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

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Question 21

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What variables are used to determine the individual's budget line?

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Income and the prices of the t...

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Question 22

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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.

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(a) Improvements in the basic education ...

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Question 23

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

"Bad theories are abstract and therefore unrealistic; good theories are fully realistic and fit all the facts".Evaluate.

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

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".

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?

What four basic functions does the entrepreneur perform for the economy?

Why do economists use graphs in their work?

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

"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.

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

Explain how increasing opportunity costs are reflected graphically in the production possibilities curve.How would the curve appear if opportunity costs were constant?

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 key economic concepts that pertain to the economy as a whole?

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

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

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

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

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