Trade-off an alternative we sacrifice when we make a decision
Ex. You want money to pay for gas but you also want to play
football. You choose to get a job rather than playing football.
- What is the trade-off?
- Why do you have to decide
Tutorial 4 Questions
Business people speak about price elasticity of demand without using the actual
term. Which one of the following statements reflects inelastic demand for a product?
A) "A price cut won't help me. It won't increase sales, and I'll j
Tutorial 5 questions
1. Water is necessary for life, and diamonds are only of minor importance. Yet, water is
generally inexpensive, whereas diamonds are expensive. Explain this paradox with a
demand and supply diagram.
2. Consider the market for chocolat
Tutorial 6 Questions (for the week of the first term test, Oct. 19-23)
Use the figure below to answer the following 3 questions (use your ruler for some
numbers on the graph). SS in the figure is the supply curve. Ignore LS.
1) Refer to Figure
Tutorial 8 Answers (with answers). See your tutor in their office if you want further explanation.
1) Suppose all prices double and income also doubles. Which statement is true?
A) The best affordable point remains the same.
B) The consumption of normal g
Tutorial 9 Questions (the cost side of this assignment will not be covered in lectures until Wednesday
but give it a shot by studying the text)
1) At that level of output where diminishing marginal returns first sets in,
A) marginal product will begin to
Tutorial 10 questions
I have kept this quite short in case they want to ask review questions of your TA in preparation for
term test 2 on Friday.
1) In a perfectly competitive industry, the market price is $10. An individual firm is producing the output
5 Sara’s income is $12 a week. The price of
popcorn is $3 a bag, and the price of cola is
$1.50 a can. The ﬁgure shows Sara’s preference
FIG U Fl
map for popcorn and cola. '3‘, 8
a. What quantities of popcorn and cola does €— 7
1.Importance and meaning of elasticity in economics.
In economics, elasticity refers the degree to which individuals
(consumers/producers) change their demand/amount supplied in response to
price or income changes. Knowing concepts of elasticity helps fir
2. Compare Monopoly and Perfect competition
A market can be structured differently depending on the characteristics of
competition within that market. At one extreme is perfect competition. This is a
system in which no individual can affect the price of a
Incentive System vs. Command System in Production
In most companies, specifically manufacturing, the management is required to make
choices when seeking to maximize companys profit. Will pushing workers to do their
job perfectly be more operative than giv
Tutorial 3 Questions
If there is an increase in the wages of farm workers who harvest coffee beans, the
equilibrium quantity of coffee will
A) remain the same.
C) rise or fall, depending on the relative shifts of the supply and demand curves.
Tutorial 2. The first 6 questions are multiple choice. Choose the best answer.
A production possibility frontier will be negatively sloped because
A) of feasibility and the resultant opportunity costs.
B) some resources are not fully utilized.
Sole proprietorship a business owned and managed by a single individual. According
to the IRS 75% of all businesses in the US are sole-proprietorships but these generate
only about 6% of US sales.
- Easy start-up (busines
Capitalism , Free Enterprise, or Market Economy
Capitalism: an economic system in which private citizens own and use
the factors of production in order to seek a profit
Free Enterprise/Market Economy: another term used to describe the
American economy. In
Costs of Production
Scarcity forces people to make decisions about how they will use
*Economic decision making requires people to consider all the costs
and benefits of a decision
What are trade-offs? What is an opportunity cost?
Supply: is the amount of goods or services available
The Law of Supply states the higher the price, the larger the quantity
produced (think like a producer now; at a higher price firms earn
additional revenue and more firms will have incentive to e
Production Possibilities Curve
Productivity: the degree to which resources are being used
efficiently to produce goods and services
Production Possibilities Curve: graph that shows alternative ways
to use an economys resources
Production Possibilities Fro
Demand: the desire to own something and the ability to pay for it
The Law of Demand states that as prices decrease people are willing to
buy more. As price increases people are willing to buy less
What is Economics?
Need: something people need that is necessary for survival (ex: air, food,
Want: an item we desire but that is not essential to survival
Economics: the study of how people seek to satisfy their needs and wants
by making choices
3 Economic Questions:
What goods and services should be produced?
How should these goods and services be produced?
For whom should these goods and services be produced?
Movement of Resources in the US
o Migrant workers move around to follow work.
Ex. Agricultural workers move throughout the countries to pick fruits
and vegetables as various crop come in season.
o Immigrants come to the US to find work. Ma
Trade: the exchange of goods, services, or raw materials for
money or for other goods, services, or raw materials
Why trade between nations?
Resources are distributed worldwide (Remember.individuals
and nations specialize!)
Absolute Advantage- the a
Tax A charge imposed by government on people or property to raise
money to meet public needs.
The power to tax is a concurrent power belonging to both the
states and the national government. The Power to tax is also an
expressed power of the Nationa
1. Many buyers and sellers in the market
2. sellers offer identical products
3. Buyers and sellers are well informed about products
4. sellers are able to enter and exit the market freely
Commodity: a product that is
From a social viewpoint explain advantages of advertising.
Many researchers and people in general question what are advantages of
advertising from a social viewpoint. As the world changes and technology,
consumer behavior, and cultural trends change, so a