Student Name: ______________________________________ Student ID #: ________________

A. Answer the following questions. Please give concrete examples.(10 points)

1. Indicate whether each of the following statements applies to macroeconomics or to microeconomics. Explain why.

a) The unemployment rate in Canada was 7.4% in November 2011

b) An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

c) The Consumer Price Index rose by 1.8 percent in 2010.

d) A Canadian software firm discharged 15 workers last month and transferred the work to India.

2. What are economic resources? Why are resources also called factors of production? Why are they called inputs?

3. What is an opportunity cost? How does the idea relate to the definition of economics. Which of the following decisions would entail the greater opportunity cost: allocating a square block in the heart of Toronto for a surface parking lot, or allocating a square block at the edge of a typical suburb for such a lot? Explain.

B Answer and explain the following giving examples: (10 points)

1. What is macroeconomics? Differentiate macroeconomics from microeconomics. Give examples.

2. Contrast how a market economy and a command economy try to cope with economic scarcity? Explain the difference and show examples.