Chapter 1. Welcome to Economics!
QUESTIONS AND PROBLEMS
QUESTIONS
- What are three reasons to study economics?
- Suppose you have a team of two workers: one is a baker and one is a chef. Explain why the kitchen can produce more meals in a given period of time if each worker specializes in what they do best than if each worker tries to do everything from appetizer to dessert.
- Why would division of labor without trade not work?
- Can you think of any examples of free goods, that is, goods or services that are not scarce?
- What is the difference between microeconomics and macroeconomics?
- What are the three main goals of macroeconomics?
- How did John Maynard Keynes define economics?
- Are households primarily buyers or sellers in the goods and services market? In the labor market?
- Are firms primarily buyers or sellers in the goods and services market? In the labor market?
- What does a production possibilities frontier illustrate?
- Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?
- Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.
- What is comparative advantage?
- What is productive efficiency? Allocative efficiency?
- During the Second World War, Germany’s factories were decimated. It also suffered many human casualties, both soldiers and civilians. How did the war affect Germany’s production possibilities curve?
- What are the three ways that societies can organize themselves economically?
- What is globalization? How do you think it might have affected the economy over the past decade?
- Why do you think that most modern countries’ economies are a mix of command and market types?
- Can you think of ways that globalization has helped you economically? Can you think of ways that it has not?
