hw 2 - 1eExertisei Exercise Score: 1. oF 1. pt Assignment...

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Unformatted text preview: 1eExertisei Exercise Score: 1. oF 1. pt Assignment Score: 96.8% (1.9.36 of 20 pts] 20 of 20 complete A B C D cotton cotton eotton cotton I \. _- __ I; ___H_-_ - xx \ \ \\ '--...___-‘\ '-\\ III I | | | I U [I [I .3 soybeans g soybeans soybeans g soybeans a. Which of the above diagrams shows a shift in the production possibilities frontier reflecting the effect of a prolonged drought”? V Diagram A Diagram B Diagram C Diagram D b. TWhich of the above diagrams shows a shift in the production possibilities frontier reflecting the effect of a technological change in soybean production? Diagram A Diagram B V Diagram C Diagram D N a ‘\ w w ‘\ w w ‘\ w d@@@@@@@@@@mt 1mmn Exercise Score: l of 1. pt Assignment Score: 96.8% (1.9.36 of 20 pts) 20 of 20 complete [Related to the Chapter Opener] One of the trade—offs faced by BMW is between safety and gas mileage. For example, adding steel to a car makes it safer but also heavier, which results in lower gas mileage. Choose the correct production possibilities frontier facing BMW engineers that shows this trade-off consistent with increasing costs of added safety. 9"- ‘F- a; 9:. gas mileage gas mileage gas mileage gas mileage 0 safety [I safety 0 safety .3 safety leExercisel I3!) Exercise Score: 1. OF 1. pt Assignment Score: 96.8% (1.9.36 of 20 p15) ll) of ID complete Suppose we can divide all the goods produced by an econom}= into two times: consmnption goods and capital goods. Capital goods, such as machiner}; equipmeng and computers, are goods used to produce other goods. Is it likely; that the production possibililies frontier in this situation would he a sa'aight line or a cm-‘e concave to the origin? V The production possibilities frontier would he a concave line. The oroduction oossilJili'ties frontier would he a straight line. ‘leExercisel Exercise Score: 1 0F 1. pt Assignment Score: 96.8% (1.9.36 0F 20 pfj] 20 0F 2|} complete Hours Spent Stud}ng lfidterm Score ‘ Emmmlcs Grade 0" Choice Economics Chemistrjs= Economics Chemistrj.= A 5 i} 94 69 B 4- 1 91 is C 3 2 33 34 D 2 3 34 88 E l 4 i9 9'0 F i} 5 ?3 91 it. Use the 4—point drawing tool to plot a production possibilites curve showing the trade—off between your economics grade and chemisz grade. Use the control points of this curve to exactly,r plot choices :‘L C, I}!= and F. Label this curve 'PPC'. More: you are mi prompfedfor this failed, you have used the wrong drawing foal. E b. If you are at point C, what is the cost of increasing your chemise}: score by studying one hour less for economics”? 4 points. W F9 51 33 SE a? as 31 Chemistry'Grade , . . . {2‘1 leEKercise (J:- Exercise Score: 1. 0F 1 pt Assignment Score: 96.8% (19.36 0F 20 pts) 20 of 20 complete ll Suppose the president is attempting to decide whether the federal government should spend more on research to find a cure for heart disease and assume the federal government has a fixed budget for medical research. a. What is the cost of spending more money to find a cure for heart disease? The costs associated with medicare. '4’ The reduction in funding for research on other diseases. The cost of additional equipment. Equal to the benefit in saving another human's life. I}. How should policymakers decide how much of the medical budget should be allocated to research for curing heart disease? '4" They shoud decide based on whether the last dollar devoted to research on heart disease results in the same benefit of less disease and fewer deaths as the last dollar spent on research for other diseases. Ihey shoud decide based on the current diets of the population. They shou_d decide based on the expected future number of heart donors. Ihey shou_d decide based on the percentage of people who die from heart disease as compared to other A leExercis-sl‘ Exercise Score: 1. of 1. pt Assignment Score: 96.8% (1.9.36 0F 20 pts) 20‘ of 20 complete Congress has given the Enviromnental Protection Agency (EPA) the authority to write regulations to implement the provisions of the Clean Act a law aimed at reducing air pollution. According to the Clean Act the EPA is not to consider the cost of complying with the regulations. If the EPA ignores the cost of pollution reduction in establishing regulations what is the likely outcome? She efficient amount of money devoted to pollution reduction as they will aim to reduce pollution to zero. if "Too much money devoted to pollution reduction as the marginal cost of pollution reduction will exceed the benefits from cleaner air. Too little money devoted to poIhItion reduction as the marginal cost ofpoIlution reduction will exceed the benefits from cleaner air. Too little money devoted to pollution reduction as they will to make guidelmes that will please Congress. lEEK-BFClSEl (JD Exercise Score: 1. of 1 pt Assignment Score: 96.8% (1.9.36 0F 20 pts) 20 of 2|) complete Lawrence Summers was a professor of economics at Harvard and served as Secretary of the Treasury in the Clinton administration before becoming president of Harvard. He has been quoted as giving the following moral defense of the economic approach. "There is nothing morally mattracfive about saying: We need to analyze which way of spending money on health care will produce more benefit and which less. and using our money as efficiently as we can. I don't think there is anythfi1g immoral about seeking to achieve environmental benefits at the lowest possible costs” Source: David Wessel, “Precepts from Professor Summers,“ Wall. Smlounml, October 1?, 2002. Would it be more moral to reduce pollution without worrying about the cost or by taking the cost into account? It would be more moral to reduce pollution by not taking the cost into account. V It would be more moral to reduce pollution by taking the cost into account. 1eEK-3rcise11l. :33:- Exercise Score: 1. OF 1. pt Assignment Score: 96.8% (1.9.36 of 20 pts] 20 of 2|) complete wants were modest enough most goods would not be scarce. According to Baum this was the case in Oz: _- "There were no poor people in the Land of 0; because there was no such thing as money... Each person was given freely by his neighbors whatever he required for his use. which is as much as anyone may reasonably desire. Some tilled the lands and raised great crops of grain. which was divided equally among the whole population. so that all had enough. Ihere were many tailors and dressrnakers and shoernakers and the like. who made things that any who desired them might wear. Likewise there were jewelers who made omaments for the person. which pleased and beautified the people. and these ornaments also were free to those who asked for them. Each man and woman. no matter what he or she produced for the good of the was supplied by the neighbors with food and clothing and a house and furniture and ornaments and games. If by chance the supply ever ran short more was taken from the great storehouses of the Ruler. which were afterward filled up again when there was more of any article than people needed... You will know. by what [have told you here. that the Land of 02 was a remarkable country. I do not suppose such an arrangement would be practical with us. " Source: L. Frank Baum, fire Emmld afflz, pp. 30—31. First edition published in 1910. Do you agree with Baum that the economic system in Oz wouldn't work in the contemporary United States? No. Ihe present day United States is much like the 02 that was described here in 1910. No. People in both the United States and in Oz both trade based on costs. V‘ Yes. People are self-interested in the United States. whereas they are not in Oz. Yes. People in the United States trade depending on costs. whereas they do not in Oz. leEaercis-aEl Exercise Score: 1 OF 1 pt Assignment Score: 96.8% (1.9.36 0F 20 pts] ll} of 20 complete Using the same amount of resources the United States and Canada 0: 0: can both produce lumberjack shirts and lumberjack boots as shown m United States m Canada in the followrng production possibilities frontiers. a. Who has a 12 12 comparative advantage in producing lumberjack boots'? Who has a :2 9 fl a comparative advantage in producing lumberjack shirts'? 13. Does e 6 either comtrv have an absolute advantage in producing both goods? 3 3 k 1:. Suppose that both counties are cmrentlv producing three pairs of S n a .3. boots and three shirts. Show that both can be better offifthejv '3 1 2 3 ‘ 5 '5 U ‘l 2 3 i 5 5 Spaciah'ze in producing one good and than engage in Wadi Quantity of boots Quantity of boots V No. Ihe 15.8. has the absolute advantage in the production of shirts and Canada has the absolute advantage in the r I production of boots. ‘ e. Assume the trade exchange rate is 2 shirts for 1 boot. Complete the table below. — — nun 6 3 6 3 Consumption with trade lfiains frnm trade {increased nnnsnmntinn‘! 3 U l 3 l U a w w w w ‘\ ‘\ 'x x x leEaerciSEEE If‘ijiél Exercise Score: 0.86 0F 1. pt Assignment Score: 96.8% (1.9.36 0F 20 pts] 20 of 20 complete a. Who has the comparative advantage in producing wine? Who has a comparative advantage in producing schnitzel? if France has the comparative advantage in the production of wine and German}: in the production of schnitzel. Germanv has the comparative advantage in the production of both goods. France has the comparative advantage in the production of both goods. I France has the comparative advantage in the production of schnitzel and Germanv in the production of wine. 1}. Suppose that France is currentlv producing 1 bottle of wine and 12 pounds of schnitzel and German}: is currentlv producing 3 bottles ofwine and 10 pounds of schnr'tzel. Assume the trade exchange rate is 3 hordes ofwine for 13 pounds of schnitzel. Complete the table below to demonstrate that France and German}: can both be better off ifthev specialize in producing onlv one good and then engage in trade Ge rmanv Production and consumption without trade 1 roduction with trade Consumption with trade Gains from trade (increased consumption] GM@@@@@@@@@@D {J} Exercise Score: 1. of 1. pt 1-3 Exercise: Assignment Score: 96.8% (1.5.36 0F 20 pts] 20 0F 20 complete ll: In colonial Americe the population was spread over a large area and transportation costs were high because it was difficult to ship products by road for more than short distances. As a result most of the free population lived on small farms where they not only grew their own food but also usually made their own clothes and rarely bought or sold anything for money. Why were the incomes of these farmers likely to rise as transporation costs fell? V As the costs feIL farmers would gain access to new markets and customers. Using comparative advantage the farmers specialized and produced a specific good. As they traded for other good; their incomes and living standards increased. As the costs felL farmers would gain access to new markets and customers. Using absolute advantage the farmers produced more of a specific good. As they traded for other good; their incomes and living standards increased. As the costs fell. the incomes and living standards increased. Using absolute advantage me farmer that could produce the most with the resources available produced all the goods. He sold them and everyone ended up with increased living standards and the farmer's income increased. As the costs feIL the incomes and living standards increased. Using comparative advantage the farmers specialized in the production of goods in which they have a higher cost. Ihe farmers then traded the goods that they produced with each other. lEEKEFClSEEB {JD Exercise Score: 1. 0F 1. pt 20 of 20 complete l7 Assignment Score: 96.8% (1.9.36 oF 2D pts] L__ Consider the data to the right. Output per day of work Foo-d Country A o Cowley B l Which country has a comparative advantage”? Courmy B has a comparative advantage in the production of both goods. Courmy A has a comparative advantage in the production of both goods. Country B has a comparative advantage in the production of food. Country A has a comparative advantage in the production of food. lEEKEI'ClS-333 I3}:- Exercise Score: l. of 1. pt Assignment Score: 96.3% (1.9.36 of 20 pts) 20 of 20 complete in a commencement address to economics graduates at the University of Texas. Robert McTeer Ir.. who was then the president ofthe Federal Reserve Bank ofDallas argued "For my money. Adam Smith's invisible hand is the most important thing you've learned by studying economics." Source: Robert J}. licIeer Jr., "The Dismal Science? Hardly!" WELL Smiounml, June 4, 2003. What is so important about the idea of file invisible hand? The invisible hand stresses the idea that individuals usually act in an irrational self—interested way. The invisible hand provides consumers with what they want because enterpreneurs are only pursu' 1g their consumers' interests. The invisible hand only provides producers with what they want. '4’ The invisible hand is the basic mechanism driving the behavior of free markets. leEaerciseM IZJI. Exercise Score: 1 of 1. pt Assignment Score: 96.8% (1.9.36 of 20 pts) 20 of 2|) complete Evaluate the following argument. "Adam Smith's analysis is based on a fundamental flaw: He assumes that people are motivated by self—interest. But this isn't true. I'm not selfish and most people I lmow aren't selfish." What misconception or fallacy is this argument based on? The fallacy that the author is not selfish and that his-'her fiierids are not selfish as well. There is no misconception. This is an obvious flaw in his analysis. ‘I’ The misconception that self-interest and selfish are the same thing. The misconception that Adam Smith's analysis applies to every aspect of life. leEKerci3-33 {JD Exercise Score: 1. 0F 1. pt Assignment Score: 96.8% (1.9.36 0F 20 pts] 20 of 20 complete W'riu'ng in the New Yo rilc Times. Michael Lewis argued that "...a market economy is premised on a system of incentives designed to encourage an ignoble human trait: self-interest.” Source: Michael Lewis, "In Defense of the Boom." New Jbrii: Tim-2.7, Gctorer 23", 2002. What incentives does a market system provide to encourage self-interest? A market system encourages self-interest by firms responding to changes in price by making decisions that end up satisfying consumers. A market system encourages self-interest by leading firms to produce goods and services that will give the firm the highest profit. The wants of the consumers are not involved in the decision of what to produce. 9' A market system driven by self-interest leads firms to produce goods and services that fulfill the wants of consumers. A market system encourages self-interest by providing consumers with what they want due to Adam Smith's invisible hand argument that business people are pursuing consumers' interests leEzaercis-EEE I39":- Exercise Score: 1 oF 1. pt Assignment Score: 96.8% (1.9.36 oF 20 pts] 20 of 20 complete An editorial in Business Week magazine offered this opinion. "Economies should be judged on a simple measure: their ability to generate a rising standard of living for all members of society. including people at the bottom." Source: “Poverty: The Bigger Picture,“ Business Week, October 3', 2002. Do you agree or disagree with this statement? '1 I agree. This is a good basis to judge an economy. A rising standard of living is a good idea. especially for lower income individuals and depending on how standard of living is defined. I disagree. This is not a good basis to judge an economy. A society that is developing a rising standard of living for all of its members is irrelevant in a society where there is already a high standard of living. I disagree. This is not a good basis to judge an economy. A rising standard of living is not a good idea especially for lower income individuals and depending on how standard of living is defined. I agree. This is a good basis to judge an economy. A rising standard of living is a good idea. especially for those societies that already have a high standard of living. but have to give a lot to get it. 19Exercise3? Exercise Score: 0.5 of 1. pt Assignment Score: 96.8% (1.9.36 of 20 pts] 20 :1le complete An estimated 400 million to not} million people worldwide are squatters who live on land to which they have no legal title. usually on the outskirts of cities in less-developed countries. Economist Hernando de Soto persuaded Peru's government to undertake a program to make it cheap and easy for mese squatters to obtain a title to the land they had been occupying. Source: Alan B. Krueger, "A Study Looks at Squatters and Land Title in Peru," New lbrk Times, January 9, 2003. How would this creation of property rights be likely to affect the economic opportunilies available to these squatters? Property owners would be able to use their property as collateral for a loan‘. This would increase the opportunities for entrepreneurs to start a business and increase personal and the national wealth. lEEK-BI'ClS-Ba {J} Exercise Score: 1. oF 1. pt Assignment Score: 96.8% (1.9.36 of 20 pts] ll) of ID complete in The Wenir'h offlfiniions. Adam Smith wrote the following [Book L Chapter II). "It is not from the benevolence of the butcher. the brewer. or the baker. that we expect our dinner. but from their regard to their own interest." What argument was Adam Smith making here? He was making the "circular—flow" argument that in pursuing their self—interest entrepreneurs end up producing the goods and services most desired by their customers. He was making the "invisible hand" argument that in pursuing the interests of consumers. entrepreneurs end up producing the goods and services most desired by their customers. V He was making the "invisible hand" argument that in pursuing their self-interest. entrepreneurs end up producing the goods and services most desired by their customers. He was making the "circular—flow" argument that in pursuing the interests of the consumer. entrepreneurs end up producing the goods and services most desired by their customers. leE:=<erciseE Exercise Score: 1. of 1. pt Assignment Score: 96.8% (19.36 of 20 pts] 20‘ of 20 complete Writing in file New Yo ric Times, Michael Lewis argued mat "...a market economy is premised on a system of incentives designed to encourage an ignoble human trait: self—interest." Source: lfichael Lewis, "In Defense of the Boom." New Ibriu: Timer, Gciorer 2?", 2002. What incentives does a market system provide to encourage self-interest? A market system encourages self-interest by firms responding to changes in price by making decisions that end up satisfying consumers. A market system encourages self-interest by providing consumers with what they want due to Adam Smith's invisible hand argument that business people are pursuing consumers' interests A market system encourages self-interest by leading firms to produce goods and services that wiil give the firm the highest profit. The wants of the consumers are not invoh-‘ed in the decision of what to produce. U’ A market system driven by self—interest leads firms to produce goods and services that fulfill the wants of COHSUIIIEI'S. "’1 "l. "l. "l "’1 "l. "l. "l "l. "l. 1eExercise Exercise Score: 1 oF 1 pt Assignment Score: 96.3% (19.36 of 2D pts) 20 of 20 complete E In which markets are factors of production, such as labor, capital natural resources, and entreprenem'ial ability traded? V In factor markets In competitive markets In product markets In essential markets ...
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hw 2 - 1eExertisei Exercise Score: 1. oF 1. pt Assignment...

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