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3. Classify each of the following statements as positive or normative. Explain.
a. Society faces a short-run trade-off between inflation and unemployment
b. A reduction in the rate of money growth will reduce the rate of inflation.
c. The Central Bank or Federal Reserve should reduce the rate of money growth.
d. Society ought to require welfare recipients to look for jobs. e. Lower tax rates encourage more work and more saving.
Classify the following topics as relating to microeconomics or macroeconomics.
a. a family’s decision about how much income to save
b. the effect of government regulations on auto emissions
c. the impact of higher national savings on economic growth
d. a firm’s decision about how many workers to hire
e. the relationship between the inflation rate and changes in the quantity of money
An economy consists of three workers: Larry, Moe, and Curly. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars; and Curly can either mow two lawns or wash one car.
a. Calculate how much of each service is produced under the following circumstances, which we label A, B, C, and D: • All three spend all their time mowing lawns. (A) • All three spend all their time washing cars. (B) • All three spend half their time on each activity. (C) • Larry spends half his time on each activity, while Moe only washes cars and Curly only mows lawns. (D)
b. Graph the production possibilities frontier for this economy. Using your answers to part a, identify points A, B, C, and D on your graph.
c. Explain why the production possibilities frontier has the shape it does.
d. Are any of the allocations calculated in part A inefficient? Explain.
- "As long as all resources are fully employed and every firm in the economy is producing its output using the best available technology, the result will be efficient." Do you agree or disagree with this statement? Explain your answer
Suppose the marginal utility and total utility of Peter's weekly consumption of bananas are both positive and that he subsequently consumes fewer bananas per week.What will happen to his marginal utility and total utility of apples?
State any two ways that firms operating under perfect competition can use to increase their profit since they cannot temper with price and quantity
After an alien invasion, Earth has to resort to the extreme protection of its resources in order to survive. A global government is elected with the mandate to control all the resources, which remain to humanity. The global government serves as a centrally directed economic system and has assumed complete responsibility for producing and distributing products and services. Which describes the main economic system used in this new world order?
If SAB were to introduce a rewards programme whereby employees who performed very well every month are given recognition and financial incentives, the company would be satisfying the __________________ needs of their employees.
The problem of "scarcity" applies
3. The production function of a firm is described by the following equation 𝑸=𝟏𝟎,𝟎𝟎𝟎𝑳−𝟑𝑳 𝟐 where L stands for the units of labor.
a) Draw a graph for this equation. Use the quantity produced in the y-axis, and the units of labor in the x-axis.
b) What is the maximum production level?
c) How many units of labor are needed at that point?
