Chapter One
List the three key economic questions.
The three key economic questions can be simply stated as what, how and why. The first question an individual, a company, or a government must ask is “what products do we produce?” When cosiderindering what product the entities list above pull their resources to produce, they must also realize if they put resources into one thing it takes away from another. For example, if a computer manufacturer uses its resources to produce more of one model of laptop; it does not have those resources to produce another model of laptop.
The second question an individual, a company, or a government must ask is “How do we produce the product?” The entities list above must consider all alternate ways of producing their product. For example, a computer manufacturer can devote one, two or three shifts to produce laptops. Furthermore, it can devote more or less employees to producing the laptops.
The third question an individual, a company, or a government must ask is “who consumes the product?” The entities above have to decide the distribution method of a product. Who gets the product? For example, does a computer manufacturer send more computers to urban, suburban, or rural areas? Moreover, does it sell solely online, retail outlets, or a hybrid of the two?
Chapter Two
Apply the principle of opportunity cost.
Opportunity cost is defined as “The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.” (Investopedia, 2014), or As Greg Mankiw, professor and chairman of the economics department at Harvard University, states it “To get one thing that we like, we usually have to give up another...
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...and thus all profitable stays with company who developed it. This greatly increases the profitability of new product so a company may recover research and development costs. (Sullivan, Sheffrin, & Perez, 2014). Additionally, the government uses accounting rules to give likely investor trustworthy financial information of a company’s financial history.
Works Cited
Investopedia (2014). Opportunity Cost Definition | Investopedia. Retrieved May 9, 2014, from http://www.investopedia.com/terms/o/opportunitycost.asp
O'Sullivan, A., Sheffrin, S. M., & Perez, S. J. (2014). Macroeconomics: Principles, applications, and tools (8th ed.). Boston, MA: Pearson.
Pragmatarianism (2012, November 9). Pragmatarianism: Opportunity Cost Passages, Quotes, Proverbs, Sayings. Retrieved May 10, 2014, from http://pragmatarianism.blogspot.com/2012/11/opportunity-cost-passages-quotes.html
Kumhof, M., Laxton, D., & Leigh, D. (2013). To starve or not to starve the beast? Journal of Macroeconomics, 39(Part A), 1-23. http://dx.doi.org/10.1016/j.jmacro.2013.10.005
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“Macroeconomic indicators include economy-wide phenomena such as unemployment rates, national income, rates of growth, gross domestic product, inflation, and price levels” (Page & Stevens, 2005).
ROBINSON, Joan (1965b). “The General Theory after Twenty-Five Years”. Collected Economic Papers, vol. III, pp. 100-2.
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More recently, entrepreneurship has also been added as one of these factors. Understanding these is essential to understanding the two production functions which this WIKI article focuses on. (2) Land Understanding what is meant by land is relatively simple. This comprises all of the natural resources that a particular producer has at their disposal. Most often this means immediate natural resources, like oil or the property on which the production facility is located.
3. Glahe, Fred R. Macroeconomics Theory and Practice. USA. Harcourt Brace Jovanovich Inc. 1992. Websites 1.
McEachern, W. A. (2012). Macroeconomics: A contemporary introduction (10th ed.). Mason, OH: South-Western Cengage Learning.
O'Sullivan, A., & Sheffrin, S. (2005). Economics. Upper Saddle River, New Jersey: Pearson Prentice Hall.
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The 4 market structures in relation to the benefits and costs to the consumer and producer