Answer the following problems found in your textbook in the back of the corresponding chapters
- Definition of Economics) What determines whether or not a resource is scarce? Why is the concept of scarcity important to the definition of economics?
2. (Rational Self-Interest) Discuss the impact of rational self- interest on each of the following decisions: a. Whether to attend college full time or enter the work- force 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. (Rational Self-Interest) If behavior is governed by rational self-interest, why do people make charitable contribu- tions of time and money?
6. (Role of Theory) What good is economic theory if it can’t predict the behavior of a specific individual?
- (Opportunity Cost) You can spend spring break either working at home for $80 per day for five days or go to Florida for the week. If you stay home, 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?
- (Absolute and Comparative Advantage) You have the following information concerning the production of wheat and cloth in the United States and the United Kingdom:
Labor Hours Required to Produce One Unit
The United Kingdom The United States
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?
- (Specialization) Provide some examples of specialized markets or retail outlets. What makes the Web so condu- cive to specialization?
(Production Possibilities) Suppose an 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 the PPF for
wheat and cloth change?
8. (Shifting Production Possibilities) 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