Econ problem set - Econ problem set #1 1a. Yes there is a...

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Econ problem set #1 1a. Yes there is a tradeoff between these two. There is only so much free time that you can spend either hanging out with friends or doing economic problems. The tradeoff is shown in the graph because it is downward sloping which means the products are substitutes. As you hang out with your friends more you lose time doing economic problems. 1b. The economics software will cause your production possibilities frontier to shift out. This is because it will create more time to do both things because you will spend less time on your economics work. If your favorite band came to town, you would be more likely to hang out with your friends than to do economics work. 1c. 2a. the circuit of production under capitalism is different than the circuit of production within a family. The circuit of production under capitalism starts with a capitalist who uses money to hire workers. These workers then produce a product which the capitalist sells for more money than it cost to make( M-C-M1-C1). The capitalist looks to expand and increase the gap between the cost of C and the cost of C1 which creates profits. Families work to produce one item in exchange for another item. An example of this would be that a child cleans dishes so that his mom cooks him dinner. ( C-C1) 2b. Capitalist make profits by selling the item they produce for more money than it cost to produce it. They look to make sure that C1>C. Capitalist may face a problem in the first part of the circuit is when wages rise and workers become more expensive to hire. The second problem they could face is when workers don’t cooperate with the capitalist and the product does not get produced. A Problem capitalists face in the last stage of the circuit of production is that they have trouble selling their product and M>M1 2c. Capitalism is an expansive system because capitalists are constantly looking to increase
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This note was uploaded on 11/08/2011 for the course ECONOMICS 104 taught by Professor Crocker during the Spring '08 term at UMass (Amherst).

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Econ problem set - Econ problem set #1 1a. Yes there is a...

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