- The document contains questions and answers related to concepts in economics from Chapter 1 such as production, consumption, scarcity, opportunity cost, and markets.
- Many questions ask the reader to define key terms, explain economic principles, or analyze examples to demonstrate understanding of topics like production possibility curves, supply and demand, and macroeconomic vs. microeconomic issues.
- The answers provide concise explanations of economic concepts, clarify differences between opportunity costs for individuals versus society, and analyze examples in terms of supply, demand, and price adjustments.
For more classes visit
www.snaptutorial.com
ECO 365 Week 1 Practice The Fundamentals of Economic Quiz
Complete the Week 1 The Fundamentals of Economics Quiz in McGraw-Hill Connect®. These are randomized questions.
Note: You have unlimited attempts available to complete practice
For more classes visit
www.snaptutorial.com
ECO 365 Week 1 Practice The Fundamentals of Economic Quiz
Complete the Week 1 The Fundamentals of Economics Quiz in McGraw-Hill Connect®. These are randomized questions.
Note: You have unlimited attempts available to complete practice
Here is an example of a question along with a possible answe.docxpooleavelina
Here is an example of a question along with a possible answer.
Please note the format. Please do not write your answers in the standard
block paragraph format!
This is by no means the perfect answer. It could certainly be better. But, I
wanted to give you a sense of what I am looking for in an answer.
Question:
Please thoroughly and completely explain the law of demand.
Answer:
Definition of the law of demand
o Demand is a schedule or curve that shows the various amounts of a
product that consumers are willing and able to purchase at each of a series
of possible prices during a specified period of time.
The law of demand tells us that there is an inverse relationship between price and
quantity demanded. This is supported by the following three concepts:
Diminishing marginal utility which means consumption of successive units of a
particular product will yield less and less marginal utility.
o Marginal utility – the change in utility that results from a one-unit change
in the consumption of a good or service.
o The income effect - which means that a lower price increases the
purchasing power of the buyers money income allowing the buyer to
purchase more of the product than before.
o The substitution effect - which means that at a lower price buyers are
motivated to substitute what is now a less expensive product for similar
products that are now relatively more expensive.
The law of demand is graphically represented as a downward sloping curve.
An increase in demand is expressed graphically as a shift of the demand curve to
the right while a decrease in demand is expressed as a shift of the demand curve
to the left.
An increase or decrease in quantity demanded is represented as a movement alone
a given demand curve and is caused by an increase or decrease of the price of the
product.
A demand curve will shift as a result of a change in one of the determinants of
demand which are:
Buyer tastes – a change in tastes can cause buyers to demand more, or less of
a product
Number of buyers – an increase in the number of buyers will result in an
increase in the demand for a product
Income –
a. If income increases and the demand for a good increases, that good is
called a normal good.
b. If income increases and the demand for a good decreases, that good is
called an inferior good
Expectations – expectations of buyers will impact demand. If the buyer
expects the price of the product to increase, this would likely cause a decrease
in demand for the product.
Prices of related goods –
a. If the price of a good increases, we would expect the demand for the
substitute good to increase.
b. If the price of a good increases, we would expect the demand for its
complement to decrease.
Price of non-related goods – a price change for one good would have no
impact on the demand for the other good.
• Make sure that you ar ...
C H A P T E R 1Economics The Study ofChoiceSTART UP E.docxjasoninnes20
C H A P T E R 1
Economics: The Study of
Choice
START UP: ECONOMICS IN THE NEWS
2008 seemed to be the year of economic news. From the worst financial crisis since the Great Depression to the
possibility of a global recession, to gyrating gasoline and food prices, and to plunging housing prices, economic
questions were the primary factors in the presidential campaign of 2008 and dominated the news generally.
What causes the prices of some good to rise while the prices of some other goods fall? Price determination is
one of the things that we will study in this book. We will also consider factors that lead an economy to fall into a re-
cession—and the attempts to limit it.
While the investigation of these problems surely falls within the province of economics, economics encom-
passes a far broader range of issues. Ultimately, economics is the study of choice. Because choices range over every
imaginable aspect of human experience, so does economics. Economists have investigated the nature of family life,
the arts, education, crime, sports, job creation—the list is virtually endless because so much of our lives involves
making choices.
How do individuals make choices: Would you like better grades? More time to relax? More time watching
movies? Getting better grades probably requires more time studying, and perhaps less relaxation and entertain-
ment. Not only must we make choices as individuals, we must make choices as a society. Do we want a cleaner en-
vironment? Faster economic growth? Both may be desirable, but efforts to clean up the environment may conflict
with faster economic growth. Society must make choices.
Economics is defined less by the subjects economists investigate than by the way in which economists invest-
igate them. Economists have a way of looking at the world that differs from the way scholars in other disciplines
look at the world. It is the economic way of thinking; this chapter introduces that way of thinking.
economics
A social science that
examines how people
choose among the
alternatives available to them.
scarcity
The condition of having to
choose among alternatives.
scarce good
A good for which the choice
of one alternative requires
that another be given up.
free good
A good for which the choice
of one use does not require
that another be given up.
1. DEFINING ECONOMICS
L E A R N I N G O B J E C T I V E S
1. Define economics.
2. Explain the concepts of scarcity and opportunity cost and how they relate to the definition of
economics.
3. Understand the three fundamental economic questions: What should be produced? How
should goods and services be produced? For whom should goods and services be produced?
Economics is a social science that examines how people choose among the alternatives available to
them. It is social because it involves people and their behavior. It is a science because it uses, as much as
possible, a scientific approach in its investigation of choices.
1.1 Scarcit ...
1. Planet Earth is our only home for the time being. As global.docxbraycarissa250
1. Planet Earth is our only home for the time being. As global
populations grow and our resources dwindle, we should
worry more about the issues of SCARCITY AND CHOICE. All
parts of this question are part of the topic called Intro to
some key concepts of Economics.
i. There are 17 Rare Earth Elements. Pick any 5 of
them, and for EACH of the 5, explain in detail why
they are so critical to us. Use Google to look the
up.
Include in your answer:
a. what it used for,
b. why are those things so critical?
c. Where in the world the resource is
located.
d. And approximately how much is left.
e. For EACH of the 5, please explain 3
things we need to start doing today
to avoid running out of that
resource. It is very important that
you provide thorough and complete
explanations here.
b. The theory of rational behavior says that we humans
act in our own self-interest. Given our actual behavior
and the decisions we have made and are continuing
to make relative to the planet, please:
i. What does over-pumping of aquifers really
mean? Use Google to gather info.
ii. Is continued over-pumping of aquifers around the
world is in our best interest. If yes, explain why. If
no, explain why not.
iii. Explain how the continued over-pumping of
aquifers in America, China, and India, could
impact our ability to survive on the planet. This
will require that you find out what things these 3
nations have in common that are related to
aquifers. Connect the dots and explain how our
ability to survive on the planet could be
impacted by continued over pumping of
aquifers. Please provide plenty of detail here.
Google can help!
iv. Explain in detail 3 things we can do to stop the
over-pumping problem. Hint: Focus on the top
uses of water in the world.
c. Utility Concepts:
i. Explain the 3 concepts: Utility, Marginal Utility,
and Diminishing Marginal Utility.
ii. Explain 3 examples of EACH of those 3 concepts
as they might be applied to the Keystone XL
Pipeline project.
d. The Theory of Consumer Behavior: this material is
provided in the slides and audio lecture.
i. Explain EACH of the key assumptions of the
Theory of Consumer Behavior and what the
theory tells us. Read the slide and listen to the
audio lecture.
ii. Does the theory of consumer behavior reflect
reality? If yes, then why. If no, the why not.
e. Marginal analysis is a decision-making tool.
i. Please define Marginal Cost
ii. Please define Marginal Benefit,
iii. Explain the following 3 cases in terms of what you
should do regarding the activity involved. Should
we do more of the activity, less of the activity, or
keep doing the same? Explain why in each case.
1. MB>MC
2. MC>MB
3. MC=MB
iv. Explain 3 examples of MC related to the Keystone
XL Pipeline question.
v. Explain 3 examples of MB related to the Keystone
XL Pipeline question.
2. The Production Possibilities Model is one of the first Economic
Models students learn about. Please refer to th.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Here is an example of a question along with a possible answe.docxpooleavelina
Here is an example of a question along with a possible answer.
Please note the format. Please do not write your answers in the standard
block paragraph format!
This is by no means the perfect answer. It could certainly be better. But, I
wanted to give you a sense of what I am looking for in an answer.
Question:
Please thoroughly and completely explain the law of demand.
Answer:
Definition of the law of demand
o Demand is a schedule or curve that shows the various amounts of a
product that consumers are willing and able to purchase at each of a series
of possible prices during a specified period of time.
The law of demand tells us that there is an inverse relationship between price and
quantity demanded. This is supported by the following three concepts:
Diminishing marginal utility which means consumption of successive units of a
particular product will yield less and less marginal utility.
o Marginal utility – the change in utility that results from a one-unit change
in the consumption of a good or service.
o The income effect - which means that a lower price increases the
purchasing power of the buyers money income allowing the buyer to
purchase more of the product than before.
o The substitution effect - which means that at a lower price buyers are
motivated to substitute what is now a less expensive product for similar
products that are now relatively more expensive.
The law of demand is graphically represented as a downward sloping curve.
An increase in demand is expressed graphically as a shift of the demand curve to
the right while a decrease in demand is expressed as a shift of the demand curve
to the left.
An increase or decrease in quantity demanded is represented as a movement alone
a given demand curve and is caused by an increase or decrease of the price of the
product.
A demand curve will shift as a result of a change in one of the determinants of
demand which are:
Buyer tastes – a change in tastes can cause buyers to demand more, or less of
a product
Number of buyers – an increase in the number of buyers will result in an
increase in the demand for a product
Income –
a. If income increases and the demand for a good increases, that good is
called a normal good.
b. If income increases and the demand for a good decreases, that good is
called an inferior good
Expectations – expectations of buyers will impact demand. If the buyer
expects the price of the product to increase, this would likely cause a decrease
in demand for the product.
Prices of related goods –
a. If the price of a good increases, we would expect the demand for the
substitute good to increase.
b. If the price of a good increases, we would expect the demand for its
complement to decrease.
Price of non-related goods – a price change for one good would have no
impact on the demand for the other good.
• Make sure that you ar ...
C H A P T E R 1Economics The Study ofChoiceSTART UP E.docxjasoninnes20
C H A P T E R 1
Economics: The Study of
Choice
START UP: ECONOMICS IN THE NEWS
2008 seemed to be the year of economic news. From the worst financial crisis since the Great Depression to the
possibility of a global recession, to gyrating gasoline and food prices, and to plunging housing prices, economic
questions were the primary factors in the presidential campaign of 2008 and dominated the news generally.
What causes the prices of some good to rise while the prices of some other goods fall? Price determination is
one of the things that we will study in this book. We will also consider factors that lead an economy to fall into a re-
cession—and the attempts to limit it.
While the investigation of these problems surely falls within the province of economics, economics encom-
passes a far broader range of issues. Ultimately, economics is the study of choice. Because choices range over every
imaginable aspect of human experience, so does economics. Economists have investigated the nature of family life,
the arts, education, crime, sports, job creation—the list is virtually endless because so much of our lives involves
making choices.
How do individuals make choices: Would you like better grades? More time to relax? More time watching
movies? Getting better grades probably requires more time studying, and perhaps less relaxation and entertain-
ment. Not only must we make choices as individuals, we must make choices as a society. Do we want a cleaner en-
vironment? Faster economic growth? Both may be desirable, but efforts to clean up the environment may conflict
with faster economic growth. Society must make choices.
Economics is defined less by the subjects economists investigate than by the way in which economists invest-
igate them. Economists have a way of looking at the world that differs from the way scholars in other disciplines
look at the world. It is the economic way of thinking; this chapter introduces that way of thinking.
economics
A social science that
examines how people
choose among the
alternatives available to them.
scarcity
The condition of having to
choose among alternatives.
scarce good
A good for which the choice
of one alternative requires
that another be given up.
free good
A good for which the choice
of one use does not require
that another be given up.
1. DEFINING ECONOMICS
L E A R N I N G O B J E C T I V E S
1. Define economics.
2. Explain the concepts of scarcity and opportunity cost and how they relate to the definition of
economics.
3. Understand the three fundamental economic questions: What should be produced? How
should goods and services be produced? For whom should goods and services be produced?
Economics is a social science that examines how people choose among the alternatives available to
them. It is social because it involves people and their behavior. It is a science because it uses, as much as
possible, a scientific approach in its investigation of choices.
1.1 Scarcit ...
1. Planet Earth is our only home for the time being. As global.docxbraycarissa250
1. Planet Earth is our only home for the time being. As global
populations grow and our resources dwindle, we should
worry more about the issues of SCARCITY AND CHOICE. All
parts of this question are part of the topic called Intro to
some key concepts of Economics.
i. There are 17 Rare Earth Elements. Pick any 5 of
them, and for EACH of the 5, explain in detail why
they are so critical to us. Use Google to look the
up.
Include in your answer:
a. what it used for,
b. why are those things so critical?
c. Where in the world the resource is
located.
d. And approximately how much is left.
e. For EACH of the 5, please explain 3
things we need to start doing today
to avoid running out of that
resource. It is very important that
you provide thorough and complete
explanations here.
b. The theory of rational behavior says that we humans
act in our own self-interest. Given our actual behavior
and the decisions we have made and are continuing
to make relative to the planet, please:
i. What does over-pumping of aquifers really
mean? Use Google to gather info.
ii. Is continued over-pumping of aquifers around the
world is in our best interest. If yes, explain why. If
no, explain why not.
iii. Explain how the continued over-pumping of
aquifers in America, China, and India, could
impact our ability to survive on the planet. This
will require that you find out what things these 3
nations have in common that are related to
aquifers. Connect the dots and explain how our
ability to survive on the planet could be
impacted by continued over pumping of
aquifers. Please provide plenty of detail here.
Google can help!
iv. Explain in detail 3 things we can do to stop the
over-pumping problem. Hint: Focus on the top
uses of water in the world.
c. Utility Concepts:
i. Explain the 3 concepts: Utility, Marginal Utility,
and Diminishing Marginal Utility.
ii. Explain 3 examples of EACH of those 3 concepts
as they might be applied to the Keystone XL
Pipeline project.
d. The Theory of Consumer Behavior: this material is
provided in the slides and audio lecture.
i. Explain EACH of the key assumptions of the
Theory of Consumer Behavior and what the
theory tells us. Read the slide and listen to the
audio lecture.
ii. Does the theory of consumer behavior reflect
reality? If yes, then why. If no, the why not.
e. Marginal analysis is a decision-making tool.
i. Please define Marginal Cost
ii. Please define Marginal Benefit,
iii. Explain the following 3 cases in terms of what you
should do regarding the activity involved. Should
we do more of the activity, less of the activity, or
keep doing the same? Explain why in each case.
1. MB>MC
2. MC>MB
3. MC=MB
iv. Explain 3 examples of MC related to the Keystone
XL Pipeline question.
v. Explain 3 examples of MB related to the Keystone
XL Pipeline question.
2. The Production Possibilities Model is one of the first Economic
Models students learn about. Please refer to th.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Normal Labour/ Stages of Labour/ Mechanism of LabourWasim Ak
Normal labor is also termed spontaneous labor, defined as the natural physiological process through which the fetus, placenta, and membranes are expelled from the uterus through the birth canal at term (37 to 42 weeks
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
1. Answers to Questions in Chapter 1
Note: No. before indicates a page number
Page
4 Could production and consumption take place without money? If you think they could,
give examples.
Yes. People could produce things for their own consumption. For example, people
could grow vegetables in their garden or allotment; they could do their own painting
and decorating. Alternatively people could engage in barter: they could produce things
and then swap them for goods that other people had produced.
4 Before reading on, how would you define scarcity? Must goods be at least temporarily
unattainable to be scarce?
See page 5 of text for a definition of scarcity. Goods need not be unattainable to be
scarce. Because people’s incomes are limited, they cannot have everything they want
from shops, even though the shops are stocked full. If all items in shops were free, the
shelves would soon be emptied!
5 If we would all like more money, why does the government not print a lot more? Could it
not thereby solve the problem of scarcity ‘at a stroke’?
The problem of scarcity is one of a lack of production. Simply printing more money
without producing more goods and services will merely lead to inflation. To the extent
that firms cannot meet the extra demand (i.e. the extra consumer expenditure) by extra
production, they will respond by putting up their prices. Without extra production,
consumers will end up unable to buy any more than previously.
6 Which of the following are macroeconomic issues, which are microeconomic ones and
which could be either depending on the context?
(a) Inflation.
(b) Low wages in certain service industries.
(c) The rate of exchange between the Australian dollar and the yen.
(d) Why the price of cabbages fluctuates more than that of cars.
(e) The rate of economic growth this year compared with last year.
(f) The decline of traditional manufacturing industries.
(a) Macro. It refers to a general rise in prices across the whole economy.
(b) Micro. It refers to specific industries.
(c) Either. In a world context it is a micro issue, since it refers to the price of one
currency in terms of one other. In a national context it is more of a macro issue,
since it refers to yen exchange rate at which all Australian goods are traded
internationally. (This is certainly a less clear-cut division that in (a) and (b) above.)
(d) Micro. It refers to specific products.
2. Answers to questions in Economics by Sloman and Norris
(e) Macro. It refers to the general growth in output of the economy as a whole.
(f) Micro (macro in certain contexts). It is micro because it refers to specific
industries. It could, however, also help to explain the macroeconomic phenomena
of high unemployment or balance of payments problems.
7 (Box 1.1) 1. Has Australia generally fared better or worse than the other three
countries?
Unemployment was around the same as in the UK but higher than in Japan and the
USA. Australia’s relative inflation performance improved significantly in the 1990s.
Notice the improvement in Australia’s relative growth performance. Since 1990 the
growth rate has been higher than in the other three countries. Australia has the largest
current account deficit.
7 (Box 1.1) 2. Was there a common pattern in the macroeconomic performance of each
of the four countries over these seventeen years?
Yes. Unemployment was higher in the early to mid-1980s and the early to mid-1990s.
Inflation was higher in the first half of the period.
9 (Box 1.2) What might prevent you from making the best decision?
Lack of knowledge. You will not know just how much benefit you will gain from the
textbook until you have read it, taken your exams or had your assignments marked!
Another cause of making poor decisions is the lack of care taken in making them.
9 (Box 1.2) If there are several other things you could have done, is the opportunity cost
the sum of all of them?
No. It is the sacrifice of the next best alternative.
9 (Box 1.2) 1. Why is the cost of food not included?
Because you would buy food anyway. If, however, food were being provided free of
charge by your parents if you lived at home, but you had to pay for it if you went to
university, then food would be an opportunity cost to you.
9 (Box 1.3) 2. Make a list of the benefits of higher education.
The benefits to the individual include: increased future earnings; the direct benefits of
being more educated; the pleasure of the social contacts at university.
9 (Box 1.2) 3. Is the opportunity cost to the individual of attending higher education
different from the opportunity costs to society as a whole?
Yes. The opportunity cost to society as a whole would include the costs of providing
tuition (staffing costs, materials, capital costs, etc). On the other hand, the benefits to
society would include benefits beyond those received by the individual. For example,
they would include the extra profits employers would make by employing the individual
with those qualifications.
10 Assume that you are looking for a job and are offered two. One is more unpleasant to
do, but pays more. How would you make a rational choice between the two jobs?
You should weigh up whether the extra pay (benefit) from the better paid job is worth
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the extra hardship (cost) involved in doing it.
10 How would the principle of weighing up marginal costs and benefits apply to a worker
deciding how much overtime to work in a given week?
The worker would consider whether the extra pay (the marginal benefit) is worth the
extra effort and loss of leisure (the marginal cost).
11 (Box 1.3) 1. There is a saying in economics, ‘There is no such thing as a free lunch’
(hence the sub-title for this box). What does this mean?
That there is always (or virtually always) an opportunity cost of anything we consume.
Even if we do not incur the cost ourselves (the ‘lunch’ is free to us), someone will incur
the cost (e.g. the institution providing the lunch).
11 (Box 1.3) 2. Are any other (desirable) goods or services truly abundant?
Very few! Possibly various social interactions between people, but even here, the time
to enjoy them is not abundant.
13 1. What is the opportunity cost of the seventh million units of clothing?
3 million units of food. (Food production falls from 3 million units to zero.)
13 2. If the country moves upward along the curve and produces more food, does this also
involve increasing opportunity costs?
Yes. Ever increasing amounts of clothing have to be sacrificed for each extra unit of
food produced.
13 3. Under what circumstances would the production possibility curve be (a) a straight
line; (b) bowed in toward the origin? Are these circumstances ever likely?
(a) When there are constant opportunity costs. This will occur when resources are
equally suited to producing either good. This might possibly occur in our highly
simplified world of just two goods. In the real world it is unlikely.
(b) When there are decreasing opportunity costs. This will occur when increased
specialisation in one good allows the country to become more efficient in its
production. It gains ‘economies of scale’ sufficient to offset having to use less
suitable resources. We shall look at economies of scale in Chapter 5, sections 5.2
and 5.4. Economies of scale are common in the real world.
14 (Box 1.4) Should all polluting activities be banned? Could pollution ever be justified?
Explain your answer.
Most economists would argue that many polluting activities ought to be allowed to
continue. It might be wise to ban certain very seriously polluting activities, or those
where the effects of pollution are not known. In other cases, however, economists
argue that governments should attempt to weigh up whether the full marginal benefit to
society from the polluting activity (i.e. the extra production of desirable goods and
services) is greater or less than the full marginal cost to society, where that marginal
cost includes the environmental damage done by the pollution. Of course, this will
require measuring the pollution damage: something that is not always easy to do.
Economists generally argue that if the marginal cost to society from production
(including the pollution damage) exceeds the marginal benefit, then production should
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4. Answers to questions in Economics by Sloman and Norris
be cut back; but if the marginal benefit exceeds the marginal cost, production should be
increased.
15 Will economic growth necessarily involve a parallel outward shift of the production
possibility curve?
No. Technical progress, the discovery of raw materials, improved education and
training, etc., may favour one good rather than the other. In such cases the gap between
the old and new curves would be widest where they meet the axis of the good whose
potential output had grown more.
17 Do you agree with the positions that the eight countries have been given in the spectrum
diagram? Explain why or why not.
Given that there is no clearly defined scale by which government intervention is
measured, the precise position of the countries along the spectrum is open to question.
18 Can you think of any examples where prices and wages do not adjust very rapidly to a
shortage or surplus? For what reasons might they not do so?
• Many prices set by companies are adjusted relatively infrequently: it would be
administratively too costly to change them every time there was a change in
demand. For example a mail order company, where all the items in its catalogue
have a printed price, would find it costly to adjust prices very frequently, since that
would involve printing a new catalogue, or at least a new price list.
• Many wages are set annually by a process of collective bargaining. They are not
adjusted in the interim.
20 1. Why do the prices of fresh vegetables fall when they are in season? Could an
individual farmer prevent the price falling?
Because supply is at a high level. The increased supply creates a surplus which pushes
down the price. Individual farmers could not prevent the price falling. If they continued
to charge the higher price, consumers would simply buy from those farmers charging
the lower price.
20 2. If you were the owner of a clothes shop, how would you set about deciding what
prices to charge for each garment at the end of season sale?
You would try to reduce the price of each item as little as was necessary to get rid of
the remaining stock. The problem for shop owners is that they do not have enough
information about consumer demand to make precise calculations here. Many shops try
a fairly cautious approach first, and then, if that is not enough to sell all the stock, they
make further ‘end of sale’ reductions later.
20 3. The number of owners of compact disc players has grown rapidly and hence the
demand for compact discs has also grown rapidly. Yet the prices of discs have fallen.
Why?
• The costs of manufacture have fallen with improvements in technology and mass-
production economies.
• Competition from increased numbers of manufacturers has increased supply and
driven prices down.
• Budget-priced CDs of original analogue recordings cost less to produce (there are
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no new studio costs).
22 Summarise this last paragraph using symbols like those in Figure 1.7.
Factor Market
Si surplus Pi Si until Di = Si
(Si > Di) Di
Goods Market
Pi Sg surplus Pi Sg until Dg =
Sg
(Sg > Dd) Dg
22 Are different factor markets similarly interdependent? Give examples.
Yes. A rise in the price of one factor (e.g. oil) will encourage producers to switch to
alternatives (e.g. coal). This will create a shortage of coal and drive up its price. This
will encourage increased production of coal.
26 (Box 1.7) There is the probability that all but the largest countries will lose some control
over their own economies. Globalisation will also probably lead to a greater inequality
of incomes within developed countries as unskilled workers compete with workers in low
income countries.
There is the probability that all but the largest countries will lose some control over
their own economies. Globalisation will also probably lead to a greater inequality of
incomes within developed countries as unskilled workers compete with workers in low
income countries.
28 Which of the following are positive statements, which are normative statements and
which could be either depending on the context?
(a) Cutting the higher rates of income tax will redistribute incomes from the poor to
the rich.
(b) It is wrong that inflation should be reduced if this means that there will be higher
unemployment.
(c) It is wrong to state that putting up interest rates will reduce inflation.
(d) The government should raise interest rates in order to prevent the exchange rate
falling.
(e) Current government policies should reduce unemployment.
(a) Positive. This is merely a statement about what would happen.
(b) Normative. The statement is making the value judgement that reducing inflation is a
less desirable goal than the avoidance of higher unemployment.
(c) Positive. Here the word ‘wrong’ means ‘incorrect’ not ‘morally wrong’. The
statement is making a claim that can be tested by looking at the facts. Do higher
interest rates reduce inflation, or don’t they?
(d) Both. The positive element is the claim that higher interest rates prevent the
exchange rate falling. This can be tested by an appeal to the facts. The normative
element is the value judgement that the government ought to prevent the exchange
rate falling.
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6. Answers to questions in Economics by Sloman and Norris
(e) Either. It depends what is meant. If the statement means that current government
policies are likely to reduce unemployment, the statement is positive. If, however, it
means that the government ought to direct its policies towards reducing
unemployment, the statement is normative.
29 What else is the diagram telling us?
• That below a certain level of income the person spends nothing at all on
entertainment.
• That even if the person’s income dropped to zero, some food would still be
purchased (presumably by borrowing or begging the money).
• That as income rises the proportion spent on food falls.
• That as income rises the proportion spent on entertainment rises.
• That although as income rises, a smaller amount is spent out of each pound on
food, the rate at which this amount falls gradually gets less (the curve changes
slope less rapidly).
• That although as income rises, a larger amount is spent out of each pound on
entertainment, the rate at which this amount rises gradually gets less (the curve
changes slope less rapidly).
30 The table in Box 1.1 shows time-series data for four different variables for four different
countries. Would there have been any advantage in giving the figures for each separate
year? Would there have been any disadvantage?
Advantages: more detailed information; peaks and troughs can be more precisely
identified - in terms of both timing and magnitude; might identify trends within the three
year periods.
Disadvantages: more information to take in; may make long-term trends harder to
identify; may give undue weight to short-term aberrations.
31 Would it be possible to show three different lines on the same diagram?
You could simply use three different vertical scales - one for each line. You could
actually show the units of two (or even all three) up the left-hand (vertical) axis. If you
glance forward to page 621 of the text, you will see an example of this.
33 Could bar charts or pie charts be used for representing time-series data?
Bar charts are frequently used for this purpose. Pie charts are not so suitable for this
purpose, unless we want to see how something has been divided up over a period of
time. For example, we may want to represent how a person’s annual income is spent
over the course of the year and divide the pie into twelve segments, each one
representing the proportion of annual income spent in that month. The twelve segments
could be represented in chronological order going clockwise round the pie.
33 1. If the vertical scale for Figure A1.2 ran from 0 to 2 million, how would this alter your
impression of the degree to which unemployment had changed?
Unemployment would seem to have been more stable over the period. The rise between
1990/91 and 1992/93 would seem to be smaller, as would the fall in unemployment
from 1993/94 to 1999/2000. (Of course, there would be no real difference at all.)
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33 2. What are the advantages and disadvantages of presenting data graphically with the
axes starting from zero?
You can get a clearer impression of the percentage rate of change of a variable. On the
other hand, if the values of the variable in question start from a high level (e.g.
unemployment fluctuating between 0.5 and 1.0 million), then to have the axis running
from, say, 0.4 to 1.0 million, will show up the fluctuations more dramatically. It is like
putting a magnifying glass on the information.
35 1. If a bank paid its depositors 5% interest and inflation was 3%, what would be the real
rate of interest?
-2%. The real value of your deposits would be falling by 2% per year.
35 2. Has your real income gone up or down this last year?
Look at the percentage increase in your nominal income, and then deduct the rate of
inflation. (Note that not all goods and services go up in price at the same rate, and thus
the ‘headline’ rate of inflation, based on the retail price index (see page 34 of the text),
may not fairly reflect the increases in costs you personally have faced.)
35 Does this mean that the value of manufacturing output in 1998/1999 was 2.6% higher
than in 1997/1998?
No. If prices have risen (as they invariably do), the value of output in money terms will
rise more than the volume of output.
36 What was the growth rate in manufacturing output from (a) 1990/1991 to 1991/1992;
(b) 1995/1996 to 1996/1997?
Using the formula (It – It-1)/ It-1 × 100 gives
(a) (87.4 – 90.1)/90.1 × 100 = minus 3.0%
(b) (99.6 – 97.3)/97.3 × 100 = – 2.4%
36 If the CPI went up from 150 to 162 over 12 months, what would be the rate of inflation?
Using the formula (CPIt - CPIt-1)/CPIt-1 × 100, gives:
(162 – 150)/150 × 100 = 8%
38 On a diagram like Figure A1.8 draw the graphs for the following equations:
y = –3 + 4x
y = 15 – 3x
In the first case, the graph would cross the vertical (y) axis at -3. It would be upward
sloping and have a slope of 4: i.e. as you move up the line, for every one unit you move
along the horizontal axis you would move 4 units up the vertical.
In the second case, the graph would cross the vertical axis at 15. It would be downward
sloping and have a slope of -3: i.e. as you move down the line, for every one unit you
move along the horizontal axis you would move 3 units down the vertical.
Note that both graphs are a straight line. This is because there is no x squared term (or
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8. Answers to questions in Economics by Sloman and Norris
any other x term to a power greater than 1).
39 What shaped graph would you get from the equations:
y = –6 + 3x + 2x2
y = 10 – 4x + x2
(If you cannot work out the answer, construct a table like Table 1.9 and then plot the
figures on a graph.)
In the first case, the graph will be a curve crossing the vertical axis at –6. As the value
of x increases above 0 and the x2
term grows more and more rapidly, the curve will
slope upwards more and more steeply.
In the second case, the graph will be a curve crossing the vertical axis at 10. As the
value of x increases above 0, initially the curve will slope downwards because the –4x
term will be dominant; but then the curve will slope upwards again as the x2
term begins
to dominate.
40 Draw a hill-shaped curve. Explain how the slope of the curve changes as we move
along it from left to right.
As we move towards the top of the hill the curve has a positive slope which gets smaller
and smaller until at the summit the gradient is zero. Beyond the summit the gradient is
negative and, in absolute terms, gets larger as we descend.
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