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Exam 1: Part A: Limits, Alternatives, and Choices

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Question 31

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List the four resource categories and give a brief description of each.

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(a) Land: natural resources including la...

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Question 32

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How do you determine the slope of a nonlinear curve? Will the slope be the same along the curve? Explain.

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The slope of a curve at any point is det...

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Question 33

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Define what is meant by an inverse relationship between two variables and describe the line graph depicting such a relationship.

Look at the following production possibilities curve illustrating the possibilities in Sluggerville for producing bats and/or peanuts with the existing level of resources and technology.

The value of the vertical intercept is $100 and the slope is 0.8 in a linear equation for consumption (measured on the vertical axis) and disposable income (measured on the horizontal axis).If disposable income is $1000, what is consumption? State the linear equation and show how you found the answer.

The production possibilities curve suggests that a nation cannot live beyond its means or production potential.Explain why international trade would cause this statement to be modified.

There are two sets of x, y points on a straight line in a two-variable graph with y on the vertical axis and x on the horizontal axis.What would be the linear equation for the line if one set of points was (0, 12) and the other set was (12, 36)?

Define what is meant by a positive or direct relationship between two variables and describe the line graph depicting such a relationship.

Below are six statements.Identify whether each is a positive or normative statement.(a) The minimum wage should be increased so low-income workers can earn a living wage.(b) The unemployment rate is too high and should be reduced through government actions.(c) The rate of inflation was about 2 percent last year, an all time low for the past decade.(d) The government should take action to break up the monopoly power of Air Canada.(e) Interest rates should be lower in Canada so that people can afford to build a home.(f) The Federal government achieved a budget surplus for the first time in thirty years.

The distinguished economist Kenneth Boulding stated: "Theories without facts may be barren, but facts without theories are meaningless".Explain what he meant.

"Economists are scientists and therefore should not become involved in making value judgments which policy formulation necessarily entails".Do you agree?

Differentiate between the independent and dependent variables in an economic relationship.

Explain and evaluate: "If resources were infinitely abundant in relation to the demand for them, the economic problem would dissolve in a sea of affluence".

Show graphically the relationships that you would expect to find between (a) student IQs and grade point averages (GPAs); (b) the price of a product and the amount consumers will purchase; (c) the temperature and the number of people at the swimming pool.Which of these are direct relationships and which are inverse? What considerations might change the expected relationships?

What do economists mean when they say that economic resources or factors of production are scarce or limited in supply?

Show graphically on the below graph the expected relationship between investment spending and interest rates.Put investment expenditures on the horizontal axis and the rate of interest on the vertical axis; connect the points and label the curve "Investment demand".Describe this relationship between the rate of interest and investment expenditures.Describe the slope of the investment curve.

Describe the adjustments in the production possibilities curves in each of the following situations for the Canadian economy.(a) the economy moves from full employment into a deep recession (b) the economy makes great strides in eliminating discrimination (c) the end of the Cold War leads to cuts in military spending (d) the government significantly increases spending for health and education

What is meant by the "the individual's economic problem"?

What is the economic rationale for the law of increasing costs?

Evaluate.Since the production possibilities curve can shift outward over time, it is possible for an economy to get more of a product without incurring an opportunity cost.