Homework CHpater 2 - Valerie V. Bodden K. (10-0014)...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Valerie V. Bodden K. (10-0014) Macroeconomics Homework 2 Chapter 2 January 26, 2011 1.1) What do economists mean by scarcity? Can you think of anything that is not scarce according to the economic definition? The situation in which unlimited wants exceed the limited resources available to fulfill those wants. Something that could not be considered as scarce according to the economic definition would be solar enery. 1.3) What does increasing marginal opportunity costs mean? What are the implications of this idea for the shape of the production possibilities frontier? Marginal Opportunity Cost is the highest-valued alternative that is given up to engage another activity. This implies that when a company or, even a country itself, wishes to produce more of a product, it needs to sacrifice producing less of a product in order to produce more of the desired product. 1.5) Relate to Page 36. One of the trade-offs BMW faces between safety and gas milage. For example, adding steel to a car makes it safer but also heavier, which results in a lower gas mileage. Draw a hypothetical production possibilities frontier that BMW engineer face that shows this trade-off.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1.7) a) b) c) 1.9) a)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/09/2011 for the course ECONOMICS --- taught by Professor --- during the Spring '11 term at Universidad Iberoamericana.

Page1 / 5

Homework CHpater 2 - Valerie V. Bodden K. (10-0014)...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online