1. What is the study of economics about? 2. What is the definition of opportunit
ID: 2505662 • Letter: 1
Question
1. What is the study of economics about?
2. What is the definition of opportunity cost?
3. What are the three methods that societies have used to allocate their scarce resources. Give an example of each method. Give an example of a good that uses all three methods at once?
4. What are the 4 scarce, factors of production and what is a description of each of them. What are the costs to these resources?
5. Draw the PPC model of peace time goods and war time goods and describe its characteristics. Label point A as being more toward peace time goods than war time goods and show graphically the opportunity cost of entering a war and re-allocating resources such that it would increase the chance of winning the war. Identify this cost in terms that might make it more relevant to the people.
6. What factors shift out the PPC and what is the opportunity cost of the economy moving out to get back on the PPC? Explain?
7. Using the PPC show what is meant by the law of increasing opportunity cost and explain (state) why that law exists. Why is that law important when deciding whether or not to watch one more hour of TV the night before the test?
Explanation / Answer
1. Economics is the study of how people choose to use resources. Resources include the time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services.
Economics can generally be broken down into: macroeconomics, which concentrates on the behavior of the aggregate economy; and microeconomics, which focuses on individual consumers.
2. The cost of an alternative that must be forgone in order to pursue a certain action
3. The method are:
Market system:
is the system used to distribute the allocate scarce resources by letting the buyers and sellers choose what to put in the market.
Brute Force:
is another system of deciding who gets what. It's like survival of the fittest. The strongest, biggest, and,or fastest get what they want.
Queuing(Lining up):
is another method of who gets what. This is just like first come, first serve. This wouldn't work well because we would spend to much time in lines.
4. The 4 scarce factor of production are:
The first factor of production is land, but this includes any natural resource used to produce goods and services. This includes not just land, but anything that comes from the land
The second factor of production is labor. Labor is the effort that people contribute to the production of goods and services.
The third factor of production is capital. Think of capital as the machinery, tools and buildings humans use to produce goods and services
The fourth factor of production is entrepreneurship. An entrepreneur is a person who combines the other factors of production
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