1. Does scarcity affect all individuals and all nations? Why or why not? Would monks, who often choose to live the most austere lives, be free from the problem of scarcity? What about Bill Gates who, as a renowned philanthropist, gives money away?
2. Are computer software programs an example of land, labour or capital? Explain your answer. 3. Is financial capital included in the economist's definition of capital? Why or why not?
3. Is financial capital included in the economist's definition of capital? Why or why not?
4. Explain the difference between macroeconomics and microeconomics. Give examples of some areas investigated by each of these branches of economics. What are some of the normative issues of interest in microeconomics and in macroeconomics? 5. What are the differences between positive and normative economic statements?
5. What are the differences between positive and normative economic statements?
6. Analyze the positive versus normative arguments in the following case. Which are the positive statements used and which are normative?

Should the wearing of flotation devices be compulsory on all pleasure craft?

Advocates of the compulsory wearing of flotation devices (life jackets) on pleasure craft argue that they will save lives and that governments should make wearing them compulsory on all pleasure craft - big or small. A sound flotation device can be bought for less than $100. Opponents argue that, because flotation devices give a false sense of security, wearing them encourages riskier behaviour on the part of boat owners. They therefore believe the government should leave the decision about whether to wear a flotation device to individuals. They say the role of the government should be limited to providing information on the risks of wearing or not wearing a flotation device.