Essay on Economics and Opportunity Cost - 1005 Words

Homework #1 ECO 156 Principles of Macroeconomics Chapter 1 2 1. Identify whether each of the following transactions takes place in the factor market or the product market. a. Billy buys a sofa from Home Time Furniture for his new home. Factor market b. Home Time Furniture pays its manager her weekly salary. Product market c. The manager buys dinner at Billy’s Cafà ©. Product market d. After he pays all of his employees their wages and pays his other bills, the owner of Billy’s Cafà © takes his profit. Factor market 2. List the opportunity costs of the following: a. going to college - the money you would have earned if you worked instead. b. missing a lecture – takes away from your knowledge of that lesson.†¦show more content†¦The opportunity cost from moving from point C to B is a decrease in food units but an increase in shelter units. d. Which of points A–E is the most efficient? Explain. C and D are most efficient because it requires society to use the resources to their fullest extent. Chapter 3 5. What would be the effect of each of the following on the demand for Chevrolets in the United States? In each case, identify the responsible determinant of demand. a. The price of Fords plummets. If the price on Fords went down the demand for them would increase. The cheaper the product is the more people will want it. b. Consumers believe that the price of Chevrolets will rise next year. If the price rises and the price of Ford is decreasing most likely the demand for Chevrolets will decrease and will lose out on customers because of Ford. c. The incomes of Americans rise. Well if this happens then they will go with the better car even if it’s more money. So Chevrolet’s will have more of an increasing demand because American’s have more money to spend. d. The price of gasoline falls dramatically. If the price of gasoline dropped then there’s a chance people will go with Chevrolet because it’s a better car even though it’s more expensive. But there’s a chance people will stay and save money with Ford because their cars are so cheap. 6. What would be the effect of each of the following on the supply of salsa in theShow MoreRelatedEconomics and Opportunity Cost Essay1006 Words   |  5 Pagesï » ¿The Cost of Something Mankiws Ten Principles of Economics Opportunity cost is the value of the next best alternative in a decision. Imagine that you have $150 to see a concert. You can either see Hot Stuff or you can see Good Times Band. Assume that you value Hot Stuffs concert at $225 and Good Times concert at $150. Both concerts cost $150 per ticket, but it would take you a couple of hours to drive to Hot Stuffs concert and you have to be in school (the next) morning for an exam. GoodRead MoreThe Economic Principles Of Tradeoff And Opportunity Cost848 Words   |  4 Pagesdecisions. 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