Discussion 1

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Economics

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Feb 20, 2024

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1.What is the difference between shortage and scarcity? How can we eliminate both? Scarcity means that the demand for a good or service is greater than the availability of the good or service. Shortage is where the quantity of a product or service demanded is greater than the quantity supplied at the market price. One way we can eliminate both is by increasing supply of the good/ service. 2. Why does scarcity affect both the poor and the rich alike? Explain. Scarcity affects both rich and poor. This is because inflation increases due to the demand for a specific good or service. This means both poor or rich have to devote a larger share of their resources to satisfy their wants. The difference between poor and rich is that the rich have more resources to spend because they have a larger income than the poor 3 List at least six examples of scarcity and explain each. Six examples of scarcity are water, labor, health care, land, energy, and housing scarcity. Water scarcity is when there is high demand for freshwater in an area where there might be global warming or changing water that leads to a shortage for both humans and animals. Labor scarcity is when there aren't enough people to fill in crucial jobs. Such as bus drivers which have been declining more and more every year. Health care scarcity is where there are limits of procedures, beds and even doctors at specific institutions and knowledge, which causes waiting lists or certain help for patients. Land scarcity is where there is a shortage of fertile land to grow food which can cause a decline in farming and food production. Energy scarcity is when there are low resources such as fossil fuels that can cause energy to be limited. Housing scarcity means there is a limited amount of housing in certain areas where there is a higher population than housing, such as New York. 4) You are in a clothing store and like a pair of pants and a T-shirt. You only have enough money for one item of clothing. You decide to buy the pants. What is the opportunity cost? The opportunity cost of buying the pants would be the shirt because you’re giving up buying it and getting the pants instead. 5) You decide to play baseball this spring instead of working at a part time job in a

computer store. List several of the opportunity costs of choosing to play baseball. instead of working. The opportunity cost for choosing to play baseball instead of working part time in a computer store would be the following reasons: having an income, job experience, better computer skills and networking/connections. 6) You have tickets to Dubai Opera on Sunday, and you have an invitation to a friend's party. You cannot go to both. You choose to go to the party. What is the opportunity cost? What is the risk in your decision? The opportunity cost of going to your friend’s party instead of the Dubai Opera would be the loss of the ticket money (if you brought them) and missing out on an opera experience in Dubai 7. Here is the production possibilities table for cars and machines B.label the points where the economy would be efficient (A), underutilized or inefficient (B) and unattainable (C). C. What is the opportunity cost of moving from point A to point В? The opportunity cost of moving from point A to point B would be the loss of 3 machines in order to make 2 cars. Work: 30-27=3

D.What is the opportunity cost of moving from point B to point С? The opportunity cost is the loss of 6 machines to make 2 more cars produced than point B which would bring the total amount of cars produced to 4. Work:27-21=6 E. What is the opportunity cost of moving from point D to point E? To make 2 more cars (total of 8) the opportunity cost is 12 machines. Work:12-0=12 F. What factors can cause a PPC to shift? A PPC will and can shift left,right,inwards, or outwards if there is a change in the numbers of production. For example, if production such as capital increases the graph will then shift outwards to show the increase in production. 8.) You have ten workers who are all equally skilled and who can do each other worker's job with the same efficiency. The first worker does a task worth $100, the second, $90, and so on until the last whose task is worth $10. Worker number one comes to you, demands a raise, and threatens to quit if the raise is not forth coming. How much at most should you be willing to pay worker number one? Personally if I were to give a raise to the worker #1 the most I would give a raise would be $10 dollars. This is because I would have to raise the rest of the workers' pay in order for the difference between each worker to stay the same. 9.) An owner of a small firm needs to hire some managers.Assume that each manager has time to do only one task. Task A is worth $100,000 to the owner, Task B is worth $75,000, and Task C is worth $50,000. The owner hires only two managers, having one to do Tas A and the other Task B. What is the opportunity cost of Task B? Both task A and task B are being completed. However, since task C is not being complete the opportunity cost for task B is $50,000. 10.) Consider the market for underground bunkers, Zombie movies have caused a spike in demand. Jennifer's construction company has built 50 bunkers so far this year at a total cost to the company of $8 million. If the company builds a 51st bunker, its total cost will increase to $8.18 million. What is the marginal cost of the 51s bunker? The marginal cost of the 51st bunker is $180,000. Work: $8.18 mil - $8 mil = $180,000

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11.) An international company is producing $50 widgets at a cost of $50,000 and is selling them for $60,000. If it produces a 51st unit, its total sales will be $62,000 and its total cost will be $51,500. Should the company produce the 51st unit? In this scenario the margin revenue is greater than the margin cost. Therefore, the company should produce the 51st unit. Work: (marginal cost) $51,500-$50,000= $1,500 (marginal revenue) $62,000-$60,000= $2,000 12.) How will the following events affect the production possibility frontier of an economy? Event A: A large fraction of the work force becomes Unemplyed. A. The PPF will shift inwards because of the large increase/rise of unemployment. Event B: The productivity of all work force doubles. B: The PPF will shift outward because the labor force has doubled in productivity. Event C:The government requires dairy farmers to destroy part of their herds C. The PPF will shift inward because the farmers need to destroy part of their herds that produce goods which will decrease the resources. 13.) Does incentives matter? Explain Incentives are very important and do matter. Incentives make employees more motivated and encourage them to work. The company then gains more efficiency and productivity in their business/company. 14.) What are three reasons to study economics? The three main reasons to learn how to solve world problems such as global warming as well as understanding these problems. The second reason is to know governmental aspects such as voting and what laws in general ae involved in the country and with economics. The last reason is because you become a better thinker when you study economics.

14). Provide two examples of macroeconomics studies and two for microeconomics. Two examples of what macroeconomics is are inflation and unemployment. As for microeconomics, two examples are the demand and supply of goods. 15.) What is normative and positive economics? Can you provide an example of each? Positive economics is based on cause and effect, while normative economics focuses more on opinion/judgment. An example of positive economics is a higher minimum wage will reduce employment opportunities for minimum wage workers. An example of normative economics is “everyone should enjoy open access to health care at no explicit charge.” 16.) Brazil can produce 16 units of corn or 8 units of wheat with a unit of resource. Mexico can produce 12 units of corn or 4 units of wheat. a. Which country has the absolute advantage in producing each good? Brazil has the absolute advantage of producing each good. This is because they produce more products than Mexico with the same resources. b. What is the relative price of wheat in each country? Of corn? Mexico has a relative price of .33 for wheat while Brazil have a relative price of .5 for wheat. The relative price for corn is 17.) What are the three main goals of macroeconomics? There are many goals of macroeconomics however there are three main ones. Stable prices of products/resources/services, full employment/employment rate, and economic growth as a whole economy. 18.)What are the three ways that societies can organize themselves economically? The three ways that society can organize itself are by market economy, command economy, and a mixed economy. 19.) Robles has spent $500 purchasing and repairing an old guitar, which he expects to sell for $800 once the repairs are complete. He discovers that, in addition to the $500 he has already spent, he needs to make an additional repair, which will cost another $400, to make the guitar worth $800 to potential buyers. He can sell the guitar as it is now for $300. Given there are two options here, what should he do? Robles should fix the guitar because if he sells the guitar for $300 he will have a net loss of $200. If he sells the guitar for $800 he will only have lost $100.

20.) What are diminishing marginal returns? Diminishing marginal returns is the decrease in marginal outputs of a production process as the amount of a single factor.

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