Question

1. A country's resources (land, labor, and capital) are used to produce the goods and services that satisfy the wants of its population. For each of the following, identify whether it should be classified as land, labor, or capital and justify your conclusion. Remember to consider the economic use of these terms (i.e. land, labor, and capital). a. a four year college degree b. the software used to make Facebook available to users c. 100 shares of Microsoft stock d. the Genesee River e. A Big Mac 2. For each government activity, explain whether the government's action is intended to improve efficiency, to improve equity, or to improve both. Justify your responses. a. The Justice Department challenged the proposed acquisition of Time Warner by AT&T Inc. on anti-trust grounds arguing that "combining AT&T's video-distribution strength with Time Wamer's stable of popular cable channels would give one company too much control of the media landscape, which it warns would lead to higher prices and less innovation. b. In the United States the government provides K-12 education at no charge to students. 3. The United States should cut corporate tax rates by another five percentage points (from 21% to 16% in order to increase incentives for firms to create jobs in the United States is this a positive or a normative economic statement? Explain. 4. Red Osier runs a seafood and steak restaurant in Stafford and also operates a food truck at fairs and festivals across the region. In considering a festival in Brockport to occur the weekend of October 21, Red Osier learns that it will have to pay a site fee of $3000 to the festival organizers for a standard site for the weekend. Based upon past experience at the festival, it estimates that it could expect sales of $12,000 over the weekend while incurring $5000 in costs for supplies and labor. Facing the entry deadline, Red Osier pays the non refundable $3000 site fee on October 7. On Thursday, October 20, the weather forecast the weekend predicts raw and blustery weather. Red Osier estimates this would result in weekend sales dropping to $6000 with the cost of food and supplies now coming in at Consider the decision to be made by Red Osier the Thursday before the festival. They could operate their food track at the festival despite the weather forecast or they could decide not to send the food truck out for the weekend. What is e marginal cost and what is the marginal benefit of operating the food truck at maximizing decision to op participate in the festival? Explain Is the t the festival or to not

Answer 1

Q1

a. Capittal

Education as in economics literature is said to be human capital which refers to the skills and knoledge of an individual.

b. Capital

The software is used to make facebook available to its users thus providing servies during its lifetime hence is categorised as a capital goods.

c. Capital

Stocks are considered to be capital goods. As per the economic theory any asset used to particularly make money come under the purview of capital goods

d. Land

Any resource which we get from land, air, water comes under the domain of land resources.

e. Land, Labor and Capital

A big mac is the result of cumulative application of all three resources. Land gives grains, capital is employed in terms of machinary and labor is employed to produce the mac. However given the best choice land is the major contributor and the cycle of prodution starts from land.