Microeconomics Chapter 1 Assignment

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Joliet Junior College *

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MICROECONO

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Economics

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May 26, 2024

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pdf

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Uploaded by SargentQuetzal2763

Microeconomics Chapter 1 Assignments Make sure you show all your work for the problems requiring calculations. Otherwise, you will not receive credit for the question. 1. Explain the concept of “scarcity.” - Scarcity is a basic economic problem of having unlimited wants but the resources needed to fulfill the wants are limited. An example of scarcity that I am able to provide due to personal circumstances is the lack of time. There is only 24 hours in a day, but having a demanding full-time job, a rental property, attending full-time as a college student, and a single mother, I often face a dilemma of having to choose which tasks to prioritize. Most nights I am faced with this problem and need to make a trade-off whether I should get decent sleep or stay up late at night and continue working. 2. Define opportunity cost. - Opportunity cost is what you give up when you make a choice. When you choose to allocate resources to one activity, you are foregoing allocating it to another. 3. Define Economics. - Economics is the social science that studies the choices that individuals, businesses, governments and entire societies make when they cope with scarcity and the incentives that influence and reconcile those choices. Economics is divided into Microeconomics and Macroeconomics. 4. Determine if the following topics would be studied in Microeconomics or Macroeconomics. a. How Google decides how much labor to hire - Microeconomics b. How a change in the price of aluminum impacts the price of soft drinks. - Microeconomics c. Why China is growing faster than the U.S. - Macroeconomics d. Why total employment is increasing - Macroeconomics e. How government budget deficits affect U.S. savings rates. - Macroeconomics f. How Planters decides how many peanuts to produce - Microeconomics 5. On Saturday morning, Brad can go play soccer, watch YouTube videos, read a book, study for Algebra, or sleep in. Brad decides to study for Algebra, but if he didn’t, he would have watched YouTube videos. What is Brad’s opportunity cost of studying for Algebra? - Brad's opportunity cost is watching YouTube videos for studying Algebra. It is his best substitute he could have picked if he had not studied. 6. The economy is answering which big question (“what,” “how,” or “for whom” to produce) with the following statements: a. You can order your Starbucks beverage on a mobile app rather than placing the order with a barista. - How to produce

b. The average computer hardware engineer salary is $112,760 per year and the average Starbucks barista earns $20,000. - For whom to produce c. Starbucks added the Crystal Ball Frappuccino and stopped producing the Unicorn Frappuccino . - What to produce 7. List and briefly describe each of the four factors of production. Include the income associated with each. - 1) Land – the natural resources; it earns rent. - 2) Labor – the work time and effort used to produce; it earns wages. - 3) Capital – the materials, buildings used to produce goods and services; it earns interest. - 4) Entrepreneurship – the human resource that organizes labor, land and capital (like inventiveness, taking risks and critical decision-making); It earns profits. 8. Define and give an example of human capital. - The skills or abilities, capabilities, knowledge and experience of a worker possesses are referred to as human capital. An example would be a data analyst with a highly skilled ability to create, export and produce useful data that is utilized to make important business decisions. 9. Explain what normative and positive statements are. - Normative statements are opinions, conclusions, based on values of what should be. For example, we should be getting an annual cost of living raise on top of annual raise based on employee performance evaluations. - Positive assertions are testable claims. They are based on facts and can be verified. For example, a demand for a good or service will increase if its price decreases. 10. Classify each of the following statements as either normative or positive statements. a. Last year, unemployment decreased. - Positive statement b. The government should spend more on education. - Normative statement c. If the price of textbooks increases, people will buy fewer textbooks. - Normative statement d. The government should require wealthy people to pay more taxes. - Normative statement e. Papa John’s pizza costs more than Hungry Howie’s pizza. - Positive statement

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