chapter 1 Econ Questions - Francisco Javier Vargas Chapter...

This preview shows page 1 - 3 out of 4 pages.

Francisco Javier Vargas Chapter 1 Questions Economics 101 T,TH 9:30-10:45 Profesor Lebedeva January 27, 2015 1. Scarcity is the condition in which our wants are greater than the limited resources available to satisfy those wants. Even though the United States is considered to be a rich country since Americans can choose from an abundance of goods and services. Scarcity can coexist with wealth and abundance. Even a country with vast resources faces scarcity since some "wants", are not able to be satisfied. A society that faces itself with scarcity can either be rich or poor. 2. Intangible good: Friendship; Tangible good: Computer; Bad: Flu 3. Smoking is good for some people but bad for others. Smoking is a good because it gives people satisfaction and bad for others since it causes dissatisfaction. 4. When Economist say that institutions matter they mean that economic and political institutions actually make a difference when it comes to poverty and wealth with countries. For example in the United States prices are determined by market forces, and in Cuba, prices for goods are determined by the government. 5. Resource "labor" refers to physical and mental talents that people contribute to the production process. Resource "entrepreneurship" refers to the talent that some people have for organizing and the ability to produce goods by developing new ways of getting the job done. The difference between these two is that the people who fall into the category of "labor" actually do the job, while the people who fall into the category of "entrepreneurship" tell the people in the category of "labor" what to do. 6. Scarcity has a number of effects, here are three: the need to make choices, the need for a rationing device, and competition. All of these effects can be found in a car dealership. The need to make choices can be found in a car dealership. For example, if a couple goes to the dealership to find a new car, they will eventually have to make a choice to either buy the new car or pay of their student loan debt. The need for a rationing device is a way of deciding who gets what of the available resources and goods. For example, 150 new cars are on the lot, and everyone wants a car. We decide who will get a new car by giving each car a dollar price. The people who pay the dollar price for a new car will end up with one. Competition exists because of
Vargas 2 scarcity. Competition the last effect of scarcity can be found in a car dealership in

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture