewalks; a cure for cancer;
cheaper MP3 downloads
© 2013 Pearson
CHECKPOINT 1.1
Practice Problem 3
Here are three news headlines. Find in these headlines
examples of the what, how, and for whom questions:
“With more research, we will cure cancer”;
“A good education is the right of every child”;
“The government must cut its budget deficit by raising taxes”
© 2013 Pearson
CHECKPOINT 1.1
Solution
“With more research, we will cure cancer”
More research is a how question, and a cure for cancer is a
what question.
“A good education is the right of every child”
Good education is a what question, and every child is a for
whom question.
“The government must cut its budget deficit by raising taxes”
The government’s raising taxes is a for whom question.
© 2013 Pearson
CHECKPOINT 1.1
Study Plan Problem
The news headline “With more research,
we will cure cancer” deals with ______
questions.
A.
B.
C.
D.
how and what
what
for whom and what
for whom and how
© 2013 Pearson
CHECKPOINT 1.1
Practice Problem 4
How does a new Starbucks coffee shop in Beijing, China,
influence self-interest and the social interest?
Solution
Decisions made by Starbucks are in Starbucks’ self-interest
but they serve the self-interest of its customers and so
contribute to the social interest.
© 2013 Pearson
CHECKPOINT 1.1
Practice Problem 5
How does Facebook influence self-interest and the social
interest?
Solution
Facebook serves the self-interest of its investors, users,
and advertisers. It also serves the social interest by
enabling people to share information.
© 2013 Pearson
CHECKPOINT 1.2
Practice Problem 1
Every week, Kate plays tennis for two hours, and her grade
on each math test is 70 percent. Last week, after playing
for two hours, Kate considered playing for another hour.
She decided to play for another hour and cut her study time
by one hour. But last week, her math grade fell to 60
percent.
What was Kate’s opportunity cost of the third hour of
tennis?
© 2013 Pearson
CHECKPOINT 1.2
Solution
Kate’s opportunity cost of playing a third hour of tennis is
the best thing she had to forgo to play that third hour.
The best thing Kate gave up was ten-percentage points on
her math test.
So Kate’s opportunity cost of the third hour of tennis was
the ten-percentage point drop in her math grade.
© 2013 Pearson
CHECKPOINT 1.2
Study Plan Problem
Every week, Kate plays tennis for two hours, and her
grade on each math test is 70 percent.
Last week, after playing for two hours, Kate decided to
play for another hour and cut her study time by one hour.
Last week, her math grade fell to 60 percent.
Kate’s opportunity cost of the third hour of tennis was
A. an extra hour of tennis
B. her 60 percent math grade
C. the ten-percentage point drop in her math grade
D. one hour of study time
© 2013 Pearson
CHECKPOINT 1.2
Practice Problem 2
Every week, Kate plays tennis for two hours, and her grade
on each math test is 70 percent. Last week, after playing
for two hours, Kate considered playing for another hour.
She decided to play for another hour and cut her study time
by one hour. But last week, her math grade fell to 60
percent.
Given that Kate played the third hour, what can you
conclude about her marginal benefit and marginal cost of
the second hour of tennis?
© 2013 Pearson
CHECKPOINT 1.2
Solution
The marginal benefit from the second hour of tennis must
have exceeded the marginal cost of the second hour
because Kate chose to play the third hour.
© 2013 Pearson
CHECKPOINT 1.2
Study Plan Problem
Last week, after playing for two hours, Kate
decided to play for another hour and cut her study
time by one hour. Last week, her math grade fell
from 70 percent to 60 percent.
A. The marginal benefit of the second hour of tennis exceeded its
marginal cost.
B. The marginal cost of the second hour of tennis exceeded its
marginal benefit.
C. The marginal cost of dropping ten-percentage points on a math test
exceeded the marginal benefit of a third hour of tennis .
D. The marginal benefit of the third hour of tennis exceeded the
marginal cost of dropping ten-percentage points on a math test.
© 2013 Pearson
CHECKPOINT 1.2
Practice Problem 3
Every week, Kate plays tennis for two hours, and her grade
on each math test is 70 percent. Last week, after playing
for two hours, Kate considered playing for another hour.
She decided to play for another hour and cut her study time
by one hour. But last week, her math grade fell to 60
percent.
Was Kate’s decision to play the third hour of tennis
rational?
Solution
Kate’s decision was rational if the marginal benefit of the
third hour of tennis exceeded the marginal cost.
© 2013 Pearson
CHECKPOINT 1.2
Study Plan Problem
Last week, after playing for two hours, Kate decided to play
for another hour and cut her study time by one hour. Last
week, her math grade fell from 70 percent to 60 percent.
Kate's decision was rational only if the marginal cost
_____.
A. of the third hour of tennis exceeded its marginal benefit
B. of the third hour of tennis was less than her marginal
C.
D.
benefit
of dropping ten-percentage points on a math test was less
than her marginal benefit of a third hour of tennis
of the lower grade on a math test was less than the marginal
benefit of the third hour of tennis
© 2013 Pearson
CHECKPOINT 1.2
Practice Problem 4
Every week, Kate plays tennis for two hours, and her grade
on each math test is 70 percent. Last week, after playing for
two hours, Kate considered playing for another hour. She
decided to play for another hour and cut her study time by
one hour. But last week, her math grade fell to 60 percent.
Did Kate make her decision on the margin?
Solution
Kate made her decision on the margin because she
considered the benefit and cost of one additional hour.
© 2013 Pearson
CHECKPOINT 1.2
Study Plan Problem
Last week, after playing for two hours, Kate decided to
play for another hour and cut her study time by one hour.
Last week, her math grade fell from 70 percent to 60
percent.
Kate's decision was rational only if the marginal cost
_____.
A. of the third hour of tennis exceeded its marginal benefit
B. of the third hour of tennis was less than her marginal
C.
D.
benefit
of dropping ten-percentage points on a math test was less
than her marginal benefit of a third hour of tennis
of the lower grade on a math test was less than the marginal
benefit of the third hour of tennis
© 2013 Pearson