Essay on Microeconomics: Economics and Positive Statement

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April 10, 2013

Econ 220

Module 1 Homework Assignment

Pg. 19-20, Questions 7,8, 10

7. a. This policy would cause a vast majority of the people receiving benefits to look for work because they know their benefits are limited and they have only a certain amount of time they are entitled to them. The incentive to find new employment is greater than what it would be if there were no time limits on benefits.
b. This policy would increase efficiency at the cost of reducing equality. By putting pressure on welfare recipients to find work, more people will have jobs. This will maximize human resources, but it reduces equality among members of society.
8. The chores in the house would take longer if divided between my roommate and I. Since my cooking skills are not as profound as his are, and my roommate cannot clean as efficiently as me. It would be much more efficient for him to do all of the cooking and for me to do all of the cleaning in the house. We would essentially be trading between each other and maximizing benefit of each other’s strengths.
Germany specializes in the making of premium automobiles while Libya specializes in the production of oil. It would be beneficial for both countries if Germany imported oil from Libya and Libya imported automobiles from Germany.

10. a. This statement is very familiar to the current arguments on Obamacare, which it’s goal is to “essentially” provide healthcare to every citizen. Providing the best possible health care is from the standpoint of equality. Enabling such a program would vastly reduce the nation’s efficiency due to gigantic price tag that would be attached to such a program. The nation would be much more efficient and better off to allow employers to offer healthcare at a lower costs and to provide better Medicare programs to seniors and those who are below the poverty line.
b. Providing unemployment benefits to eligible recipients under no time limit, until they find a job is an equality concern. This would be a dangerous policy that would seriously hinder an economy from growth. If there is no time limit on benefits, more people would be inclined to continue to receive benefits rather than look for employment for an unforeseen amount of time. For a more efficient policy, there should be a time limit on benefits to ensure recipients are proactively seeking employment.

Pg. 38-39, Questions 4,5,6
4. a. & b. 1. 40 lawns mowed and 0 cars washed. 2. 0 lawns mowed and 40 cars washed. 3. 20 lawns mowed and 20 cars washed. 4. 25 lawns mowed and 25 cars washed. B. [pic] c. The production possibilities frontier has the shape it does because of the maximum allowable output between the three workers. Anything inside the lines between 40 cars and 40 lawns mowed is a possible outcome between the three workers in a ten-hour day.

d. Yes, point D is considered an inefficient point. Because the maximum out put in a given ten-hour day is 40 lawns or 40 cars. The production possibilities frontier illustrates that anything outside of the line is unrealistic and cannot be achieved. Point D represents 25 cars washed and 25 lawns mowed, which is not a possible outcome with the resources of the three workers available.

5. a. Microeconomics b. Microeconomics c. Macroeconomics d. Microeconomics e. Macroeconomics
6. a. This statement represents a positive statement. It entails how the economy actually is and not how it should be. Economists have facts backing these claims about the trade off between inflation and unemployment, which makes it true rather than an assumption.
b. This statement represents a positive statement. Researchers and economists have determined based on evidence that
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