1. What is the biggest cost of going to college full time? a. The biggest cost of going to college is the income lost if working full time.
b. Now explain why.
The implication of scarcity means that everything we do carries a cost. The cost of doing more of one thing then, is the value that is sacrificed by doing less of something else. In this case the cost of going to school full time is the value of the income that will be lost if the person were to work full time.
2. Doing more with less means fewer jobs and therefore is good/bad?
c. Doing more with less has its good and bad aspects depending on how one sees it.
d. It will be argued to be good if it results from advances in technology that makes it possible to produce more with fewer hands, thus creating opportunities for other areas of the economy to expand and develop. Though doing more with less destroys some jobs, it doesn’t necessarily mean fewer employment opportunities. This is because when technology makes it possible to do a job with fewer workers and resources, those workers and resources displaced can be used to produce other desirable things that would otherwise not have done produced or developed.
3. “Market economies succeed because they let us make the best use of the information necessary for social cooperation. They do so by allowing that information to be communicated from those who have it to those best able to act on it with messages containing the information motivating people to respond appropriately and providing them the means to do so”. Explain the meaning of the 3 M’s and what the quote means.
e. Messages- The message relate to the information needed to ensure harmony in the market place. Information is necessary in the market economy because it communicates to producers what consumers are willing to pay and what is needed where.
f. Motivating – motivation for a higher return will determine the goods or service provided and this will be based on the accuracy of information available.
g. Means – When consumers are willing and able to pay higher prices then producers are also motivated to produce more so as to earn more profits. Increased profits enable the producers to stay in business and expand.
h. What it means
In the effort to understand and mitigate the implication of scarcity, market economies make the best use of information to ensure social cooperation. Information is thus transmitted from those who have it to those who are in the best position to utilize it and thus ensure the highest value. Price signals also motivate producers to act in the interest of the consumer with profits becoming the motivation for choosing what production decision to take. In the market economy there is interplay of factors of production between buyers and sellers. Key factors include the message or information available which enables producer to make decisions. The sensitivity and accuracy of the information will then direct production backed by the motivation for extra revenue.
4. “Private property is an essential element in the social cooperation of the market place”. Explain what this means and why.
Private property allows people to harmonize their interest through market prices. When property is owned privately, and private owners have the right to use their property as they see fit they can transfer rights to property on any mutually agreed-on terms. Market cooperation depends on private property, since market prices emerge only when exchange occurs, and most exchanges involve private property.
5. “Price controls help the poor”. Yes? Or No? Answer and explain why.
No, price controls does not help the poor, though it purports to help the poor. This is because price controls outlaws price communications making it less costly for producers to discriminate against the poor. Price controls causes...