Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 2, Problem 2CQQ
To determine
The role of households and firms in the market for factors of production in circular flow.
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The circular-flow diagram illustrates that, in marketsfor the factors of production,a. households are sellers, and firms are buyers.b. households are buyers, and firms are sellers.c. households and firms are both buyers.d. households and firms are both sellers.
4. An economy consists of three workers: Larry, Moe,and Curly. Each works 10 hours a day and can produce two services: mowing lawns and washing cars.In an hour, Larry can either mow one lawn or washone car; Moe can either mow one lawn or wash twocars; and Curly can either mow two lawns or washone car.a. Calculate how much of each service is producedunder the following circumstances, which welabel A, B, C, and D:r All three spend all their time mowing lawns. (A)r All three spend all their time washing cars. (B)r All three spend half their time on eachactivity. (C)r Larry spends half his time on each activity, whileMoe only washes cars and Curly only mowslawns. (D)b. Graph the production possibilities frontier for thiseconomy. Using your answers to part a, identifypoints A, B, C, and D on your graph.c. Explain why the production possibilities frontierhas the shape it does.d. Are any of the allocations calculated inpart a inefficient? Explain.
The circular-flow diagram illustrates that, in markets for the factors of production?
Chapter 2 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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- In the simple circular-flow diagram, who buys the factors of production? A) Households only B) Firms only C) Both households and firms D) Neither households nor firmsarrow_forwardExplain, how does the economy as a whole works? And which economic agents are of the greatest importance in determining what goods and services are produced?arrow_forwardWhat is the circular flow diagram, and what does it demonstrate? What are the two main categories of participants in markets? Which determines in a free market what goods and services are produced?arrow_forward
- Which of the following best describe what we mean byresources in economics? A. The natural resources, like water and trees. B. The factors of production used to produce goods and services. C. The human resources, like workers. D. The capital resources, like tools and buildings.arrow_forwardAccording to a simple circular-flow diagram, how many markets do households and firms interact in? A. four types of markets B. one type of market C. two types of markets D. three types of marketsarrow_forwardDiscuss the concept of Economic Goods.arrow_forward
- Discuss a way that your family interacts in the factor market and a way that it interacts in the product market.arrow_forwardGive typing answer with explanation and conclusion Which of the following illustrates goods markets? A. Maggie took an educational loan of $10,000. Safeway sells milk at $4.35 a gallon. B. Anna got a job with a public firm. Smith wants to take a vacation in December. C. Walmart sells potatoes at $2.14 a pound. Ann bought a new condo for $200,000. D. Banks have raised interest rates to 2.5 percent. Ryan enjoys playing chess.arrow_forwardI. Essay. Explain the following.1. What is Applied Economics?2. What are the three basic economic concepts and briefly explain each. 3. What are the two assumptions of economics? 4. What are the basic economic problems? 5. What are the factors of production?arrow_forward
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