Microeconomics Samuelson

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Microeconomics Samuelson and Nordhaus Chapter 1,2,3,4,5
Some Questions for Discussion

Chapter 1

1.Question 1 .- Explain how the cool head might provide the essential positive economic analysis to implement the normative value judgments of the warm heart. Do you agree with Marshall’s view of the role of the teacher? Do you accept his challenge? In order to achieve the ultimate goal of economic science which is to “improve the living conditions of people in their everyday lives” (*) a cool head attitude has the knowledge and wisdom acquired through a lifetime relation to the economic momentum. Balancing this with a warm heart compassion vision, and a willingness to improve society, is the most appropriate way to use certain economic models in order to acquire economic sustainability with social improvement. We agree with Marshall’s view which was conceived through a social corporate responsibility. We, as leaders, accept his challenge through developing projects which should be not only profitable but also socially accepted and with respect to the environment. Also, we should use our cool heads to objectively take challenges and make difficult decisions that will lead us to a prosperous society with a sustainable economic growth.

(*) Economics – Samuelson Nordhaus 18th edition, pg.6

2.Question 7 .- Some scientists believe that we are rapidly depleting our natural resources. Assume that there have only two inputs (labor and natural resources) producing two goods (concerts and gasoline) with no improvements in society’s technology over time. A.Show what would happen to the PPF over time as natural resources are exhausted.

B.How would invention and technological improvement modify your answer? On the basis of this example, explain why it is said that “economic growth is a race between depletion and invention.”

It is said that economic growth is a race between depletion and invention because the continuous use of the natural resources of a country will tend to deplete them, over a long period of time but in the contrary, the invention of new technologies can extend a country PPF – making a race between them, since both things usually happens at the same time. Chapter 2

1.Question 1 .- What determines the composition of national output? In some cases, we say that there is “consumer sovereignty” meaning that consumers decide how to spend their income on the basis of taste and market prices. In other cases, decisions are made by political choices of legislatures. Consider the following examples: transportation, education, police, energy efficiency of appliances, health-care coverage, television advertising. For each, describe whether the allocation is by consumer sovereignty or by political decision. Would you change the method of allocation for any of these goods? National Output includes the total amount of goods and services that a country is capable to produce in a certain period of time. It is also known as the country´s GDP = C+I+G+(X-M). A country has the responsibility to decide what outputs to produce and in what quantity, how to produce them and for whom should they be produced. In a market society, the national output is influenced by consumer tastes and the resources and technology available in the country. On the other hand, governments may intervene to compensate for market failures that usually occurs inside a country, or to fund social programs. Here there are some examples that show mixed economies between consumer sovereignty and government interventions.

Transportation
Generally speaking transportation means are controlled by the private sector through companies that provide transportation services such as airlines, company taxis, trains, etc. Inside a country, there also exists public transportation for those people who can not afford the private one. In Peru, specially for the ground transportation, the government plays a...
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