Chapter 1. Welcome to Economics!



  1. What are three reasons to study economics?
  2. 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.
  3. Why would division of labor without trade not work?
  4. Can you think of any examples of free goods, that is, goods or services that are not scarce?
  5. What is the difference between microeconomics and macroeconomics?
  6. What are the three main goals of macroeconomics?
  7. How did John Maynard Keynes define economics?
  8. Are households primarily buyers or sellers in the goods and services market? In the labor market?
  9. Are firms primarily buyers or sellers in the goods and services market? In the labor market?
  10. What does a production possibilities frontier illustrate?
  11. Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?
  12. Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.
  13. What is comparative advantage?
  14. What is productive efficiency? Allocative efficiency?
  15. 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?
  16. What are the three ways that societies can organize themselves economically?
  17. What is globalization? How do you think it might have affected the economy over the past decade?
  18. Why do you think that most modern countries’ economies are a mix of command and market types?
  19. Can you think of ways that globalization has helped you economically? Can you think of ways that it has not?


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UH Macroeconomics 2022 Copyright © by Terianne Brown and Cynthia Foreman is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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