Question

In: Economics

Students are to complete the exercises in Word (or some other compatible word processor) and submit...

Students are to complete the exercises in Word (or some other compatible word processor) and submit for evaluation.

Questions

1. The purpose of economics is to provide a way to think. Economic thinking and decision-making recognize that because of scarcity something cannot be obtained without giving up something else. Consequently, we must make our decisions by comparing the costs and benefits and evaluating the tradeoffs. In doing so, five principles of economic thought come into play: tradeoffs, incentives, opportunity costs, marginal thinking, and voluntary exchange. Explain with a specific example of each how you apply these five principles of economic thought in your everyday life.

Table 1-1

Possible Output Combinations

Apples

(thousands of kilos)

Pears

(thousands of kilos)

A

70

0

B

60

20

C

50

36

D

40

48

E

30

56

F

20

60

G

10

63

H

0

65

2. Refer to Table 1-1. The Fruit Farm produces only apples and pears. The table above shows the maximum possible output combinations of the two fruits using all resources and currently available technology.

a. Graph the Fruit Farm's production possibilities frontier. Put apples on the horizontal axis and pears on the vertical axis. Be sure to identify the output combination points on your diagram.

b. Suppose the Fruit Farm is currently producing at point D. What is the opportunity cost of producing an additional 8,000 kilos of pears?

c. Suppose the Fruit Farm is currently producing at point D. What happens to the opportunity cost of producing more and more pears? Does it increase, decrease or remain constant? Explain your answer.

d. Suppose the Fruit Farm is currently producing at point G. What happens to the opportunity cost of producing more and more apples? Does it increase, decrease or remain constant? Explain your answer.

e. Suppose the Fruit Farm is plagued by a maggot infestation which destroys apple trees but not pears. Show in a graph what happens to its PPF.

3. Suppose you own an outdoor recreation company and you want to purchase all-terrain vehicles (ATVs) for your summer business and snowmobiles for your winter business. Your budget for new vehicles this year is $240,000. ATVs cost $8000 each and snowmobiles cost $12,000 each.

a. Draw a budget line for your purchase of new vehicles.

b. What is the opportunity cost of one ATV?

c. What is the opportunity cost of one snowmobile?

Expert Solution

1) The 5 principles along with their examples are given as below:

a) Incentives: Incentive means a form of reward which is given so as to prompt to the individuals to do something.

Eg: when bonus is linked with good work ,then it means the workers are incentivised. Higher the effort, more the bonus. This is Incentive.

b) Tradeoffs: the resources in world are limited but demand of goods and services are unlimited. This means that there would be choices between production of goods or between different economic activities. This is tradeoff.

Eg: an individual with his pocket money may decide to watch a movie or save it for vacations. These are Tradeoffs one comes across in everyday life.

c) opportunity costs: these are the costs foregone ie the next best alternative which is given up.

Eg: a country can produce with the given set of resources both food and guns. If it decides to produce good, the opportunity cost would be guns and vice versa.

Another example could be an individual wanting to pursue graduation. The opportunity cost would be the salary foregone had he applied for a job.

d) Voluntary exchange: it is a process which takes place in free market ie when the buyers are paying the price they want to pay and sellers are selling at their minimum accepted price.

Eg: in a perfectly competitive market of tomatoes, there is voluntary exchange taking place. It would be distorted in government's presence or intervention.

E) Marginal thinking: it refers to thinking in terms of margin ie the additional unit.

It could be through the seller or the buyer's perspective.

Eg: if an individual is buying pizza with a given cost, he would be buying it as long as the marginal benefit from the next slice of pizza is equal to the marginal cost he is paying for the additional slice.

Hence these are the five principles of economic thought.

(You can comment for doubts)

Rahul Sunny answered 2 years ago

Use MS Word to complete "Questions to be Graded: Exercises 31 and 32" in Statistics for...

Use MS Word to complete "Questions to be Graded: Exercises 31 and 32" in Statistics for Nursing Research: A Workbook for Evidence-Based Practice. Submit your work in SPSS by copying the output and pasting into the Word document. In addition to the SPSS output, please include explanations of the results where appropriate.

Design an algorithm for each of the exercises and type it into a word document....

Design an algorithm for each of the exercises and type it into a word document. Upload the document to PE1 assignment folder. The roots of quadratic equation: Design an algorithm to find the real roots of a quadratic equation of the form ax2+bx+c=0, where a, b, c are all real numbers and a is nonzero

What are some activities that a typical lobbyist would do to influence government? In other word,...

What are some activities that a typical lobbyist would do to influence government? In other word, what are interest groups’ strategies for influence?

Describe some useful techniques for enhancing students' awareness of other world cultures.

Using SQL Developer ONLY! Lab 5 1. Create a lab report file (MS Word compatible) and...

Using SQL Developer ONLY! Lab 5 1. Create a lab report file (MS Word compatible) and name it as “IT4153_Lab 5_ Your D2L ID”. a. Create two tables: Employee: empID (PK), empFname, empLname, deptID(FK) and Department: deptID(PK), deptName, chairID chairID is empID from Employee table b. Insert at least 3 rows in the Department table and at least 6 rows in the Employee table. c. Create trigger on update of chairID that enforces the following business rules • One employee...

Exercises Code of Conduct Exercises Instructions: Answer the following in complete sentences using the AICPA's revised Code...

Exercises Code of Conduct Exercises Instructions: Answer the following in complete sentences using the AICPA's revised Code of Conduct, providing the ET references for each of your responses. For questions with multiple parts, include multiple ET references as appropriate. What are the three broad categories of safeguards identified in Part 1 of the Code, in the Conceptual Framework for members in public practice? Which category of safeguard cannot be relied upon, by itself, to reduce threats to an acceptable level?

Jane works as a word processor for a large insurance company. Her job, which she detests,...

Jane works as a word processor for a large insurance company. Her job, which she detests, involves inputting hundreds of numbers into a computer. She has gone to her family physician because she feels a constant tingling in her fingers and a sharp pain in her fingers, wrist, and forearm but only at certain times. Her doctor is not a neurological specialist but can see nothing obviously wrong with Jane’s hands or wrists. Jane is depressed and anxious about this...

In the same file, complete the following exercises in the author’s pseudocode as presented in the...

In the same file, complete the following exercises in the author’s pseudocode as presented in the text book and material on Blackboard in this chapter, and following all requirements for good program design that were shown in Chapter 2 and all examples since then. At the Summer Olympic Games every four years, for historical reasons, athletes represent National Olympic Committees (NOCs) rather than strictly countries. For the sake of convenience in our program, let us refer to them simply as...

For your task, provide responses to the following in a Word document and submit them: project...

For your task, provide responses to the following in a Word document and submit them: project name - Build an IT infrastructure for a medium size company that does accounting Explain why you selected this project Based on your project selection, explain what requirements and restrictions would be encountered Explain how you would go about constructing this project using an engineering approach

For Assignment 2, submit a word or pdf file with the SQL queries along with screenshots...

For Assignment 2, submit a word or pdf file with the SQL queries along with screenshots of the outputs. (It is ok if the whole problem cannot be answered, if possible, I just would like an idea of how to begin, thanks in advance!) 9. Write a query to count the number of invoices. 10. Write a query to count the number of customers with a balance of more than $500. 11. Generate a listing of all purchases made by...