Economic Decision Making

Question 1: Scarce and Free Resources

Replace this text with your response to the following in 75–150 words (1–2 paragraphs): What are the key differences between scarce and free resources? How are they allocated? What can cause a free resource to become a scarce resource? Can you provide some examples so I can better understand this topic?

Question 2: No Such Thing as Free Lunch

Replace this text with your response to the following in 75–150 words (1–2 paragraphs): Economists argue there is “no such thing as a free lunch,” yet I just had lunch with a friend who paid for it! Are the economists incorrect? Explain using basic principles of economics.

Question 3: Responding to Incentives

Replace this text with your response to the following in 75–150 words (1–2 paragraphs): I once read about a manager who noticed the company’s sales personnel were offering its customers deals that, while increasing revenues, lowered profits. After he reviewed the company’s compensation plan, the manager discovered that bonuses were based on sales revenue. Can you explain the sales personnel’s behavior using the economic principle that “people respond to incentives”? What kinds of changes might you recommend to the compensation plan to correct this problem?

Question 4: Absolute Advantage and Trade

Replace this text with your response to the following in 75–150 words (1–2 paragraphs): Assume country A has an absolute advantage in producing all products compared to country B. Are there opportunities for gains from trade for both countries? Please provide at least 2 examples. What determines the direction of trade?

Question 5: International Trade

Replace this text with your response to the following in 75–150 words (1–2 paragraphs): How does international trade allow a country to move beyond its production possibilities frontier? Can you please elaborate on this and provide 1 or 2 examples?

References

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