Click on the button to go to the problem © 2013 Pearson

Getting Started 1 CHECKPOINTS

Click on the button to go to the problem © 2013 Pearson Problem 1 Problem 2 Problem 3 Problem 1 Problem 2 Problem 4 Clicker version Clicker version Clicker version Clicker version Problem 4 Problem 5 Problem 3 Clicker version Clicker version Clicker version Clicker version Clicker version Clicker version Clicker version Clicker version Clicker version Clicker version Checkpoint 1.1Checkpoint 1.2

© 2013 Pearson 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. CHECKPOINT 1.1

© 2013 Pearson Study Plan Problem Economics studies choices that arise from one fact. What is that fact? CHECKPOINT 1.1 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 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. CHECKPOINT 1.1

© 2013 Pearson Study Plan Problem In the United States, three wants that are especially pressing but not satisfied are ______. CHECKPOINT 1.1 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 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” CHECKPOINT 1.1

© 2013 Pearson 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. CHECKPOINT 1.1

© 2013 Pearson Study Plan Problem The news headline “With more research, we will cure cancer” deals with ______ questions. CHECKPOINT 1.1 A. how and what B. what C. for whom and what D. for whom and how

© 2013 Pearson 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. CHECKPOINT 1.1

© 2013 Pearson 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. CHECKPOINT 1.1

© 2013 Pearson 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? CHECKPOINT 1.2

© 2013 Pearson 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. CHECKPOINT 1.2

© 2013 Pearson 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 CHECKPOINT 1.2 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 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? CHECKPOINT 1.2

© 2013 Pearson 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. CHECKPOINT 1.2

© 2013 Pearson 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. CHECKPOINT 1.2 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 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. CHECKPOINT 1.2

© 2013 Pearson 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 _____. CHECKPOINT 1.2 A. of the third hour of tennis exceeded its marginal benefit B. of the third hour of tennis was less than her marginal benefit C. of dropping ten-percentage points on a math test was less than her marginal benefit of a third hour of tennis D. of the lower grade on a math test was less than the marginal benefit of the third hour of tennis

© 2013 Pearson 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. CHECKPOINT 1.2

© 2013 Pearson 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 _____. CHECKPOINT 1.2 A. of the third hour of tennis exceeded its marginal benefit B. of the third hour of tennis was less than her marginal benefit C. of dropping ten-percentage points on a math test was less than her marginal benefit of a third hour of tennis D. of the lower grade on a math test was less than the marginal benefit of the third hour of tennis