- why are all goods and services scarce?

- Why are all goods and services scarce?a. Some goods have a greater opportunity cost than othersb. All people have unlimited wants, but limited resources to satisfy those wantsc. Some things are needs and others are wantsd. Some people want to have more goods than others

Explanation: scarcity is defined as unlimited wants given limited resources, no one can have an unlimited amount (time, rest, vacation, stuff, etc) of any given thing.

Economics Daily Ten #1

Explanation: scarcity is defined as

Economics Daily Ten #2• Study the graph below and use it to answer the following question.

•The probable impact of corporate downsizing is a movement frompoint X toA. point MB. point NC. point OD. point P

Explanation: The PPF model shows the production possibilities between two goods. It is a visual illustration of opportunity cost.

Economics Daily Ten #3• Study the model below and use it to answer the following question.

•The entry of women into the American labor force during World War II was oneimportant reason for

A. a shift from curve CD to point GB. a shift from curve EF to curve CDC. a movement from point Y to point ZD. a shift from curve CD to curve EF

Explanation: Increases in population increase the work force and potential output of goods and services, making it possible to produce at a greater level.

- An economy where the three economic questions are based on decisions made by consumers and businesses, with limited government intervention is an example of a _____________ economic system.

a. Marketb. Mixedc. Traditionald. Command

Explanation: (b) – mixed economies, such as the U.S., rely on supply and demand, with government playing the role of protector, overseer and regulator of the economy.


Explanation:

- An efficient economy is one that

Explanation: (c) – efficiency is using resources wisely to produce goods and services


Explanation:

a. Has very few people who do not work for a livingb. Makes less use of all its goods and servicesc. Uses the factors of production wisely and not wastefullyd. Makes the least costly use of it resources

- Fill in the blanks for each of the following:1. QB Peyton Manning’s high salary, vs. a cashier’s low salary,

represents economic _________.2. Moving from the personal computer to handheld devices

represents an economic _________.3. Today, Chevron will have gas is representative of economic

___________.4. GM receiving a government bailout represents economic

____________.5. Increasing the production of goods, services and jobs would

represent economic ________.

Word Bank: innovation, predictability, growth, security, equity.


equity

innovation

predictability

security

growth

Economics Daily Ten #41. Why does a free market economy need some government intervention?

a. so that the government has total control over factor resourcesb. to ensure the government has the freedom to tax as necessaryc. to make sure that the government can fulfill its needs for goods and servicesd. to provide for things that the marketplace does not address (i.e. market failures)

2. In what kind of economy does the government make all the decisions?a. socialistb. laissez fairec. centrally planned, or command economyd. free enterprise

Explanation: (d) – most modern economies are mixed, or have some government involvement to regulate, protect and oversee.

Explanation: (c) – command economies are controlled by a dictator, or small group of economic policy makers.

Explanation:

Explanation:

Economics Daily Ten #51. What is the function of an economic system?

a. to make sure all people have equal access to goodsb. to organize and distribute scarce resources c. to give all producers the same access to consumersd. to make sure people are paid for their labor

2. You are an entrepreneur with an innovative idea for a new business. In which kind of economy would you have the most opportunity to try to achieve success?a. market economyb. command economyc. traditional economyd. economy of scale

Explanation: (b) – an economic system is an organized way of providing goods and services to people in a society.

Explanation: (a) – a market economy would offer the greatest degree of economic freedom.

Explanation:

Explanation:


The flow of goods and services to consumers is illustrated byA. 4 to 2B. 8 to 6C. 2 to 5D. 6 to 1Explain: Outer circles represent the flow of money, inner circles represent the flow of inputs and outputs.

Economics Daily Ten #71. The upper line of monetary flow, marked “1”

shows thea. factor marketb. product marketc. supply and demandd. production possibilities frontier

2. The lower half, marked “2” represents the

a. factor marketb. product marketc. supply and demandd. production possibilities frontier

3. Which of the following is not flowing from

the household to the firm in the factor market?a. Landb. Laborc. Capitald. Goods

Economics Daily Ten #6Properly label each component of the circular flow model,

indicating the two markets, two entities and what is represented by each arrow.

Explanation: the product market is where goods and services are exchanged. The households bring money, Firms bring goods + services. The factor market is where land, labor and capital are exchanged. Households own the F.O.P and firms buy from the households.

Consumer SpendingBusiness Revenue

Income to Households Payments to Households

Consumer

Goods/Services Outputs

Land, Labor, CapitalInputs

Economics Daily Ten #8What is the purpose of competition?

a. to create centralized control in the marketplace of one businessb. to cause producers to attempt to put each other out of businessc. to cause buyers and sellers to be generous about spending their moneyd. to act as a motivating force behind the free market

Which describes the metaphor of the invisible hand?a. an economy where the 3 economic questions are answered by the governmentb. an economy where households and firms determine the marketc. an economy where tradition, ritual and custom determine the factors of productiond. a tangible force behind a modified free enterprise

Explanation: (d) – competition is at the heart of a capitalist economy; it motivates firms to improve their products and keep prices fair.

Explanation: (b) – Adam Smith’s Invisible Hand represents free market economic philosophy, with limited involvement by the government.

Economics Daily Ten #9Buyers and sellers willingly engage in a transaction that benefits both parties

because of which concept in economics?a. economic equityb. communismc. voluntary exchanged. property rights

One of the strongest incentives in the market economy is to make money, this is illustrated by the concept of a. property rightsb. profit motivec. voluntary exchanged. division of labor

Explanation: (c) – voluntary exchange is the free trade of goods and services and the gains made from trade.

Explanation: (b) – profit motive is the motivating factor behind every firm.

Economics Daily Ten # 10Exposure to second hand smoke would be an example of a

a. positive externalityb. negative externalityc. negative perspectived. positive incentive

The primary way to improve productivity isa. reduced work ethicb. negative incentivesc. improved technologyd. removal of subsidies from the private sector

Explanation: (b) – externalities are a cost or benefit incurred by a party who did not agree to the action causing the cost or benefit.

Explanation: (a) – technology plays a major role in a society’s productivity and growth.

Economics Daily Ten # 11Which of the following is a role of the government in a modified free enterprise?

a. ensure that businesses follow certain environmental protection rulesb. ensuring that business obtain market power and determine price fixingc. ensuring that the market is completely deregulated in order to allow competition to flourishd. To actively dismiss the public interest for the concerns of the firms

Explanation: (a) – government plays the role of informer, protector and regulator of the U.S. economy

The primary way to improve productivity isa. reduced work ethicb. negative incentivesc. improved technologyd. removal of subsidies from the private sector

Explanation: (c) – technology plays a major role in a society’s productivity and growth.

Economics Daily Ten # 12Someone who does not pay for a public good/service, but benefits from it is a

a. free-loaderb. free-riderc. free-persond. free-bird

Explanation: (b) – a free-rider is someone who consumes more than their fair share of a public resource.

A situation in which the market on its own does not distribute resources efficientlya. market externalityb. market productionc. market failured. market deficit

Explanation: (c) – market failures occur as a result of a breakdown in the allocation of scarce resources within a market style economy.

Economics Daily Ten #1Price

Quantity Demanded

1. Why is the demand curve downward sloping?a. Because of the positive relationship

between p and qd.b. Because of the inverse relationship

between price and qd.c. Because of the direct relationship

between price and qd.d. Because of negative relationship

between supply and demand.

Explanation: (b) The Law of demand causes a downward sloping curve

P Q P Q


1. Which of the following statements exhibit demand in economics?a. I love the new Infiniti G37.b. I want to travel to Europe next year, but I’m dead

broke.c. I want to build a deck, so I’m saving the money and

I’m going to buy it this summer.d. I really want to buy a new pair of UGGs, I have the

money, but they are too expensive for me to buy.

Explanation: (c) Demand is the desire, willingness and ability to consume a good or service.


Quantity Demanded

1. Which of the following is a true statement?a. P1 to P2 represents an increase in price

and decrease in qd.b. P1 to P2 represents a shift in the

demand curve.c. P1 to P2 represents a positive

relationship between price and qd.d. P1 to P2 represents a drop in price and

an increase in qd.

Explanation: (d) Price falls, quantity demanded increases

P1

P2

Q1 Q2


Which situation would cause the shift of the demand curve to shift from D1 to D2?

A – The economy is experiencing a recession and people’s overall income reduces.B – Prices drop for the item being analyzed on the graph.C – Population in the area analyzed by the graph increases by 80%.D – Prices increase for the item being analyzed on the graph.

Explain: List Determinants of Demand:

Price

Quantity Demanded

D1 D2

Explain: List Determinants of Demand: (c) Income, Tastes, Price of Related Products, Expectations, Number of Buyers

Economics Daily Ten #5Test Your Understanding1. In each of the following cases, state whether

(1) there is a movement along the demand curve for American automobiles, (2) the demand curve for American automobiles will shift to the right,(3) the demand curve for American automobiles will shift to the left

1. The price of gasoline rises ________________________2. The price of American automobiles rises ________________________3. The price of Japanese automobiles rises ________________________4. Buyers' incomes fall ________________________5. Buyers find that American automobiles are of higher quality __________________6. Mexican automobile buyers are now able to buy American automobiles _____________________7. Buyers expect that the price of American automobiles will drop next year _____________________8. The price of American automobiles drop ____________________

(3) – Shift to the left(1) – Movement along

(2) – Shift to the right(3) – Shift to the left

(2) – Shift to the right(2) – Shift to the right

(3) – Shift to the left(1) – Movement along

Explanation: Price change of item - causes change in QD, movement along curve Change in determinant - causes change in D, shift in curve

Economics Daily Ten # 6Ceteris Paribus means

a. all things changingb. all things remaining constantc. all things constantly changingd. all things remaining changed

Explanation: (b) – The demand curve remains fixed Ceteris Paribus (all other things constant).

A change in the price of an item being analyzed causes (2 answers apply)a. a shift in the demand curveb. a change in quantity demandedc. a change in supplyd. a change in demande. movement along the demand curve

Explanation: (b and e) – price (of an item in study) does not change “demand”.

Economics Daily Ten # 7Complete the following chart:

Explanation: Elasticity of demand reflects the change in qd when there is a change in price.

Calculate the following using the midpoint method.

Product Elastic or Inelastic Determinant

Gasoline (tomorrow’s prices)

Heinz baked beans

Infiniti G37

Insulin for a diabetic

Q2 – Q1__ ________ (Q2 + Q1)/2 = ____________ = ______ = ______ P2 – P1__ ________ (P2 + P1)/2

Inelastic Time Horizon

Elastic Availability of Substitutes

ElasticNecessity vs. Luxury/Relative ImportanceNecessity vs. Luxury/Relative Importance

Inelastic

300250 30 35

1.2.86

1.4

ElasticElastic or Inelastic ___________

Elastic or Inelastic ___________

Economics Daily Ten # 8Complete the following chart:

Calculate the following using the midpoint method.

Product Elastic or Inelastic Determinant

Gasoline (5 years from now)

Food

Marlboro Cigarettes

Table Salt

Q2 – Q1__ ________ (Q2 + Q1)/2 = ____________ = ______ = ______ P2 – P1__ ________ (P2 + P1)/2

Elastic Time Horizon

Inelastic Definition of the Market/Necessity vs. Luxury

Elastic Definition of the Market

Necessity vs. LuxuryInelastic

4080 57.5

.5

.67.75

Inelastic


Quantity Supplied1. Why is the supply curve upward sloping?

a. Because of the positive relationship between p and qd.

b. Because of the inverse relationship between price and qd.

c. Because of the direct relationship between price and qs.

d. Because of negative relationship between supply and demand.

Explanation: 1. (c) Law of supply causes an upward sloping curve. 2. (d) Determinants cause a shift; effects of rising costs, technology, subsidies, taxes, regulation, future expectation of price, number of sellers.

Price

Quantity Supplied

S1 S2

2. Which of the following could cause a shift in the supply curve?

a. The government places an excise tax on the suppliers of the product.

b. The price of the good goes up because demand for the good increases.

c. The number of sellers reduces.d. The government provides an incentive to

produce through increased subsidies.

P QS

P QS


1. What is the Pe and Qe respectively at the equilibrium point? a. 50, 6b. 6, 50c. 5, 60d. 60, 5Explanation: 1. (b) Equilibrium, QS = QD

2. At $3 there would be a _____ of _____ quantity. a. Shortage, 50b. Shortage, 60c. Surplus, 50d. Surplus, 60Explanation: 2. (b) Shortage below Eq, Surplus above Eq.

QS – QD20 – 80 = - 60

Economics Daily Ten #3• Suppose we are analyzing the market for summer clothing. Using a correctly labeled graph,

illustrate the impact the scenario following would have on demand or supply.• Winter starts and the weather turns sharply colder.

• Include on your graph:• Supply curve• Demand curve• Price Equilibrium (Pe)• Quantity Equilibrium (Qe)• Shift and effect on Pe and Qe

S

D

Economics Daily Ten #4• Suppose we are analyzing the current market for oil. As a result of unrest in Libya, the

world’s 2nd leading supplier of oil, there is a supply shock and a reduction of oil in the global market.

• Using a correctly labeled graph, illustrate the impact the scenario would have on demand or supply.

• Answer the following questions:1. Which curve will be affected?2. What will happen to the equilibrium price?3. What will happen to the equilibrium quantity?

S

D

SupplyRise, go upFall, go down


Suppose the government set a binding price ceiling at $2. 1. What would be the quantity demanded and the quantity supplied? ______________2. In this case the price ceiling is ______ the equilibrium point.3. There would be a shortage/surplus of ______

Explain: Price ceiling is a legal maximum price that can be charged for a good or service. Price ceilings can cause a shortage in the market and affect market equilibrium.

QD = 40 QS = 20below

Shortage - 20

Economics Daily Ten #61. Which of the following would most likely be fixed costs for a firm?

a. Salaried workers (someone that is paid a monthly amount based on an annual salary, ie. $50,000)

b. Lease on the building (paid monthly spread out over 10, 20, 30 years, etc.)c. Hourly workers (someone that is paid by the hour, i.e. $13.00 an hour)d. Electricity (cost to power a building, office, etc.)

Explanation: (a, b) fixed costs do not change based on production.

2. Which of the following would most likely be variable costs for a firm?a. Salaried workersb. Lease on the buildingc. Hourly workersd. Electricity

Explanation: (c, d) variable costs change based on production.


Of the following, which situation would cause the shift of the supply curve from S1 to S2?

a. The government reduces subsidies to wheat farmers.b. New fertilizers increase wheat crop yields.c. Firms exit the wheat industry.d. Drought reduces industry output by 25%.

Explanation: (b) Technology, prices reduced, quantity increased

Economics Daily Ten #11. Which of the following sets are arranged from most competitive to least competitive?

a. absolute competition, monopolistic competition, imperfect competitionb. perfect competition, oligopoly, monopolistic competition, monopolyc. perfect competition, monopolistic competition, oligopoly, monopolyd. oligopoly, perfect competition, monopolistic competition, monopolye. absolute competition, imperfect competition, monopolistic competition, monopoly

2. Which of the following would most likely serve as an example of a monopoly?a. a bakery in a large cityb. a bank in a large cityc. a local cable television companyd. a small group of corn farmerse. the auto industry

Explanation: (c) Perfect competition – many sellers, no distinction between productsMonopolistic competition – many sellers, similar but different productsOligopoly – few sellers dominate a market Monopoly – one seller dominates a market and controls price

Explanation: (c) Cable companies are authorized to monopolize a region by way of governmental regulation.

Economics Daily Ten #2 1. Price discrimination occurs when one company

a. offers the same price b. offers one price to one individual and another price to another individualc. offer a price set by a government price ceilingd. offers a price set by a government price floor

2. When a firm tries to distinguish its product on the basis of service level, location, physical characteristics and advertising, it is considered

a. Price discriminationb. Price competitionc. Nonprice competitiond. Market powere. Pure competition

Economics Daily Ten #3 Describe the following as monopolistic competition or oligopolies.a. Fast food companiesb. Video game systemsc. Ice cream companiesd. Cable sports channels

Which of the four forms of nonprice competition, pgs. 167-168, would reflect the following?

a. A new shape for a bottle of cokeb. In-home doctor visitsc. Ralph Lauren vs. Wal-mart brand clothingd. A fast food restaurant near I-95

Monopolistic competition

Oligopoly

Monopolistic competitionOligopoly

Physical CharacteristicsService Level

Advertising, Image, or StatusLocation

Economics Daily Ten #4 Characterize the following as sole proprietor, partnership or corporation.a. Google, inc. b. Cohen and Cohen Law Firmc. John Doe’s Island Landscaping

Which of the following is not an advantage of a sole proprietorship?a. Easy to start upb. Sole receiver of profitc. Full control of decision-makingd. Unlimited personal liabilitye. Relatively few regulations

Corporation

Partnership

Sole Proprietor

Explanation: (d) Sole proprietors are personally liable for debt and lawsuits from injury.

Economics Daily Ten #5Which of the following two are not advantages of a partnership?a. Easy to start upb. Shared decision making and specializationc. Larger pool of capitald. Potential for conflicte. Unlimited liabilityExplanation: (d/e) Partnerships have unlimited liability, there is a potential for conflict because of differing perspectives.

Which of the following two are not advantages of a corporation?a. Limited liability b. More potential for growthc. Double taxationd. Loss of controle. Long life Explanation: (c/d) Corporations must pay taxes on income and dividends; original owners must give up control to board of directors.

Economics Daily Ten #11. Classify the following components of GDPa. Dell opens a new factory in Seattle, WA. _______________________b. Congress approves the purchase of a new fleet of Boeing Jets. ______________________c. A family buys a new Honda Accord. __________________________d. China imports soybean from the U.S. _________________________

2. All of the following are accurate regarding the definition of GDP EXCEPTa. The market valueb. Of all final goods and servicesc. Produced by a country’s companies, domestically and abroadd. In a given period of time

Investment (I)Government (G)

Consumption (C)Net Exports (NX)

Explanation: (c) GDP measures only that which is produced domestically, within a country’s borders.

Economics Daily Ten #21. Complete the following in order to classify the stages of the business cycle

2. Two quarters of economic decline is known as a ______a. Troughb. Recessionc. Depressiond. Recovery

Peak

Contraction

Trough

Expa

nsio

nRecession

Reco

very

Economics Daily Ten #3Country 1998 GDP Population Per Capita GDP Population Rank Per Capita GDP

RankUSA $8,080,000,000,000 270,310,000China $4,250,000,000,000 1,240,000,000Japan $3,080,000,000,000 125,930,000Germany $1,740,000,000,000 82,080,000

France $1,340,000,000,000 58,800,000UK $1,240,000,000,000 58,970,000Brazil $1,040,000,000,000 169,800,000Mexico $694,300,000,000 98,550,000Russia $692,000,000,000 146,860,000Canada $658,000,000,000 30,680,000

Use the first table to fill in the information, including population.1. Describe how population might affect GDP.2. What does Per Capita GDP tell you about a country's economy and standard of living?4. Based on the table above, which country has the highest standard of living? The lowest?5. Why are the citizens of the countries with high Per Capita GDP more likely to have a better quality of life than other countries?

Economics Daily Ten #3Country 1998 GDP Population Per Capita GDP Population Rank Per Capita GDP

RankUSA $8,080,000,000,000 270,310,000China $4,250,000,000,000 1,240,000,000Japan $3,080,000,000,000 125,930,000Germany $1,740,000,000,000 82,080,000

France $1,340,000,000,000 58,800,000UK $1,240,000,000,000 58,970,000Brazil $1,040,000,000,000 169,800,000Mexico $694,300,000,000 98,550,000Russia $692,000,000,000 146,860,000Canada $658,000,000,000 30,680,000

Use the first table to fill in the information, including population.1. Describe how population might affect GDP.2. What does Per Capita GDP tell you about a country's economy and standard of living?3. Based on the table above, which country has the highest standard of living? The lowest?4. Why are the citizens of the countries with high Per Capita GDP more likely to have a better quality of life than other countries?

$29, 892

$3,427

$24,458

$21,199

$22,789

$21,028

$6,125

$7,045

$4,712

$21,447

1

2

3

4

5

6

7

8

9

10

1

2

3

4

5

6

7

8

9

10

The higher the per capita gdp, the higher the standard of living.

United States, China

Positive Externalities, people benefit from the “spillover” of social benefits created by the pursuit of self-interest.

In general, the larger the population, the larger the gdp.Larger population can reduce per capita gdp.

Economics Daily Ten #41. What would you conclude about an economy characterized by

increasing real gross domestic product (GDP), low unemployment?a. This economy is in a slowdown.b. The government needs to address the unemployment problem.c. This economy is in the expansion phase of a business cycle.d. This economy is in the trough phase of a business cycle.

2. The amount of goods and services each individual worker can generate on average in a given year is measured by a. Productivityb. Capital gains c. Capital deepeningd. Natural resources

Economics Daily Ten #11. The BEST example of structural unemployment in an economy is someonea. between jobs or entering the work force b. out of work due to a change in the business cyclec. out of work due to a seasonal downturn in businessd. whose job skills do not match the economy’s needs

2. What range of the unemployment rate would indicate that an economy is in the peak of its business cycle? a. 4-6%b. 7-8%c. 10-12%d. Unemployment is not an economic indicator

whose job skills do not match the economy’s needs

a. 4-6%

Economics Daily Ten #21. Determine the unemployment rate based on the following information:Unemployed: 8.5 millionLabor Force: 190 million

2. Determine the CPI for 2010 based on the following information:Market Basket 2010: $3907.561982-1984 Market basket: $1792.00

3. Determine the inflation rate from 2009 to 2010 based on the following information:

CPI 2010 = use answer from aboveCPI 2009 = 214.5

8.5/190 = .0447 X 100 = 4.5%

3907.56/1792 = 2.18056 x 100 = 218.1

218.1 – 214.5 = 3.63.6/214.5 = .0167 x 100 = 1.67%

Economics Daily Ten #11. List the function that each of the following serves:

1. Money can earn interest in the bank.2. Money can buy things.3. Money is a way to keep track of debts/investments.

2. List the following in order from most liquid to least: House, car, checking account, savings account.

Store of Value

Medium of Exchange

Unit of Account

Checking account, savings account, car, house


2. When the Federal Reserve buys government securities (bonds) on the open market, what effect does this action have on the nation’s money supply?Money Supplya. increases b. falls c. stays the samed. decreases

1. Which of the following is responsible for the control of the money supply?a. the United States Treasuryb. the Federal Reserve Systemc. the Federal Deposit Insurance Corporationd. the Comptroller of the Currency

the Federal Reserve System

increases


2. The policy of the Fed to increase the money supply during a downturn in the economy reflectsa. tight-money policy b. center-money policy c. easy-money policyd. hard-money policy

1. The Federal Reserve System conducts its business directly witha. the government and banksb. stock marketsc. individuals and firmsd. product markets and factor markets

easy-money policy

a. the government and banks

A $3000 deposit is made in the bank and the RRR is 9%.1. How much must be held as required reserves?

2. How much will be available in excess reserves?

3. How much could the initial deposit increase the money supply?


3000 x .09 = $270

3000 – 270 = $2730

MM = 1/.09 = 11.11 3000 x 11.1 = $33,333.33

1. The BEST example of a progressive tax in the United States isa. the federal excise tax on gasolineb. the Social Security taxc. the federal personal income taxd. state sales taxes


2. Which of the following taxes is MOST regressive?a. the federal income taxb. a sales tax on foodc. a luxury taxd. the corporate income tax

1. If the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would bea. decreasing taxesb. decreasing government spendingc. reducing the investment tax creditd. balancing the budget


2. Which of the following results when federal government expenditures are less than the federal government’s total revenue?a. a trade surplusb. a federal budget deficitc. a negative balance of paymentsd. a federal budget surplus

Economics Daily Ten #3• Use an aggregate demand and aggregate supply diagram to illustrate and explain how

each of the following will affect the equilibrium price level and real GDP:1. Consumers spending declines as a result of a recession2. Government spending increases3. Foreigners prefer Chinese products over U.S. products

PriceLevel

Quantity ofOutput

Equilibriumprice level

Aggregate supply (AS)

Aggregate demand (AD)

Equilibriumoutput

Economics Daily Ten #1China and the United States are considering trade of two products, Cars

and Cheese. The U.S. can produce 15 cars, while in China they can produce 4. In the U.S. they can produce 5 tons of cheese, while in China can only produce 2.

1. Who has absolute advantage in this situation?2. ________ has a comparative advantage when producing cars3. ________ has a comparative advantage when producing cheese.4. Therefore, ___________ should produce cars and __________ should produce

cheese.

ProductivityCars Cheese

US = _____ cheese = ______ carsChina = _____ cheese = ______ cars

1/3 3

1/2 2

5/15 15/54/22/4

15 524

US China

US China

Explain: Absolute advantage exists when one country can produce better than another (lower financial cost). Comparative advantage is determined by lower opportunity cost.

US

Economics Daily Ten #2Japan and the Canada are considering trade of two products, CDs and

Beef. Japan can produce 4 cds, while in Canada they can also produce 4. In Japan they can produce 2 pounds of beef, while in Canada they can produce 6.

1. Who has absolute advantage in producing Cds? _________________2. ________ has a comparative advantage when producing cds3. ________ has a comparative advantage when producing beef.4. Therefore, ___________ should produce cds and __________ should produce

beef.

ProductivityCDS Pounds of Beef

Japan = _____ beef

= ______ cds

Canada = _____ beef

= ______ cds

2/4 4/24/66/4

4 264

Japan Canada

Japan Canada

Neither

1/2 or .5 2

3/2 or 1.5 2/3

Economics Daily Ten #3Countries X and Y will NOT trade shoes and wheat if which of the following is true?a. Country X can produce more shoes and wheat than can country Y.b. Country Y can produce enough shoes and wheat to satisfy the demand of its public.c. The opportunity costs of producing shoes and wheat are the same in both countries.d. The opportunity cost of producing shoes is greater in country X than it is in country Y.

Study the information below and use it to answer the question that follows.• Foreign Exchange Rates (Tuesday, July 3, 2001)• Keisha traveled to Canada and took $100 in U.S. currency. When Keisha exchanged the

$100 for an equivalent sum in Canadian dollars, she received about

• 33 Canadian dollars• 66 Canadian dollars• 100 Canadian dollars• 150 Canadian dollars

Economics Daily Ten #4Using simple interest, a 1 year bond with a principal of 2000 at a rate of 5% interest will earn a. $100b. $200c. $300d. $400

Using compounding interest, if the interest rate is 7.5 percent, then what is the future value of $1500 in 6 years?a. $1900b. $2315c. $3225d. $4052



Simple Interest = PxRxT $2000x.05x1 = $100.00



Simple Interest = PxRxT $2000x.05x1 = $100.00

FV = PV (1 + r)^n $1500(1+.075)^6 = $2314.95

- why are all goods and services scarce?

Documents

production of goods

ef explanation

government bailout

command explanation

services economics

representative of economic

economic questions

economic system