Question

Which of the following decisions would entail the greater opportunity cost: allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot? Explain.

1. Indicate whether each of the following statements applies to microeconomics or macroeconomics: LO1.3
   1. The unemployment rate in the United States was 5.1% in September 2015.
   2. A U.S. software firm discharged 15 workers last month and transferred the work to India.
   3. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.
   4. U.S. output, adjusted for inflation, increased by 2.4% in 2014.
   5. Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point.
   6. The consumer price index rose by 0.2% from August 2014 to August 2015.
2. What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs? LO1.4

Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve: LO1.5

1. The quality of education increases.
2. The number of unemployed workers increases.
3. A new technique improves the efficiency of extracting copper from ore.
4. A devastating earthquake destroys numerous production facilities.

Answer 1

Question 1)

Making a parking lot in the heart of New York city would entail more opportunity cost as it is more expensive to acquire space in New York City, more people and more demand for space indicates that the space can be used for other purposes. While the same space in a typical suburb would not entail same opportunity cost and there is a lot more space available in suburbs.

Question 2)

a )The unemployment rate in the United States was 5.1% in September 2015. - Macroeconmics

This statement applies to macroeconomics as this for the economy as a whole , unemployment is calculated for economy as a whole.

b) A U.S. software firm discharged 15 workers last month and transferred the work to India. - Microeconomics

This statement applies to microecnomics because it is about a decision about a particular firm.

c) An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise - Microeconomics

This applies to microeconomics as this is related to one good not all goods in general.

d ) U.S. output, adjusted for inflation, increased by 2.4% in 2014. - Macroeconomics

Inflation is considered for economy as a whole hence is a macro concept

e) Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point. - Microeconomics​​

This statement applies to microecnomics because it is about a decision about a particular firm.

f) The consumer price index rose by 0.2% from August 2014 to August 2015.- Macroeconomics

Question 3) What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?

Economics resources are factor used in producing goods and services. There are 4 major categories of economic resources : Land , Labor , Capital , Entrepreneurship. They are called factors of production because they are used in the production process of goods an services. They are called inputs because they are what you put in the production process in orer to get the output or the final product.

Question 4)

1. The quality of education increases. - Shifts the PPC outwards as efficiency of economy improves
2. The number of unemployed workers increases. - It movs the point of production from on the curve to inside of the curve as there is not full effciency of resources.
3. A new technique improves the efficiency of extracting copper from ore. - Improvement in technology improves efficiency and PPC shifts outwards
4. A devastating earthquake destroys numerous production facilities. - As level of resources come down there is inward shift of PPC.