True or False:
1) The macroeconomist studies corporations, like General Motors, while the microeconomist studies the little start-up companies.
2) The ceteris paribus assumption presumes that only one of many things that might affect a variable in the process of changing; the others stay the same during the period under consideration.
3) Even Bill Gates must deal with the fundamental economic problem of scarcity.
4) If in order to add a row of beans to his garden, Joe has to plant one fewer rows of carrots, the opportunity cost of those extra beans are the carrots Joe could have harvested.
5) If there is "too much of a good thing", the marginal cost of the last item exceeds its marginal benefit.
1) False:
The statement is incorrect. Macroeconomists study the overall economy, including aspects such as inflation, unemployment, and economic growth. They focus on aggregated variables at a national or global level. On the other hand, microeconomists analyze individual economic units such as consumers, firms, and markets. Microeconomics examines how these units make decisions and interact with one another.
To get this answer, you can refer to any introductory economics textbook or online resource that explains the difference between macroeconomics and microeconomics.
2) True:
The statement is correct. Ceteris paribus, a Latin phrase meaning "other things being equal," is a crucial assumption in economic analysis. It assumes that all other factors affecting a particular variable remain constant while analyzing the impact of a single factor. By isolating one variable, economists can examine its influence on the outcome without the interference of other variables.
To confirm this answer, you can study any introductory economics material covering the concept of ceteris paribus.
3) True:
The statement is correct. Scarcity is a fundamental economic problem that affects everyone, regardless of their wealth or position. Even individuals or organizations with enormous resources, such as Bill Gates, face scarcity because unlimited wants and needs cannot be fully met with limited resources. Scarcity necessitates the need to make choices and allocate resources efficiently.
To validate this answer, you can review any economics textbook discussing the concept of scarcity.
4) True:
The statement is correct. The opportunity cost of a decision refers to the value of the next best alternative that must be given up. In this case, if Joe decides to add a row of beans to his garden, he foregoes the opportunity to plant one fewer row of carrots. Therefore, the opportunity cost of those extra beans is the carrots Joe could have harvested.
To verify this answer, you can understand the concept of opportunity cost through various economics textbooks or online resources.
5) False:
The statement is incorrect. If there is "too much of a good thing," the marginal benefit of the last item exceeds its marginal cost. Marginal benefit refers to the additional satisfaction or utility gained from consuming an additional unit of a good or service, while marginal cost represents the additional cost incurred for producing or obtaining the last unit.
To clarify this answer, you can consult any introductory economics material that explains the relationship between marginal benefit and marginal cost.