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TUT1

This document introduces economic concepts through a tutorial with example questions. It discusses microeconomic and macroeconomic topics, opportunity costs of choices, weighing costs and benefits of work decisions, production costs and profits, effects of social security programs, production possibility curves, and positive vs normative economic statements.

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emnagrichi
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33 views2 pages

TUT1

This document introduces economic concepts through a tutorial with example questions. It discusses microeconomic and macroeconomic topics, opportunity costs of choices, weighing costs and benefits of work decisions, production costs and profits, effects of social security programs, production possibility curves, and positive vs normative economic statements.

Uploaded by

emnagrichi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Tutorial 1

Introducing Economics
1. Which of the following are macroeconomic topics/issues and which are microeconomic ones?
(a) The level of consumer spending............................................................................Micro / Macro
(b) Subsidies paid to farmers ......................................................................................Micro / Macro
(c) The level of Tunisian exports ................................................................................Micro / Macro
(d) The price of DVDs.................................................................................................Micro / Macro
(e) The rate of unemployment ....................................................................................Micro / Macro
(f) The average wage rate paid to textile workers .....................................................Micro / Macro
(g) The total amount spent by Tunisian consumers on clothing and footwear .........Micro / Macro
(h) The amount saved last year by Tunisian households ...........................................Micro / Macro

2. Describe some of the tradeoffs faced by the following:


(a) A family deciding whether to buy a new car
(b) A member of Congress deciding how much to spend on national parks

3. Make a list of three things you did yesterday. What was the opportunity cost of each? Have a look

4. How would the principle of weighing marginal costs and benefits apply to a worker deciding how
much overtime to work in a given week?

5. Assume that a firm is selling 1000 units of a product at 20TND each and that each unit on
average costs 15TND to produce. Assume also that to produce additional units will cost the firm
19TND each and that the price will remain at 20TND. To produce additional products will
therefore reduce the average profit per unit. Should the firm expand production? Explain?

6. The Social Security system provides income for people over age 65. If a recipient of Social
Security decides to work and earn some income, the amount he or she receives in Social Security
benefits is typically reduced.

(a) How does the provision of Social Security affect


(b) How does the reduction in benefits associated with s
incentive to work past age 65?

7. A country is capable of producing the following combinations of goods and services per period of
time, assuming that it makes full use of its resources of land, labour and capital.

Goods (units) 100 80 60 40 20 0

Services (units) 0 50 90 120 140 150

(a) Draw the production possibility curve for this country on the following diagram.

120

100

80

60

40

20

0
0 20 40 60 80 100 120 140 160
Services

(b) Is it possible for this country to produce the following combinations of goods and services?
(i) 80 units of goods and 50 units of services ................................................................ Yes / No
(ii) 70 units of goods and 90 units of services ................................................................ Yes / No
(iii) 40 units of goods and 100 units of services.............................................................. Yes / No

(c) What is the opportunity cost (in terms of services) of producing 20 extra units of goods when
this country is initially producing:
(i) 60 units of goods ......................................................................................................................
(ii) 20 units of goods ......................................................................................................................

8. Which of the following are positive statements, which are normative statements and which could
be either depending on the context?

(a) It is wrong that inflation should be reduced if this means that there will be higher
unemployment.
(b) It is wrong to state that putting up interest rates will reduce inflation.
(c) The government should raise interest rates in order to prevent the exchange rate falling.

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