Question

1. Does the phrase "unlimited wants and limited resources" apply to both a low- income household and a middle-income household? Can the same phrase be applied to a very high-income household? 2. In a single sentence, contrast microeconomics and macroeconomics. Next, categorize each of the following issues as a microeconomic issue, a macroeconomic issue, or not an economic issue. a. The national unemployment rate b. The decision of a worker to work overtime or not c. A family's choice to have a baby d. The rate of growth of the money supply e. The national government's budget deficit f. A student's allocation of study time across two subjects 3. Which of the following predictions appear(s) to follow from a model based on the assumption that rational, self-interested individuals respond to incentives? a. For every ten exam points Myrna must earn in order to pass her economics course and meet her graduation requirements, she will study one additional hour for her economics test next week. b. A coin toss will best predict Leonardo's decision about whether to purchase an expensive business suit or an inexpensive casual outfit to wear next week when he interviews for a high-paying job he is seeking. c. Celeste, who uses earnings from her regularly scheduled hours of part-time work to pay for her room and board at college, will decide to purchase and download a newly released video this week only if she is able to work two additional hours.

Answer 1

Answer 1:

The study of economics is all about allocation of limited resources to satisfy the unlimited wants of the consumer. The study mainly tells us how to allocate these limited resources to satisfy unlimited wants of the consumer. Whether an individual is high, middle or low income earning individual, still the wants of an individual are unlimited and has to make a trade off between the choices available to the consumer though the choices made are different. When an individual is high income earning individual, then he has to make a trade off between various luxury choices that he can purchase and do not worry about the necessities. On the other hand, in case of low income earning individual, the choices are mainly related to necessities and trade off involved in purchasing the necessity goods as they cannot afford to purchase the luxuries. Thus, it can be stated that phrase unlimited wants and limited resources applies in case of low, middle income as well as high income households.