hw ch 2 1-17 - TA Ergin Bayrak Econ 203 Section 26508D Fall...

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TA: Ergin Bayrak Econ 203 Section: 26508D Fall 2005 September 2, 2005 Homework Chapter 2; #1-17 1. a. “Wants aren’t unlimited. I can prove it. I get all the coffee I want to drink every morning at breakfast.” i. Drinking all the coffee you want in the morning will not satisfy your want for coffee in the future. You will probably still want coffee the next morning or perhaps later that day. b. “Wants change as we move from childhood to adulthood, but they do not diminish.” i. Wants tend to change and they tend to multiply. For instance, when we were younger, we probably wanted Barbie Dolls. Now, as adults, we want something that we can get use out of, such as clothes, movies, and so forth. 2. Economic resources are sometimes called factors of production and include four categories: land, capital, labor, and entrepreneurial ability. They are all the natural, human, and manufactured resources that go into production of goods and services. They are called factors of production because these four main category resources are combined to produce goods and services. If resources were unlimited and freely available, then economics, the study about the efficient use of scarce resources would not exist. Also, if our resources were unlimited, we would not have to make any choices and the rational behavior aspect of economics would not exist. There would be no reason to weigh costs and benefits because humans could essentially have everything they wanted. 3. Money is not an economic resource because it produces nothing; so-called money capital is simply means for purchasing real capital. Entrepreneurial ability is distinct from labor because of the many functions the entrepreneur performs: taking the initiative, making strategic business decisions, being an innovator, and being a risk taker. Labor is the mental and physical talents of an individual in producing goods and services. Laborers receive wages where entrepreneurs receive profits.
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