Microeconomics, GS, Assignment One
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Define scarcity. Provide examples of goods that are not scarce.Scarcity is the limited resources and services that are available to humans that have an infinite want and need for them. I do not believe that we have a resource and/or a service that is not scarce. The supply and demand for resources and services in some areas may not be up but that does not make them available infinitely. Public policies often alter the costs and benefits of private actions. Why is it important for policymakers to consider both the direct and indirect effects of public policies? Select a particular public policy with which you are familiar and discuss two positive and two negative aspects of that policy. What goal do you think the policy makers were trying to achieve in effecting that policy? Do you believe it was successful? Why or why not? Policy makers must consider both the direct and indirect effects that polices have across the nation. Considering the direct effect will allows the policy makers to see the obvious change it has while the indirect effect allows them to see the overall behavior effect that is has. I am not too familiar with public policy but have been effected my one, abortion. Abortion has been and is a very controversial policy that ultimately is legal according the US policy but may be restricted by states to a point.
The positive effects that abortion has is that it allows a woman to decide is she is ready to raise a child physically, mentally, emotionally and financially. I also think that with the choice it allows for women to feel in control of their body and not allowing others to choose for them. On the negative side of abortion some women seem to use this method as a form of birth control thus possibly ruining their reproductive abilities permanently. On the negative side of abortion there are a lot of people who do not believe in it and this can cause women who choose this option to be looked and treated differently in their communities. Negative effects of abortion are also that an innocent life is never given a chance at life. The life inside of the woman did not ask to be there but due to any circumstance it is there not and will not be given a chance at life itself. I believe the policy makers were able to achieve to goal of giving a woman the right to choose and they were successful.
Women are allowed to choose if they wish to carry a pregnancy to term or terminate it early without any issues. How does Adam Smith’s concept of the invisible hand explain why markets move toward equilibrium? Do market participants need to know about the invisible hand for it to function? Explain your answer. Adam Smith’s concept of the invisible hand explains that markets need to find the right balance with supply and demand as to not take too much of a financial loss in their business. Markets need to know about the invisible hand to function and profit. If a business does not know about the invisible hand and moving toward equilibrium they probably have a higher risk at loss. Also when a business owner has no longer has interest in the business he has lost the invisible hand. What is the difference between a positive statement and a normative statement? Determine whether each of the following statements is positive or normative. Positive statements are statements that describe how the world is, while normative statements prescribe how the world ought to be.
a. The minimum wage creates unemployment among young and unskilled workers.
b. The minimum wage ought to be abolished. NORMATIVE
c. If the price of a product in a market decreases, other things equal, quantity demanded will increase. POSITIVE
d. A little bit of inflation is worse for society than a little bit of unemployment.
e. There is a tradeoff between inflation and unemployment in the short run. POSITIVE
f. If consumer income increases, other things equal, the demand for automobiles will increase. NORMATIVE
g. The U.S. income distribution is not equitable. POSITIVE
h. U.S. workers deserve more liberal unemployment benefits. NORMATIVE
i. If interest rates increase, investment will decrease. POSITIVE
j. If welfare benefits were reduced, the country would be better off. NORMATIVE
Use the following demand curve to answer the questions that follow.
a. How would point A be represented as an ordered (x,y) pair? (20,24)
b. What does this curve show? The curve shows the higher the price it reduces the quantity.
c. Does this curve show a positive or negative correlation between price and quantity? NEGATIVE
d. Compute the slope of D1 between points A and C. 16-24=-8, 40-20=20, -8/20=-2/5
e. What is the slope of D1 between points C and E? Why would you not have to calculate this answer? The slope is -2/5 and it is the same
f. What is it called if we move from curve D1 to curve D2? This is called curve shifts.
g. How do you know that the slope of D2 is the same as the slope of D1? The demand curve stays constant.