Exam 1: A: - Limits, Alternatives, and Choices

Explain and evaluate: "If resources were infinitely abundant in relation to the demand for them, the economic problem would dissolve in a sea of affluence".

"The relative scarcity of resources makes the operation of any economy a matter of choosing between alternatives".Explain.

What do economists mean when they say that economic resources or factors of production are scarce or limited in supply?

Describe the Greek Debt Crisis, and explain its relation to the Economic Problem?

An economy consists of five workers, who can produce either fish or fruit.The following table shows the daily output of each worker. (a) Suppose one worker catches fish and four workers pick fruit.For the economy to achieve productive efficiency, which of the five workers must fish? (b) Does the economy achieve full employment and productive efficiency by producing 12 fish and 4 fruit?

Define what is meant by an inverse relationship between two variables and describe the line graph depicting such a relationship.

Explain the importance of the ceteris paribus or "other-things-equal" assumption.

What are the key economic concepts that pertain to the individual?

What is utility and what is its relevance to rational behaviour?

What is meant by "society's economic problem"?

Show graphically the relationships that you would expect to find between (a) student IQs and grade point averages (GPAs); (b) the price of a product and the amount consumers will purchase; (c) the temperature and the number of people at the swimming pool.Which of these are direct relationships and which are inverse? What considerations might change the expected relationships?

Explain the relationship between full employment of resources and full production.

What does it mean to say that theories, principles, and models are "purposeful simplifications"?

One application of the production possibilities concept has been to explain the difference in growth patterns of a nation with a high level of investment (Alta) and an equivalent nation with a low level of investment (Zorn).Use the concept to explain why Alta's economic growth would be greater than that of Zorn over time.

What are the three interrelated features of the economic perspective?

Why have the last few years been an exciting time to study macroeconomics?

The production possibilities curve suggests that a nation cannot live beyond its means or production potential.Explain why international trade would cause this statement to be modified.

Describe the adjustments in the production possibilities curves in each of the following situations for the Canadian economy.(a) the economy moves from full employment into a deep recession (b) the economy makes great strides in eliminating discrimination (c) the end of the Cold War leads to cuts in military spending (d) the government significantly increases spending for health and education

Below are six statements.Indicate whether each one pertains to microeconomics (MIC) or macroeconomics (MAC).(a) "The inflation rate in Canada hit its lowest level in the last twenty years".(b) "The profits of BCE rose 20 percent during the past quarter".(c) "A drought has occurred in the Prairies.The prices for barley are expected to rise sharply".(d) "The nation's economy grew at an annual rate of 3.7 percent in the final quarter of the year".(e) "The trade surplus in Canada was $4 billion last month".(f) "General Motors plans to spend $800 million on a new automobile plant".

Give one example of a positive economic statement and one example of a normative economic statement.