Review: 1. How does the expression \"there is no such thing as a free lunch\" ap
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Review: 1. How does the expression "there is no such thing as a free lunch" apply to study of 2. How does the expression... "Don't cry over spilled milk" relate to the economic perspective 3. of marginal analysis (MB v.MC)-Na warte gel4 back sejused cutr it. Determine if the example below is a Micro or Macro example. The effect of higher cigarette taxes on quantity of cigarettes sold The effect of higher income taxes on the total amount of consumer spending The reason the economies of East Asian countries grow faster than the economies of sub-Saharan African countries. mero a. mec b. mae c. What does the term "opportunity cost" mean? How about increasing opportunity cost? What are the short-run assumptions of society's PPF? Can an economy experience growth yet be inside the PPF? Explain. Problem: What if your income was $200 and you were considering the purchase of two goods -shirts and CD. 4. 5. 6. What if the price per shirt was $50 and the price per CD was S10. Prepare a table and chart demonstrating all possible purchase combinations. What happens if your income increases to $300? What happens if the price of shirts increases to $60 (assume original income of $200)? a. b. c. 7. Problem: For the production possibilities frontier below, compute the opportunity costs for each good. What do you observe? Food Cloth 0.0 8.0 1.0 7.5 3.0 5.0 2.0 4.0 6.5 8. Is there a tradeoff between efficiency and equity? 10. Define "ceteris paribus". Apply it to an example. 9. What's the difference between a positive and normative statement? 11. Describe the virtues of a market system (in contrast to a "central planning" system). 12. Do markets get the allocation of resources wrong sometimes? 13. How does specialization in the use of human and material resources enhance efficiency and output in an economy? 14. Suppose a firm is producing 400 loaves of banana bread day. Assume the least cost combination of resources in producing the bread is 5 units of labor $40/unit of labor * 7 units of land @ $60/unit of land . 2units ofcapital@S6@wnit ofcapital . 1 unit of entrepr. ability @ $20/unit What should the firm do if the selling price is $2/loaf? 15. If economics relies on scientific methodology to test hypotheses and successfully tested hypotheses become the basis of economic principles and laws, how then do economists oftentimes disagree on what the appropriate policy is to achieve a particular economic objective? e/discuss the following scenarios: The US economy with 10% unemployment and factory utilization of 65%. b. The US government relaxes immigration laws allowing more foreigners to reside in the US legallyExplanation / Answer
1. "There is no such thing as a free lunch " because to get something ,you always have to give up another thing. There is always a trade off , to get one thing you always have to pay for it (in giving up another thing ).
2. "Don't cry over spiiled milk" : This statement implies that don't focus on the past thing that already happened and live in the present. As the principle of marginal cost and marginal benefit says that to make a decision you should look on marginal cost and benefit and ignore the sunk or past costs. It means that people will maximise their profits only by counting MC and MB of a decision. Because there is no way to get it back so just get over it.
3. (a) It is the example of Microeconomics. It is based on an individual level.
(b) Macro example. It is based on broad perspective.
(c) Macro example. It is based on world level.
4. Opportunity cost : An opportunity cost is the value that a person could have received but have given up, to take another alternative.In other words, it is the value of what have given up in order to choose something else. For example: If we have $30 to spend on textbook or we can enjoy a meal in restaurant. If we spend $20 on a textbook, the opportunity cost is the meal we have given up to choose texbook.
Increasing opportunity cost: It states that as a person increase production of one good , the opportunity cost to produce an additional unit of good will increase.
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