1. Give the three reasons that explain why the division of labor increases an economy’s level of production.

2. What are three reasons to study economics?

3. Suppose you have a team of two workers: one is a baker and one is a chef. Explain why the kitchen can produce more meals in a given period of time if each worker specializes in what they do best than if each worker tries to do everything from appetizer to dessert.

4. Why do you think that most modern countries’ economies are a mix of command and market types?

5. Can you think of ways that globalization has helped you economically? Can you think of ways that it has not?

6. What is comparative advantage?

7. What does a production possibilities frontier (PPF) illustrate?

8. Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.

9. During the Second World War, Germany’s factories were decimated and suffered many human casualties, both soldiers and civilians. How did the war affect Germany’s production possibilities curve?

10. Marie has a weekly budget of $24, which she likes to spend on magazines and pies.

a) If the price of a magazine is $4 each, what is the maximum number of magazines she could buy in a week?

b) If the price of a pie is $12, what is the maximum number of pies she could buy in a week?

c) Draw Marie’s budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of the budget constraint?

d) What is Marie’s opportunity cost of purchasing a pie?

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The detailed answer for the above question is provided below 1 Division of Labor and Increased Production Specialization Workers become more skilled and efficient in specific tasks enhancing overall p... View the full answer