Scribd Logo
Upload

Welcome to Scribd!

  • 77 views

    Assignment-Ii Hnin Yee Hpwe Emdev.S 16 - Roll 14

    Uploaded by

    hnin scarlet
    Economics utilizes the scientific method of theory and observation to study how households, firms, and markets interact. While economists make simplifying assumptions, economic models do not need to perfectly describe reality. The production possibilities frontier shows the tradeoffs between what an economy can produce. It takes a bowed-out shape due to increasing opportunity costs. Political parties may prefer different points on the frontier based on their priorities like a strong military or more consumer goods.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Assignment-Ii Hnin Yee Hpwe Emdev.S 16 - Roll 14

    Uploaded by

    hnin scarlet
    77 views3 pages
    Economics utilizes the scientific method of theory and observation to study how households, firms, and markets interact. While economists make simplifying assumptions, economic models do not need to perfectly describe reality. The production possibilities frontier shows the tradeoffs between what an economy can produce. It takes a bowed-out shape due to increasing opportunity costs. Political parties may prefer different points on the frontier based on their priorities like a strong military or more consumer goods.

    Original Description:

    Macroeconomic

    Original Title

    Chapter-2

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Economics utilizes the scientific method of theory and observation to study how households, firms, and markets interact. While economists make simplifying assumptions, economic models do not need to perfectly describe reality. The production possibilities frontier shows the tradeoffs between what an economy can produce. It takes a bowed-out shape due to increasing opportunity costs. Political parties may prefer different points on the frontier based on their priorities like a strong military or more consumer goods.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    77 views3 pages

    Assignment-Ii Hnin Yee Hpwe Emdev.S 16 - Roll 14

    Uploaded by

    hnin scarlet
    Economics utilizes the scientific method of theory and observation to study how households, firms, and markets interact. While economists make simplifying assumptions, economic models do not need to perfectly describe reality. The production possibilities frontier shows the tradeoffs between what an economy can produce. It takes a bowed-out shape due to increasing opportunity costs. Political parties may prefer different points on the frontier based on their priorities like a strong military or more consumer goods.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 3

    Assignment-II

    Hnin Yee Hpwe


    EMDev.s 16 – Roll 14

    1. How is economics a science?


    Economics is a science in part because it utilizes the scientific method: theory and observation, an iterative
    process. Due to economics being a social science, it is often harder than traditional science to collect and analyze
    data.

    2. Why do economists make assumptions?


    Economist make assumptions because it can simplify the complex the world and make it easier to understand.

    3. Should an economic model describe reality exactly?


    No.
    Model just support to understand how human body work.

    4. Name a way that your family interacts in the factor market and a way that it interacts in the product market.
    Factor market – Spend monthly salary for Rent
    Product market – Spend food, clothes and kitchen wears

    5. Name one economic interaction that isn’t covered by the simplified circular-flow diagram.
    This simple diagram does not cover the roles of government and international trade. This is due in part to being
    a diagram aimed at basic understanding of how the economy is organized and how the pieces fit together.

    6. Draw and explain a production possibilities frontier for an economy that produces milk and cookies. What
    happens to the frontier if disease kills half of the economy’s cows?
    Types of Cookie
    Milk (liter) Calculation Opportunity Cost
    production (pcs)
    A 0 200
    B 50 150 (10-0)/(40-50) -1
    C 100 100 (12-10)/(30-40) -1
    D 150 50 (14-12)/(20-30) -1
    E 200 0 (16-14)/(0-20) -1

    PPC
    250
    200
    200
    150
    150
    100
    100
    50
    50

    0 0
    0 50 100 150 200 250

    If disease kills half of the economy's cows, dairy farmers will move to cookie business and gallons of milk
    decreases.

    7. Use a production possibilities frontier to describe the idea of “efficiency”


    An outcome is efficient if the economy is getting all it can from the scarce resources it has available. An efficient
    outcome would be a point lying directly on the production possibilities frontier.

    8. What are the two subfields into which economics is divided? Explain what each subfield studies.
    Economics is divided into microeconomics and macroeconomics.
    Microeconomics is the study of how households and firms make decisions and how they interact in markets.
    Macroeconomics is the study of economy wide phenomena, including inflation, unemployment, and economic
    growth.

    9. What is the difference between a positive and a normative statement? Give an example of each?
    Positive is reveal the condition as it is.
    Normative is analyze, suggest and give idea on a condition.

    10. Why do economists sometimes offer conflicting advice to policymakers?


    Economists often have differences in their scientific judgments and differences in their values. This leads to
    economists making different assumptions and having different normative views, which often leads to conflicting
    advice. Contrary to common perception, there is much more agreement among economists than is recognized,
    and often both economists can suggest different policies that both have positive outcomes.

    Multiple Choice
    1.D
    2.D
    3.B
    4.C
    5.B
    6.B

    Problems and Applications

    1. Imagine a society that produces military goods and consumer goods, which we’ll call “guns” and “butter”.
    a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain
    why it most likely has bowed-out shape.
    Production Possibility Curve
    Types of Production A B C D E
    Butter (Y) 0 10 12 14 16
    Gun (X) 50 40 30 20 0

    1816
    16 14 G
    Butter
    14 12
    12 10
    10
    8
    6 F
    4
    2
    0 0
    0 10 20 30 40 50 60

    Guns

    Types of Butter Guns Opportunity


    Calculation
    production (Y) (X) Cost
    A 0 50
    B 10 40 (10-0)/(40-50) -1
    C 12 30 (12-10)/(30-40) -0.2
    D 14 20 (14-12)/(20-30) -0.2
    E 16 0 (16-14)/(0-20) -0.1

    Opportunity Cost of E to D
    = Produced (Butter)÷Produced (Guns)
    = (14-16) ÷ (20-0)
    = -2 ÷ 20
    = - 0.1 Butter
     The opportunity cost of 20 Guns is -0.1 butter.
    The opportunity cost each Gun is 0.005 butter.

    The reason for the shape of the Production Possibilities Curve (PPC) is something called the law of increasing
    opportunity costs.  Basically, what this means is that as an economy devotes more of its resources to one
    kind of product, it becomes less efficient.  This is why the PPC is flatter at its end points and more curved in
    the middle.

    b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but insufficient.
    - A point that is impossible for the economy to achieve = G
    - A point that is feasible but insufficient = F

    c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the
    Does (who wants a smaller military). Show a point on your production possibilities frontier that the Hawks
    might choose and a point that the Doves might choose.
    - A point that the Hawks might choose = C or B
    - A point that the Doves might choose = D

    d. Imagine that an aggressive neighboring country reduces the size of its military. As result, both the Hawks
    and the Doves reduce their production of Guns by the same amount. Which party would get the bigger
    “peace dividend”, measured by the increase in butter production? Explain.

    5. Classify the following topics as relating to microeconomics or Macroeconomics.


    Sr Question Answer
    .
    a. A family’s decision about how much income to save Microeconomic
    b. The effect of government regulations on auto emission Microeconomic
    c. The impact of higher national saving on economic growth Macroeconomic
    d. A firm’s decision about how many workers to hire Microeconomic
    e. The relationship between the inflation rate and changes in the quantity of money Macroeconomic

    6. Classify each of the following statements as positive or normative. Explain.


    Sr Question Answer
    .
    a. Society faces a short-run trade-off between inflation and unemployment Positive
    b. A reduction in the rate of money growth will reduce the rate of inflation Positive
    c. The Federal Reserve should reduce the rate of money growth Normative
    d. Society ought to require welfare recipients to look for jobs. Normative
    e. Lower tax rates encourage more work and more saving. Positive

    You might also like