Carefully define the following terms and explain their importance.
a. Variable
b. Ray
c. Slope
d. Contour map
What will be an ideal response?
a. A variable is an object, such as price, whose magnitude is measured by a number. It is used to analyze what happens to other things when the size of that number changes.b. A ray is a straight line emanating from a particular point an extending endlessly in one direction.c. The slope of a line is change per unit from left to right. It is measured by the change in the variable on the vertical axis divided by the change in the variable on the horizontal axis.d. A contour map shows all points representing different combinations of two variables, for example, combinations of labor and raw materials capable of producing a given output. (Other examples of contour maps could be drawn from later chapters.)
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Refer to the scenario above. If they are the only bidders in the auction and each bidder bids up to his value for the good, the winner will earn a surplus of ________
A) $500 B) $625 C) $125 D) $150
Okun's law relates ________ to ________
A) inflation; unemployment B) inflation; output C) output; unemployment D) output; employment