Principles of Macroeconomics

Which of the following decisions would entail the greater opportunity cost: allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot? Explain.

 

Per McConnell, Brue, and Flynn’s Macroeconomics, allocating a square block in the heart of New York City for a surface parking lot would entail greater revenue thus making the greater opportunity cost the allocation of a square block at the edge of a typical suburb (McConnell et al., 2019). As explained earlier in the chapter, the economic perspective outlines scarcity and choice which are the factors that enables the assessment of marginal benefits in comparison to marginal costs. Since we are in concurrence that land is a scarcity and coupled with the implication that New York City exudes a higher need and a higher turnover rate for parking lot spaces. Thus, the surface parking lot at the heart of New York City poses a greater opportunity for revenue in contrast to the same purpose of land use at a typical suburb which would be defined as the opportunity cost.   

 

Indicate whether each of the following statements applies to microeconomics or macroeconomics: LO1.3 

a. The unemployment rate in the United States was 5.1% in September 2015. 

Macroeconomics

b. A U.S. software firm discharged 15 workers last month and transferred the work to India. 

Microeconomics

c. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise. 

Microeconomics

d. U.S. output, adjusted for inflation, increased by 2.4% in 2014. 

Macroeconomics

e. Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point. 

Macroeconomics

f. The consumer price index rose by 0.2% from August 2014 to August 2015.

Macroeconomics

 

What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?

Economists assigned four categories for economic resources (McConnell et al., 2019). Those categories are as follows:

·         Land

·         Labor

·         Capital (capital goods)

·         Entrepreneurial Ability

Economic resources are defined as all natural, human, and manufactured resources that enable the production of goods and services. Economics resources are essentially factors of production. Economists call these factors of production as inputs. 

Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve: LO1.5

a. The quality of education increases. 

An example of the country’s production possibilities curve with the assumption that the quality of education increases could mean that opportunity cost would be for example at the reduction in expenditure of for profit prisons or the expansion of law enforcement.

b. The number of unemployed workers increases. 

If the number of unemployed workers increases the production possibility curve would decrease in let’s say the production of manufactured parts. Due to a decreased labor workforce the production output would be minimized.

c. A new technique improves the efficiency of extracting copper from ore. 

In the event, that a new technique improves the efficiency of extracting copper from ore, the production possibility curve would increase as the cost of labor would decrease. Since the new technology make the production more efficient, it would be safe to assume that the cost of extracting copper would decrease as labor decreases and production quantity increases.

d. A devastating earthquake destroys numerous production facilities

In the event that an earthquake were to disrupt production facilities, production would decrease as consumer demand would increase since there is now more of a scarcity of the product and less product is being produced.

 

References

McConnell, C. R., Brue, S. L., Flynn, S. M., & Grant, R. R. (2019). Chapter 1 Limits, Alternatives, and Choices . In Macroeconomics: Brief edition (Third, pp. 3–4, 11-12, 13-14). essay, McGraw-Hill Education.

 

 

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