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Apr 3, 2024

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Chapter 1. What Economics Is About Questions Problems, page 24 1 through 6 1- The United States is considered a rich country because Americans can choose from an abundance of goods and services. How can there be scarcity in a land of abundance? There can be scarcity in a land of abundance because even though there’s unlimited wants the limited resources available satisfy those who want so it’s a need ending cycle. 2- Give two examples for each of the following: an intangible good, trademark a bad, the flu 3- Give an example of something that is a good for one person and a bad for someone else. A car gives someone the chance to travel comfortably and others a financial bump. 4- What is the difference between labor as a resource and entrepreneurship as a resource? The difference between labor as a resource and entrepreneurship as a resource is that labor revolves work that is physical and mental talents that people pitch in. Entrepreneurship as a resource is having the talent of producing good, new business opportunities, develop new methods because of land, labor, and capital . 5- Can either scarcity or one of the effects of scarcity be found in a car dealership? Explain your answer. Yes because a car is made of many resources that are used for other goods. For example, rubber is used for a car but can be use for toys, surgical gloves, medical devices, and clothes. 6- Explain the link between scarcity and each of the following: a choice, Due to having scarcity humans have to pick different goods that they have a chance to have. b opportunity cost, Picking certain goods cost opportunities. For example, picking (to stay home to eat) one good they gave up on (eating out) another good. c the need for a rationing device, Your wants greater than the resources. People giving up hundreds of thousands of dollars for a painting. d competition. The limited resources causing people to compete for one resource. Betting is an example because there’s a room of people throwing high numbers to beat others numbers. Chapter 2. Production Possibilities Frontier Framework Questions Problems, page 57 1 through 7 1. Describe how each of the following would affect the U.S. PPF:

A war that takes place on U.S. soil: Equipment and plant would be either used in war or destroyed and people would be killed or drafted which kills production inwards. B the discovery of a new oil field: The increase in resources would cause a outward shift C a decrease in the unemployment rate: nothing will change because the PPF was below when unemployment was high so when unemployment decreases it will actually level it back efficiently using all goods or resources. D a law that requires individuals to enter lines of work for which they are not suited. Resources will be underused due to the fact people’s skills are being misapplied and under used so PPF will be beneath itself. 2 Explain how the following can be represented in a PPF framework: A the finiteness of resources implicit in the scarcity condition, The curve shows how finite resources produce maximum combination of goods. B choice, Each point on the PPF shows how each production choice affects the curve or positions of points. C opportunity cost, The trade between the production of one good at the price of another causes the downward slops. D productive efficiency, having a good efficient way of making goods creates a curve E unemployed resources. Any point inside the curve shows that all resources aren’t being used in a favorable way. 3 What condition must hold for the PPF to be bowed outward (concave downward)? To be a straight line? In order for the PPF to be bowed outward (concave downward) opportunity costs have to be going up. To have a straight line opportunity costs have to stay at the same rate. 4 Look back at Exhibit 4 and notice that the slope between points A and B is relatively flatter than it is between points C and D. What does the slope of a curve between two points have to do with the opportunity cost of producing additional units of a good? Points A and B, the curves show the more houses made we lose only 5 units of good X but then points C and D show that building more houses than points A&B we lose 20 units of good X. Basically the more houses are made the more goods are being used faster rather than making less houses like point A and B. 5 Give an example to illustrate each of the following: A constant opportunity costs: A person buys a bag for the cost of three pairs of shoes so basically every time the person buys a bag they give up three pairs of shoes. B increasing opportunity costs. If a company increases production of a demanding product they’ll need more labor equipment, and raw materials. 6 Why are most PPFs for goods bowed outward (concave downward)? When they have an increasing opportunity cost because they have to put more labor, raw material, and equipment on one good (demanding) than another. 7 Within a PPF framework, explain each of the following:

a disagreement between a person who favors more domestic welfare spending and one who favors more national defense spending: This will change the point on the PPF regardless of the choice made. A an increase in the population,: The resource of labor would increase which would shift the PPF upward because of the increase of production . B a technological change that makes resources less specialized: The production would increase high and shift the PPF upward. Working with numbers and graphs, 58 1 through 3 ● Illustrate constant opportunity costs in a table similar to the one in Exhibit 1(a). Next, draw a PPF that is based on the data in the table. Combination Shoes Bags Point In Part A 10 0 A B 8 1 B C 6 2 C D 4 3 D E 2 4 E

2 Illustrate increasing opportunity costs (for one good) in a table similar to the one in Exhibit 2(a). Next, draw a PPF based on the data in the table. Combination Shoes Bags Point In Part A 11 0 A B 10 1 B C 8 2 C D 5 3 D E 0 4 E 3 Draw a PPF that represents the production possibilities for goods X and Y if there are constant opportunity costs. Next, represent an advance in technology that makes it possible to produce more of X but not more of Y. Finally, represent an advance in technology that makes it possible to produce more of Y but not more of X.

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Related Questions

Suppose a nation has a total of 12 units of labor, which can be used to produce either guns or butter. One gun takes 6 units of labor to produce and 1 butter takes 2 units of labor to produce.  Explain why scarcity exists in this economy. Use the data as evidence of your reasoning.  What is the maximum quantity of guns that can be produced?  What is the maximum quantity of butter than can be produced?  Draw the nation’s production possibility curve.  What is the opportunity cost of guns in this nation?  Explain why the nation can’t produce both 3 guns and 4 butters.  Explain why the nation shouldn’t produce both 1 gun and 2 butters.

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