7. Indicate whether each of the following statements applies to microeconomics or macroeconomics: a. The unemployment rate in the U.S. was 9.0% in April 2011. Macroeconomics b. A U.S. software firm discharged 15 workers last month and transferred the work to India. Microeconomics c. A unexpected freeze in central Florida reduce the citrus crop and caused the price of oranges to rise. Microeconomics d. U.S. output, adjusted for inflation, grew by 2.9% in 2010. Macroeconomics e. Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point. Microeconomics f. The consumer price index rose by 1.6% in 2010. Macroeconomics
11. Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve. a. The quality of education increases. The curve will shift outward. Better education leads to higher productivity of labors, inventions and technological advantages. b. The number of unemployed workers increases. This should not affect the curve. Production moves inward, away from the curve. c. A new technique improves the efficiency of extracting copper from ore. The curve should shift outward as more production is possible with existing resources. d. A devastating earthquake destroys numerous production facilities. The curve should shift inward with the destruction of resources/capital.
1. Contrast how a market system and a command economy try to cope with economic scarcity. A market system allows for the private ownership of resources and coordinates economic activity through market prices. Participants act in their own self interest and seek to maximize satisfaction or profit through their own decisions regarding consumption or production. Goods and services are produced and resources are supplied by whoever is willing to do so. The result is competition and widely dispersed economic power. The command economy is...