introduction to economics questions

Please use simple English in explaining the answers as the student’s English is a second language. Q1: The behavioral model of neoclassical microeconomics asserts that human beings are “self- interested and rational.” Yet, we have emphasized the importance of a human being’s social nature, and especially the importance of acquiring morals and ethics, essentially from our social settings. When you ask people about what is important to them, most people mention “family” somewhere near the top of their priorities; rarely is a person so candid as to admit that they place themselves first. Is it important to be committed primarily to yourself or to your family? What if someone in your family breaks the law, or commits a fundamentally immoral act? According to microeconomics, how does a person decide where to give their loyalty when the interests of one social group, like the family, are in conflict with the interests of another social group, like the person’s nation or religion? In summary, what is the economic role of ethics and morals for both the individual person and the society? Q2: Suppose there is a market for commercial air travel. What happens in the market for commercial air travel if: (a) the government introduces safety regulations that slightly restrict the number of flying hours per week that commercial pilots are allowed to log, while at the same time (b) there is a substantial increase in the price of hotel accommodations for vacation and business travel?

Q3:

Grain (g) Dairy(d)

ALBANIA 8 4

BOSNIA 12 18

• Which country has the comparative advantage in which item? Do not answer this

• Is it rational for BOSINA to trade with ALBANIA? Do not answer this

• When they go to make an exchange, what will keep BOSINA from over-charging

ALBANIA? Please answer this.

• What factors might prevent trade between the two countries? Do not answer this