Homework 1 - Jenny Kow September 4, 2010 ECO-2023-170...

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Unformatted text preview: Jenny Kow September 4, 2010 ECO-2023-170 Assignment #1 Textbook page 20 (1, 4, 8, 11, 15); page 43 & 44 (4, 5, 7, 10, 14); page 64 (2, 5, 7, 9, 12) Page 20 1. Opportunity cost is the sacrifice of one product to that of another product. It is forgoing the opportunity to get the next best thing. This relates to economics, which is the social science concerning how individuals, institutions, and society make decisions under the conditions of scarcity, in ways that if the world didnt have scarcity there wouldnt be opportunity cost. Also, by opportunity costs being the way we can observe economics; to see how one chooses ones decision. The opportunity cost is higher for allocating a square block in the heart of NYC for a surface parking lot than for allocating a square block at the edge of a typical suburb for such a lot. It is greater because to give up a square block in the heart of NYC is more of a sacrifice than giving up one in the suburbs. 4. The key elements of the scientific method are observing real-world behaviors and outcomes, based on the observation formulate a hypothesis, testing by comparing outcomes of certain events to the outcome predicted by the hypothesis, accepting or rejecting the hypothesis and modifying it based on the comparisons, and after continuous testing of the explanation it will then become a theory. This relates to economic principles and laws by the fact that using the scientific method to produce a theory that is well- tested and accepted will be referred to as an economic principle or law. 8. Economic resources are all natural, human, and manufactured resources that go into the productions of goods and services. These resources are classified into four general categories: land, labor, capital, and entrepreneurial ability. Economic resources are also called factors of productions because it is the combination of the four categories that produces goods and services. Also, inputs is a simply another name for factors of productions because input means the process of putting in, which in this case are putting in efforts to produce goods and services. 11. A graph that shows marginal benefit compared to marginal cost should look like an X on the grind. The x-coordinates are the measurement of quantity of the product. The y- coordinates are the cost and benefits. Marginal benefit should be decreasing at a constant rate, whereas marginal cost increases constantly. Because the marginal benefit is decreasing when the marginal cost is increasing, the lines will intersect. The optimal allocation of resources to a particular product is determined at that intersection. If current allocation of resources to a particular product is determined at that intersection....
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This note was uploaded on 11/13/2010 for the course ECON 2023 taught by Professor Badry during the Spring '10 term at Edison College.

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Homework 1 - Jenny Kow September 4, 2010 ECO-2023-170...

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