1. Scarcity and Opportunity Costa. Define scarcity and explain why it is a fundamental problem in economics.
b. Assume that a student has 4 hours of free time after school. They can choose to study for an exam, work a part-time job, or play video games. The student chooses to work.
2. Production Possibilities Curve (PPC)a. Define the Production Possibilities Curve and explain the significance of points on, inside, and outside the curve.
b. Draw a PPC for a society that produces only two goods: computers and wheat.
3. Shifts in the PPCa. Assume a country produces two goods: healthcare services and education.
4. Supply and Demand Basicsa. Define the law of demand and the law of supply.
b. Consider the market for coffee.
5. Price Controlsa. Define price ceilings and price floors.
b. Suppose the government imposes a price ceiling on rent in a city.
6. Elasticitya. Define price elasticity of demand and explain the difference between elastic and inelastic demand.
b. Provide an example of a good with elastic demand and a good with inelastic demand, explaining the reasoning behind each classification.
c. Assume the price of a product decreases by 10%, and as a result, the quantity demanded increases by 20%.
b. Assume that a student has 4 hours of free time after school. They can choose to study for an exam, work a part-time job, or play video games. The student chooses to work.
- Explain the concept of opportunity cost in this scenario.
- Identify and explain the opportunity cost of the student’s decision to work.
c. Discuss how scarcity forces individuals and societies to make trade-offs.
2. Production Possibilities Curve (PPC)a. Define the Production Possibilities Curve and explain the significance of points on, inside, and outside the curve.
b. Draw a PPC for a society that produces only two goods: computers and wheat.
- Label a point that represents efficient production, one that represents inefficient production, and one that is unattainable.
c. Explain what happens to the PPC if there is a technological advancement in the production of computers.
d. Discuss how the concept of opportunity cost is illustrated by movement along the PPC.
3. Shifts in the PPCa. Assume a country produces two goods: healthcare services and education.
- Illustrate and explain what would happen to the PPC if the country experiences an increase in its labor force.
b. Explain how a natural disaster might affect the PPC.
c. Discuss the role of economic growth in shifting the PPC outward.
4. Supply and Demand Basicsa. Define the law of demand and the law of supply.
b. Consider the market for coffee.
- Explain what would happen to the equilibrium price and quantity if there is an increase in the price of tea (a substitute good).
- Analyze what would happen to the equilibrium price and quantity if the cost of coffee beans (an input) rises.
c. Draw and label a graph to illustrate how an increase in demand affects the equilibrium price and quantity.
5. Price Controlsa. Define price ceilings and price floors.
b. Suppose the government imposes a price ceiling on rent in a city.
- Illustrate and explain the impact of this price ceiling using a supply and demand graph.
- Identify and explain two potential unintended consequences of this policy.
c. Explain how a price floor in the agricultural market, such as for wheat, might lead to a surplus.
6. Elasticitya. Define price elasticity of demand and explain the difference between elastic and inelastic demand.
b. Provide an example of a good with elastic demand and a good with inelastic demand, explaining the reasoning behind each classification.
c. Assume the price of a product decreases by 10%, and as a result, the quantity demanded increases by 20%.
- Calculate the price elasticity of demand.
- Explain whether the demand for this product is elastic, inelastic, or unit elastic.