1. Explain why economics is a study of choices. Why do we have to make choices?

Question

1. Explain why economics is a study of choices. Why do we have to make choices?

2. What are the economic resources? Why are they scarce?

3. Outline the differences between macroeconomics and microeconomics.

4. What are the economic questions? How is each question answered?

5. Outline the interaction of supply, demand, and price.

6. What is the difference between a buyers and a sellers market? Provide examples of each in your answer.

7. What causes equilibrium? How does price react?

8. What is the marginal principle? How can you apply it as a consumer?

9. & 10. We all hear talk about the dependency of oil and how higher oil prices affect our economy. Why have we not made greater strides to energy efficiency? Make sure you have at least two references to back your opinion.

Explanation / Answer

1.

Studying economics will help you in many ways, specifics depend on what you plan to do in your life.

By learning economics you should gain a better and bigger perspective on the stock market and your future 401K and other investment strategies.

By studying economics you should gain better understanding of which politicians are full of ****. Of course this time it will be more than simply knowing when their mouths are open.

Economics is a prestigious subject of inquiry. Economic issues are important to everyone. Read any newspaper and you will find no shortage of economic issues and questions. Why do gas prices behave so strangely? How are we going to pay for health care? Why does the dollar move in value? Is the flat tax the best tax? Are we using energy efficiently? Why do financial crises occur? Why are some nations poor and others are not? Are free trade and globalization good? Will a minimum wage help or harm people? Economists are always called upon to answer questions such as these.

An Economics Education develops analytical and abstract skills. After a solid grounding in economic theory, you will learn statistical tools to analyze data and interpret it. By explaining complex ideas to others, you will learn effective communication skills so widely sought after in the job market.

Economics works both sides of your brain. Some people like economic issues, but not the mathematical equations that go along with them. Others like the equations, but dislike writing about them. No matter what your preference, an economics education will allow you to work on both sets of skills.

Economics allows you to see the costs associated with any given action. Some of the most pressing issues in Canada have to do with the scarcity of resources such as people, money and equipment. By studying economics, you will begin to understand how to allocate one of the most precious resources of all - your time. Because economics attempts to consider the costs and consequences of decisions, it allows humans to make more informed decisions. For example, should you go to university or take that full time position? You'll have to take an economics class to answer that one.

Economics is the best preparation for law school. Studies have shown that economics majors consistently rank ahead of physics/math and philosophy majors in the top three groups of students taking the LSAT. New areas of law consistently implement economic concepts and the economic way of thinking in their analysis of legal problems, and having an economics major will give you the edge in law school and on the LSAT. (Source: Nieswiadomy, Michael, "LSAT Scores of Economics Majors," Journal of Economic Education (Fall 1998): 377-379.)

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2.

Generically, economic resources are the land, labor, capital and entrepreneurial ability that are combined to produce outputs that meet human needs. They earn, rent, wages, interest, and profit, respectively as their resource payments.

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3.

Macroeconomics is dealing with the "big picture" of the whole economy. So in practice an observer of this needs to stand far away and so avoid the problem of not seeing "the wood for the trees". This problem is often so acute that would-be macro-economists get confused about what they should be studying.

Microeconomics is the study of the local effects of firms, families and small-scale groups of businesses, which can be thought of as if they were independent of the rest. This may be useful for some aspects of how their separate finances are working, but it does nothing to understand how to integrate them into the full-scale system of the country.

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4.

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