ProblemSetOne - Problem Set#1 ECON 200 B Clower Due Friday...

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Problem Set #1 ECON 200 B Clower Due Friday April 9 th , 2010 Resource Utilization and the Science of Economics 1. List and explain fully the ten principles of economics. 2. What is scarcity and why is it important in economics? a) Give an example, related to economics, which demonstrates the concept of scarcity. b) Define opportunity cost and explain how it is related to scarcity. Is opportunity cost the same as monetary cost? Why or why not? 3. In a simplified economy, imagine that there is only one scarce input, labor, and only two outputs, bread and cheese. The following table show how many loaves of bread and how pounds of cheese can be produced daily with different quantities of labor. Workers Bread Workers Cheese 0 0 0 0 500 400 500 2,000 1,000 800 1,000 3,800 1,500 1,200 1,500 5,400 2,000 1,600 2,000 6,800 2,500 2,000 2,500 8,000 a) If there were only 2,500 workers available in the economy, derive a table showing the maximum amount of bread that can be produced for different levels of cheese production.
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