economics homework answers

economics homework answers

The Importance of Economics in Understanding the World

1. Introduction to Economics

Actually, the entire book content is very closely related to ‘occasion’ to the decision-making process in understanding the world. But it has been too long to explain any other theme. Step by step introduction to the economy itself has provided a vast comprehension of how humans and the world itself change behavior, becoming more systematic in order to gain a better condition. This has answered the perception of why currently many people are very concerned about the global condition and want to study international relations. Aware or not, it is about the comparison rate of nation goal achievement and also the international organization. That kind of people quest for global condition has made the decision-making process on global affairs still in the case of uncertainty. So if this book has summarized just slightly stated by the change, the economics method is more a science used to assist decision making with resources.

The author has well developed this theme through his planning in arranging the book content. It sufficiently shows that economics is a vital tool for explaining and understanding the world. He has made a very simple example about ‘occasion’ telling how two persons having different financial positions can show their interest in an event taking place. According to him, one will judge whether to attend the event after seeing the ticket price, while the other after seeing the event place. This example has clearly shown that both have different cost and benefit comparisons to the event, and it is definitely related to opportunity cost. This event shows a very simple choice of an individual, but it has also been made by a family, group, or even a society. This is the first occasion of learning that has been done by other people taking another case of an event. At the end, he made a comparison among the various choices of events and the probability of an event to gain experience. This comparison has shown that decision making at different levels has high complexity and uncertainty. So the decision maker will want to do a comparison by cost and benefit of trying the most event. This first part of the decision-making process is the concept of optimization. With new global problems, this theory has a direct relation to world problems. High complexity events require the best solution for the cost or the last solution to gain maximal results at less cost. Next, he describes global problems that have a cost-effect, which is about resources that are unknown by people when consumed, has the same result. This is the example that can be made by comparing the cost of looking at the world economy today with its environmental quality. Step by step, his explanation has raised awareness about how the decision-making at several levels has been done, and it is definitely related to world affairs.

The “Introduction to Economics” is developed through this book with an aim to provide the background or foundation as a starting point for more meaningful understanding. It introduces the basic concept of economics, how people deal with scarcity, and understand trade-offs. This section also introduces decision making by individuals, families, and societies at large, whether at the micro level or macro level. At the end, it introduces the concept of opportunity cost and does a cost and benefit comparison for prospective action.

2. Basic Concepts in Economics

Because resources are scarce in comparison to needs, every society needs to make choices about how to use their resources. Choices need to be made about how to allocate resources to best satisfy the unlimited wants of the people. For example, how much of a particular food product should be produced, what kind of advertising should be used, which group should be targeted, and what prices should be charged. These can be broad macroeconomic questions or individual microeconomic decisions. In any case, choosing one thing always means foregoing the next best alternative. This is known as the opportunity cost and is a measure of the cost of the choice in terms of the next best alternative foregone. For example, if a country uses resources to build new hospitals, the opportunity cost may be the alternative of improved defense and lower unemployment. If a company decides to employ more sales staff, the opportunity cost may be the employment of advertising personnel and increased efforts to push the product. High-quality decisions are those that are made at the margin, closely comparing the additional benefits (marginal benefits) with the additional costs (marginal costs).

Scarcity refers to a situation in which the potential of unlimited wants exceeds the productive potential of limited resources. It suggests that human beings have unlimited wants for goods and services. However, in order to realize these wants, societies must use resources, which have alternative uses. It is this scarcity of resources with alternative uses that gives rise to the central problem of economics.

3. Macroeconomics: Understanding the Economy as a Whole

Macroeconomics is useful when considering an overall view of the world. In “The Importance of Economic in Understanding the World,” the author Lie points out the significance of the study of macroeconomics from differing perspectives of its usefulness that can be gained. Macroeconomics is not only used to understand current issues taking place in the world today; it can also help provide an analysis of global history. It can help explain why it has taken several centuries for some countries to reach a state of economic prosperity, whereas it has taken others only a few decades. This is often done through a study of the rise and decline of nations using varying different models of macroeconomics in an attempt to explain the switch over time of which countries have been global economic leaders. Lie uses the example of his own country (Malaysia) and the study of “Japanese economic development and its changing strategies.” From this, we are able to draw comparisons of nations at differing stages of economic development to better understand possible issues and implications that can occur. Global history is a complex tapestry of events that have shaped and changed the world’s nations into what they are today. In order to be able to understand the world today, we must first have an understanding of what has taken place in the past. This is the basic foundation for a better understanding of the world and its economies.

While microeconomics is concerned with decisions made by individuals and firms, macroeconomics is the study of the entire national economy. To fully understand the economic issues that face the world today, we need to have an understanding of the economies of different countries and the global economy as a whole. In recent years, there has been a move away from an isolationist approach to the study of economics into the realm of macroeconomics. This shift has been motivated by a global trend arising from trade liberalization and the increasing significance of international trade. Hence, many economic issues and problems faced in the real world can be better understood by using economic models that consider the economy as a whole. An example of a macroeconomic issue is the study of the effect of globalization on national economies and the growing importance of international trade. This issue cannot be studied using microeconomic models since the effects of globalization can only take place in the context of changes to the global economy.

4. Microeconomics: Analyzing Individual Economic Units

Microeconomics is concerned with the behaviour of individual entities such as markets, firms, and households. It examines how individual consumers and producers make their decisions and studies how they interact with each other. By analyzing the behavior of individual decision-making units, microeconomics determines how prices and quantities are determined and how these can change over time. Microeconomic analysis also investigates what factors influence the level of production and efficiency within the economy. Finally, the effects of government in understanding economics are probably trying to relate to the flow-on effects of various government changes. As whole economies consist of an aggregation of individual markets, a failure by macroeconomists to understand the behavior of individual economic units can cause their analysis to miss or misunderstand important issues or make incorrect assumptions. This increases the importance of microeconomic analysis. Due to the relative inability to conduct controlled experiments in economics, there is often no definitive answer or conclusion. Experts in the field often disagree on what would be the best course of action, argue about the relevant information, or have different views of how the issue should be addressed. This is an indication of the depth and complexity involved in making decisions and understanding the implications of change in an environment with scarce resources and alternative uses. All of this provides the perfect scenario for the application of economic reasoning and analysis. Economic theory provides a framework of concepts and logical techniques to help in understanding and ultimately deciding the best course of action in various difficult situations. The theory is a set of principles that are definite and traceable and can be used in explaining cause and effects. It should not be confused with policy, which can reflect personal views and be swayed by political motives. The role played by economists as policy advisers can be carried out in the form of a scientist testing research hypotheses or more akin to an engineer solving a problem with a known blueprint.

5. Applications of Economics in Real Life

Marine species preservation, in an economic sense, states that declining species of fish can be considered a nonrenewable resource. This is because when a population of a certain fish declines past a certain point, it is no longer cost effective to fish that species. It will take too much effort and money to catch each fish, and that will detract from the profitability of the industry. At this point, the fishery is closed. An example of this is the moratorium on cod fishing in Newfoundland which started in 1992 and is still in effect today. There are still debates on whether the fishery will open again, and what the best course of action is for stock preservation. Any of these issues can be modeled by supply and demand analysis, and can be put in context with the opportunity cost of using the resources in different ways. It is possible to find the best possible combination of resource usage to produce the best outcome in the long run.

In calculation, farmers look at the effects of weather, pesticides, fertilizers, and other steps in crop production. The final intended output is to have the maximum yield with A grade produce. Modern farms have access to technology that can aid in determining the best possible combination of factors to increase production. This technology uses simulations that model the effects of different factors on the cost and yield of a given crop. It will provide the farmer with the “best” strategy from an economic perspective.

Health Canada recently released a revised food guide. After a review of decades of research, the guide points out the link between diet and health. It defined a healthy diet as one containing plenty of vegetables and fruit, grain products and at least two servings of fish per week. Using these principles, a group of researchers determined the most cost-effective way for a family to achieve this healthy diet. They used a mathematical program to find the cheapest way to fulfill the daily serving recommendations using food purchased in the province of British Columbia.

Economics can be used in real life to address various issues. A few examples include: a mechanism for determining what constitutes a healthy diet; how farmers can maximize crop yield, and preservation of marine species.