Unit 1
1) What
determines whether or not a resource is scarce?
Why is the concept of scarcity important to definition of economics?
2) Discuss
the impact of rational self-interest on each of the following decisions:
a)
Whether to attend college full time or enter the
workforce full time
b)
Whether
to buy a new textbook or a used one
c)
Whether
to attend a local college or an out of town college
3)
If behavior is governed by rational
self-interest, why do people make charitable contributions of time and money?
4)
What
good is economic theory if it can’t predict the behavior of a specific
individual?
5)
You can spend spring break either at home
working for $80 per day for five days or go to Florida for the week. If you stay your expenses will total about
$100. If you go to Florida, the airfare,
hotel, food, and miscellaneous expenses will total about $700. What’s your opportunity cost of going to
Florida?
6)
You have the following information concerning
the production of wheat and cloth in the United States and the United Kingdom:
|
Labor |
||
|
The |
The |
|
|
Wheat |
2 |
1 |
|
Cloth |
6 |
5 |
a.
What is the opportunity cost of producing a unit
of wheat in the United Kingdom? In the
United States?
b.
Which country has an absolute advantage in
producing wheat? In producing cloth?
c.
Which country has a comparative advantage in
producing wheat? In producing cloth?
d.
Which country should specialize in producing
wheat? In producing cloth?
7)
Provide some examples of specialized markets or
retail outlets. What makes the web so
conducive to specialization?
8)
Suppose any economy uses two resources (labor
and capital) to produce two goods (wheat and cloth). Capital is relatively more useful in producing
cloth, and labor is relatively more useful in producing wheat. If the supply of capital falls by 10 percent
and the supply of labor increases by 10 percent, how will PPF for wheat and
cloth change?
9)
Determine whether each of the following would
cause the national economy’s PPF to shift inward, outward, or not at all:
a.
An increase in average length of annual
vacations.
b.
An increase in immigration.
c.
A decrease in the average retirement age
d.
The migration of skilled workers to other
countries
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