Question

Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important.

a. The fact that many developing nations have not finished building their wired communication networks and focused on wireless, while most developed nations have maintained their wired, and continued to build out their wireless networks can be explained by the concept of opportunity cost.

b. If the unemployment rate decreases, we can be sure that the number of unemployed workers has decreased.

Answer 1

a. The fact that many developing nations have not finished building their wired communication networks and focused on wireless, while most developed nations have maintained their wired, and continued to build out their wireless networks can be explained by the concept of opportunity cost.

TRUE

This is because in case of developing nations, the opportunity cost of investing in wired communication is high and they can make more money for growth by investing this money somewhere else. In case of developed nations, since the infrastructure and other facilities are all developed, the opportunity cost of investing in wired communication is low.

b. If the unemployment rate decreases, we can be sure that the number of unemployed workers has decreased.

TRUE

Reason: A fall in unemployment rate necessarily means that the number of unemployed workers has decreased. Since unemployment rate is calculated as the ratio of unemployed to the sum of employed and unemployed workers, a fall in unemployed and an increase in employed is the same thing and both will reduce unemployment rate.