Principles of Economics

Your task is to complete all assigned questions to the best of your ability. Best of luck!

1. Define opportunity costs?

Opportunity cost is the profit lost when one alternative is selected over another.

2. Identify at least two non-monetary and monetary opportunity costs you forgo to attend classes online?

3. What is a Production Possibilities Curve (Frontier)?

4. How do you determine, which points are efficiency points on the Production Possibilities Curve (Frontier)?

5. Identify at least three points on the Production Possibilities Curve (Frontier) that are efficient points?

6. From the graph given below, Point W represents a(n) ______________________point.

7. Point X on the graph given below represents a(n) ________________________point.

Cars Planes 1,000 0 900 2 700 5 500 7 300 9 200 10 0 11

8. What are three ways in which the Production Possibilities Curve (Frontier) may shift to the right?

9. Explain why countries engage in trade?

10. Identify and discuss trade restrictions as they pertain to the United States? Identify at least three reasons why the United States imposes trade restrictions on importing countries.

RUBRIC

Able to state and articulate what the production possibility curve is able to state absolute and comparative advantage. Also, able to give examples and articulate inefficient position production to the fullest potential and unobtainable positions. Able to articulate and give examples of absolute and comparative advantage.

NOTES/COURSE MATERIALS

The Production Possibilities Curve represents a country’s ability to produce two different goods or services utilizing all four factors of production to include:

· Land

· Labor

· Capital

· Entrepreneurship

The graph below illustrates a Production Possibilities Curve (Frontier)

Values to contrast the Production Possibilities Curve are given below:

Computers	Automobiles	Combinations
100	0	A
90	2	B
70	5	C
50	7	D
30	9	E
20	10	F
0	11	G

Points A – G on the Production Possibilities Curve (Frontier) are all efficient points. Efficient points imply that a country is utilizes all four factors of production efficiently.

Point W represents an inefficient point, which implies that land, labor, capital, or a combination of the three factors of production are not fully utilized.

Point Z represents an unattainable point, which implies that our economy must meet the following criteria to shift the Production Possibilities Curve (Frontier) to the right.

· An increase in population

· Education and training

· New technology

· New emerging markets

· Exploitation of natural resources to include, domestic oil production

Countries engage in trade due to specialization and opportunity costs.

Trade restrictions exist due to the following:

· Protection of domestic employment

· Protection of domestic markets (industry)

· Protection of infant industries

Opportunity costs are the highest valued goods or services forgone to partake in another activity.

Secondary Sources

Production Possibilities Frontier

Opportunity Cost