Essay - Economics Chapter 2 #1. the Opportunity Cost of 200,000 Bushels...

Economics

Chapter 2 #1.

The opportunity cost of 200,000 bushels of wheat in this redrawing is *****000 tanks for each 200,000 ***** of wheat. In this example, the law of increasing ***** cost does not apply to bushels of *****. The opportunity cost of each 200,000 ***** remains stable in ***** particular example.

*****. A technological innovation in lifesav*****g would have ***** following impact on Figure 7. The curve ***** be shifted outward. Essentially, society would produce the same amount, the number of lives saved ***** increase. The increased potential for livesaving would be the new curve. At the point this happens, point A would ***** inside the curve area. This means that goods production would be inefficient. Over time, it would be expected that fewer assets ***** be allocated to saving lives, since ***** would be needed to save ***** same ***** of lives. *****s a result, over ***** more goods ***** be produced as more *****sets are allocated towards goods production. This will bring ***** production and life-saving back into equilibrium.

*****. a) ***** ***** cost assumes the full $31,917 of explicit *****s. Room and board is included because without school, there would not be any room and board costs. The foregone income of $16,500 is also included. This *****s in a tot*****l opportunity cost ***** $48.417.

***** b) In this scenario, the room and board is ***** included in the ***** cost, as those expenses would be incurred regardless of university attendance. The tuition and fees are also not included in the cost, ***** those *****s will not ***** *****curred. *****refore, the opportunity cost is the books, transport and foregone income. Th***** results in a tot*****l opportunity cost of $19,390.

***** c) The ***** cost in this scenario is $32, 376. ***** explicit *****s ***** in full, with the exception of room and board, which would be paid regardless of ***** attendance. The foregone income, however, is only $8250. ***** student makes ***** full amount of summer *****, leaving $16,500 in *****come, but the half-time work allows for $***** to be made during the school year.

***** 3 #1. Th***** statement is false. The ***** erroneously draws a causal relationship from ***** correlation. The relationship typically is that a decre*****e in supply ***** result in an *****crease in price. ***** th***** case, *****ere is a rational explanation for the decrease in *****s at ***** same time as the decre*****e ***** supply. New housing starts are a lagging indicator. Housing prices will typically *****gin to fall before ***** ***** starts. Therefore, the two can ***** at the same time, ***** the relationship is not as implied in the true or ***** proposition.

3. a) A blight killing off the Brazilian crop would result in a decrease in global coffee supply. Dem***** ***** remain unchanged. Theref*****e, coffee would be subject to an increase in price.

A b) A change in the price of tea may or ***** ***** ***** ***** ***** coffee market. In some *****s, they ***** substitutes