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

What is a brief definition of economics? What are the conditions that give rise to this definition?

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 26 fish and 20 fruit?

Explain how each event affects production possibilities.(a) The population becomes more educated over time as the number of high school dropouts falls and the number of college graduates rises.(b) The unemployment rate declines from 8 to 6 percent of the labour force.(c) Businesses and government are unable to solve a major computer problem, thus reducing economic efficiency and national output.(d) Advances in telecommunications and new technology significantly contribute to economic growth over time.(e) The Federal government decides to allocate more resources to national defence.

"The two cornerstones of economics are the scarcity of resources and the multiplicity of wants.True economy consists of deriving maximum want satisfaction from available resources".Explain.

"Economists are scientists and therefore should not become involved in making value judgments which policy formulation necessarily entails".Do you agree?

Identify whether each of the following is a positive or normative statement.(a) Should tuition fees increase, fewer students would obtain a post-secondary education.(b) The Prime Minister announced that Canada is the best place in the world to live.

In a two-dimensional graph showing the relationship between income and consumption in the economy, what is shown on the vertical axis and what is shown on the horizontal axis?

How do you determine the slope of a nonlinear curve? Will the slope be the same along the curve? Explain.

What changes must occur for the potential total output of the economy to grow?

What is meant by the "the individual's economic problem"?

Evaluate.Since the production possibilities curve can shift outward over time, it is possible for an economy to get more of a product without incurring an opportunity cost.

"Economic models are somewhat like different types of maps".Evaluate.

Use marginal analysis to explain why it is possible to "have too much of a good thing".Use education as an example.

A production possibilities table for two products, corn and paper, is found below.Usual assumptions regarding production possibilities are implied.Corn is measured in tons, and paper is measured per unit. (a) Using the following graph construct a production possibilities curve from this information placing corn on the vertical axis and paper on the horizontal axis. (b) What is the marginal opportunity cost of producing the first unit of paper? The marginal opportunity cost of producing the fourth unit of paper?

"Economics cannot be scientific because it is based upon the value judgment that 'more (output) is better'".Do you agree?

The production possibilities table below shows the hypothetical relationship between the production of food and clothing in an economy. (a) What is the marginal opportunity cost of producing the second unit of clothing? (b) What is the total opportunity cost of producing two units of clothing? (c) What is the marginal opportunity cost of producing the third unit of clothing? (d) What is the total opportunity cost of producing three units of clothing?

A production possibilities table for two products, grain and airplanes, is found below.Usual assumptions regarding production possibilities are implied.Grain is measured in tons and airplanes are measured in units of 1,000.(a) Using the below graph construct a production possibilities curve from this information placing grain on the vertical axis and airplanes on the horizontal axis. (b) What is the opportunity cost of producing the first unit of airplanes? The marginal opportunity cost of producing the fourth unit of airplanes?

How do income changes affect the position of the budget line?

Describe the slope of a direct and an inverse relationship.

What were the approximate average incomes of Canadians and Pakistanis in 2015?