Discussion 1

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University of Texas, Rio Grande Valley *

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ECONOMETRI

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Economics

Date

Feb 20, 2024

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Uploaded by DeaconStraw1837

1.What is the difference between shortage and scarcity? How can we eliminate both? Scarcity means that the demand for a good or service is greater than the availability of the good or service. Shortage is where the quantity of a product or service demanded is greater than the quantity supplied at the market price. One way we can eliminate both is by increasing supply of the good/ service. 2. Why does scarcity affect both the poor and the rich alike? Explain. Scarcity affects both rich and poor. This is because inflation increases due to the demand for a specific good or service. This means both poor or rich have to devote a larger share of their resources to satisfy their wants. The difference between poor and rich is that the rich have more resources to spend because they have a larger income than the poor 3 List at least six examples of scarcity and explain each. Six examples of scarcity are water, labor, health care, land, energy, and housing scarcity. Water scarcity is when there is high demand for freshwater in an area where there might be global warming or changing water that leads to a shortage for both humans and animals. Labor scarcity is when there aren't enough people to fill in crucial jobs. Such as bus drivers which have been declining more and more every year. Health care scarcity is where there are limits of procedures, beds and even doctors at specific institutions and knowledge, which causes waiting lists or certain help for patients. Land scarcity is where there is a shortage of fertile land to grow food which can cause a decline in farming and food production. Energy scarcity is when there are low resources such as fossil fuels that can cause energy to be limited. Housing scarcity means there is a limited amount of housing in certain areas where there is a higher population than housing, such as New York. 4) You are in a clothing store and like a pair of pants and a T-shirt. You only have enough money for one item of clothing. You decide to buy the pants. What is the opportunity cost? The opportunity cost of buying the pants would be the shirt because you’re giving up buying it and getting the pants instead. 5) You decide to play baseball this spring instead of working at a part time job in a

computer store. List several of the opportunity costs of choosing to play baseball. instead of working. The opportunity cost for choosing to play baseball instead of working part time in a computer store would be the following reasons: having an income, job experience, better computer skills and networking/connections. 6) You have tickets to Dubai Opera on Sunday, and you have an invitation to a friend's party. You cannot go to both. You choose to go to the party. What is the opportunity cost? What is the risk in your decision? The opportunity cost of going to your friend’s party instead of the Dubai Opera would be the loss of the ticket money (if you brought them) and missing out on an opera experience in Dubai 7. Here is the production possibilities table for cars and machines B.label the points where the economy would be efficient (A), underutilized or inefficient (B) and unattainable (C). C. What is the opportunity cost of moving from point A to point В? The opportunity cost of moving from point A to point B would be the loss of 3 machines in order to make 2 cars. Work: 30-27=3

D.What is the opportunity cost of moving from point B to point С? The opportunity cost is the loss of 6 machines to make 2 more cars produced than point B which would bring the total amount of cars produced to 4. Work:27-21=6 E. What is the opportunity cost of moving from point D to point E? To make 2 more cars (total of 8) the opportunity cost is 12 machines. Work:12-0=12 F. What factors can cause a PPC to shift? A PPC will and can shift left,right,inwards, or outwards if there is a change in the numbers of production. For example, if production such as capital increases the graph will then shift outwards to show the increase in production. 8.) You have ten workers who are all equally skilled and who can do each other worker's job with the same efficiency. The first worker does a task worth $100, the second, $90, and so on until the last whose task is worth $10. Worker number one comes to you, demands a raise, and threatens to quit if the raise is not forth coming. How much at most should you be willing to pay worker number one? Personally if I were to give a raise to the worker #1 the most I would give a raise would be $10 dollars. This is because I would have to raise the rest of the workers' pay in order for the difference between each worker to stay the same. 9.) An owner of a small firm needs to hire some managers.Assume that each manager has time to do only one task. Task A is worth $100,000 to the owner, Task B is worth $75,000, and Task C is worth $50,000. The owner hires only two managers, having one to do Tas A and the other Task B. What is the opportunity cost of Task B? Both task A and task B are being completed. However, since task C is not being complete the opportunity cost for task B is $50,000. 10.) Consider the market for underground bunkers, Zombie movies have caused a spike in demand. Jennifer's construction company has built 50 bunkers so far this year at a total cost to the company of $8 million. If the company builds a 51st bunker, its total cost will increase to $8.18 million. What is the marginal cost of the 51s bunker? The marginal cost of the 51st bunker is $180,000. Work: $8.18 mil - $8 mil = $180,000

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