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Chapter One: What is Economics?
14. Describe three services that the
government provides to its citizens. Identify some of the opportunity
costs of providing each of those services.
15. Some economists consider
entrepreneurship to be a fourth factor of production in addition to
land, labor and capital. Other economists consider entrepreneurship to
be a special category of labor. Which group of economists do you agree
with and why? |
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Chapter Two: Economic Systems
13. Think of three ways your life would
change if the United States began using a pure free market system or a
pure centrally planned system instead of the free enterprise system.
15. Suppose that you are opening a new
music store in your town. What resources would you need fro the factor
market? What would you offer in the product market? How would the
government affect your business. |
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Chapter Three: American Free
Enterprise
15. How might the invention of a new,
powerful fuel source for cars and trucks affect the country’s production
possibilities frontier? How might the new fuel affect GDP?
16. Suppose that there is a three person
city. The three residents are considering having a fireworks display.
Gabriela is willing to contribute $100 toward the display, while Jerome
is willing to pay $80, and Katelyn is willing to pay $60. The fireworks
display costs $120. Will any one citizen alone be willing to pay for
the fireworks? What recommendation can you make to this city that will
benefit all three citizens? |
| Chapter Four: Demand
14. Do you agree or
disagree with the following statement? An increase in income will
shift the demand curve for a normal good to the left. Explain your
answer.
16. As a business
owner, you are always concerned about how much of your good or service
is demanded. If there is an increase in your production costs,
what options do you have to keep your product in demand? |
| Chapter Five: Supply
15. A local coffee shop has
the following expenses: $5,000 a month for rent; $3,000 a month
for a full-time manager; $4,000 a month for part-time workers; and
$2,000 a month for coffee beans, milk, and cups. In July, the
owner can expect to earn $7,000 in revenue. If she chooses to
close down the store, she will not have to pay for part-time workers or
supplies. Explain whether she should close the shop for the month
of July, and why or why not.
16. Compare the
two terms increasing marginal returns and diminishing marginal returns.
Describe two scenarios, one to explain and demonstrate each term.
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| Chapter Six: Prices
16. How do prices in
the free market lead to efficient resource allocation? Describe an
example from your experience.
17. Suppose that a
recent snowstorm has caused a supply shock in the market for sugar in
the United States. How would you attempt to solve the problems
that follow the storm? What actions are available to both
consumers and producers? |
| Chapter Seven: Market Structures
14.
What are the trade-0ffs between free enterprise
and government intervention associated with the United States antitrust
policies.
16. Assume that
you are the owner of the only music store in town because your town
limits the number of shops. The town wants to repeal that law and allow
more music stores to open. Describe what actions you could take as
a business owner once the law is repealed. |
| Chapter Eight: Business Organizations
21. How can
stockholders influence the actions of the corporation they own?
22. Recommend a
cooperative for your community. Describe the type of cooperative
it would be (consumer, service, or producer) and how your community
could benefit from it. |
| Chapter Nine: Labor
19. Describe the
reasons why companies are turning to contingent labor. How might
this trend affect the work force in the future?
20. Suppose you
are a business owner competing for employees in a tight labor market.
How might you attract employees without raising wages. |
| Chapter Ten: Money and Banking
17.
Some
economist have predicted a "cashless society" in which all banking will
be done electronically. Do you think this will be true in the
United States economy? Support your conclusion with specific
examples.
19. Make a list of
the problems associated with debit cards, such as forgotten PINs, lost
cards, and so forth. What steps could be taken to eliminate some
of these problems? |
| Chapter Eleven: Financial Markets
18. Analyze the
economic impact of investing in the stock and bond market.
19. Suppose that
you have been handed $10,000. Now, create your own hypothetical
investment portfolio that best suits your needs and goal. What
types of financial intermediaries will you use? Will you invest
more money in stocks, bonds, or other financial assets? |
| Chapter Twelve: Gross Domestic
Product and Growth
13. Why is real
capita GDP used to measure economic growth? In which ways is this
measure more effective than other measures?
15. A group of
consumers claims that drug companies earn excessive profits because of
the patents they have on drugs. They recommend cutting the length
of time that a drug company can hold a patent to five years. They
argue that this will lead to lower prices for drugs because competitors
will enter the market after the five-year period. Are there any
drawbacks to this proposal? |
| Chapter Thirteen: Economic Challenges
16. How can full
employment be a problem? What issues arise when the economy
reaches full employment?
18. Assume you are
about to run for local political office. Your area is currently
affected by high poverty rates and unemployment. Write a proposal
for alleviating poverty and unemployment in your area. |
