Homework Help needed

timer Asked: May 28th, 2015

Question description


Economics deals with economic choices (decisions) individuals, firms and nations make. Why do economic agents need to make choices in the decision making process? What are the factors that force us to make choices among the viable alternatives at our disposal during a given period of time?


The economy works via the interactions of economic agents (interactions of economic choices). Think of a recent purchasing decision in which you compared the marginal benefits associated with buying a product with the marginal costs. How do you make a rational decision by comparing marginal benefits and marginal costs?


The economy works via the interactions of economic agents or interactions of economic choices in markets. Economists claim that pursuing self-interest leads to trade based on specialization, which in turn leads to mutual gains from trade. What is the role of self-interest in free market operations? Why engagement in self-interest may lead to better economic welfare for the society at large?


  • According to the Principles of Economics, economic principles guide how we make economic choices and how we interact in the market. What role do economic principles play in your personal economic decisions (choices)? Do you encounter scarcity either personally or in your workplace? What are the kinds of scarcity you encounter?
  • To make rational economic decisions, we need to compare costs and benefits. Suppose you are trying to decide whether to take a vacation. The majority of the costs of the vacation are measured in monetary terms (dollars), but the benefits of the vacation are generally non-monetary in nature. How do you compare the non-monetary benefits with the monetary costs? What are the economic (opportunity) costs of going on vacation? Explain in terms of economic costs, which include both monetary and non-monetary costs.



The theory of comparative advantage states that there are gains from trade if countries specialize and optimize their opportunity costs. What is the difference between absolute advantage and comparative advantage? Why do the gains from trade depend on comparative advantage regions and countries have at a given period of time?


What is circular flow diagram? What are the major markets and economic decision makers the circular flow diagram indicates? What is the importance of the diagram in various markets of the economy or economic interactions (transactions)?


Production possibility frontier indicates the maximum amount of two goods that can be produced, given scarce resources and prevalent technology. How does the production possibility frontier model help us understand the feasible and efficient amounts that can be produced?


  • Absolute and comparative advantages differ in both meaning and importance. An individual or a country may have absolute advantages in producing several products and services whereas others may have comparative advantages. Give an example in which one person has absolute advantages in doing two things but another person has a comparative advantage in doing one of the tasks. Will both individuals benefit if they specialize in a task based on their comparative advantage and engage in trade? Why?
  • The circular flow diagram shows us how economic agents interact in various markets once the economic decisions (choices) are made. As an economic agent, in which market do you participate in the circular flow diagram? How does the flow diagram help you understand the roles of the economic agents in the market?



Why supply and demand is considered as factors that make market economies work? Why supply and demand drives the market economy? Provide an example of the role of supply and demand in business decision making.


What is the difference between a movement along and a shift of the demand and supply curves? What are the factors that lead to shifts in supply and demand curves?


Governments may intervene in the market to control prices. What are the inefficiencies the price controls measures such as price ceilings and price floors create? Why do price ceilings and price floors lead to productive and allocative inefficiency?


  • Economists argue that successful business depends on creating sustainable and effective supply and demand networks. If you own (manage) a business, how do you create effective demand and effective supply to maximize profit?
  • There are pros and cons of relying on various policy instruments. Assume there is a proposal to raise tax revenue in order to make workers better off. The proposal includes raising the payroll tax paid by firms to use part of the extra revenue to reduce the payroll tax paid by workers. What are its pros and cons? Explain.



What are the major components of the U.S. GDP? Explain the contribution of each component to the GDP with data.


What is the relationship between the GDP and the business cycle? How do the business managers use the information about the positive trend in the real GDP growth rates to increase profits?


GDP only measures the value of marketed goods and services for a country during a given period of time. What are the limitations of the GDP in measuring total output and national welfare? What products (goods and services) are excluded from the GDP computation?

Tutor Answer

(Top Tutor) Studypool Tutor
School: Duke University
Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors