1. Consider a
nation with a large economy like the United States and a nation with a small
economy like the Dominican Republic. How can the United States, with absolute
advantage in production of almost all goods, benefit from trade with the
Dominican Republic?
2. If a minimum
wage of $8 exists in this market, what is the impact on the market? Who are the
winners and losers of the minimum wage?
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5. You and your
roommate are taking the same economics class. When it comes to doing homework
assignments, your roommate draws beautifully precise graphs, while you are an
extremely fast typist. Therefore, you and your roommate work on the assignments
together. Which of the 12 principles is at work here?
6.Explain
why economists believe that in reality production possibility frontiers have a
bowed-out curvature, rather than a straight line.
7.Many college freshmen describe themselves as
“pre-med” but a very small percentage of these freshmen will ever attend
medical school. After the first course in biology or chemistry, many decide to
major in something other than the natural sciences. Which of the 12 principles
is at work here?
8.How
would each of the following events affect the demand for new textbooks?
a)The
price of a used textbook rises.
b)The
price of college tuition rises.
c)More
high school graduates decided to attend college.
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