Question

Answer the following questions in your own wors. A typical short answer should be between 100-150 words.

1. Define a time when you had to evaluate the opportunity costs of a choice and how they influenced your decision.

2. Describe an example of a price floor or a price ceiling and explain how it might create economic inefficiency.

3.

Explain how supply or demand can be affected when the following occur:

• Oranges - after a tornado.
• Automobiles - after a major recall.
• Spinach - after the FDA announces that spinach can prevent cancer.
• Flu Vaccines - after technology was discovered to mass produce flu vaccines.

4. A country has an absolute advantage in the production of two goods (coffee and cars) but also benefits from trade in these goods from other countries. Explain why.

5. What does the GDP indicate about an economy? Can a GDP be manipulated and thus provide inaccurate information about a country's economic production?

Answer 1

1. When i was in college i had two options. First option was if i complete graduation in 3 years i will get a job which will give $20000 per month. If i quit study now i can look after our family buisiness which will give profit $50000 per month after 3 years.

So the opportunity cost of study is $50000 and the opportunity cost of buisiness is $20000. As the opportunity cost of doing buisiness is lower so my dicission was to quit study and continue our buisiness.