BA 206 BU The Output of The Chosen Item in The World of Today Question
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Week 1 Homework Assignment
BA 206: Microeconomics
Name_________________________________________________________________
Instructions: Please answer each question with sufficient detail. Relevant detailed
responses are highly rewarded. If you consult any sources, then you should provide
both in-text citations and references at the end for each response. You need to make
sure to at least consult your textbook for your responses, and cite the textbook using
APA format.
1. What is an opportunity cost? How does the idea relate to the definition of
economics? (10% of grade)
2. Cite three examples of recent decisions that you made in which you, at least
implicitly, weighed marginal cost and marginal benefit. In all cases or examples,
make sure to clearly identify the cost and benefit. Please also make sure to
explain how you arrived at your decision. Do you think you made a rational
choice in each case? Explain. (20% of grade)
3. What are economic resources? What categories do economists use to classify
them? Why are resources also called factors of production? Why are they called
inputs? (20% of grade)
4. Why is money not considered to be a capital resource in economics? Why is
entrepreneurial ability considered a category of economic resource, distinct from
labor? What are the major functions of the entrepreneur? Make sure to address
each part of the question. (20% of grade)
5. Studies indicate that married men on average earn more income than unmarried
men of the same age and education level. Why must we be cautious in
concluding that marriage is the cause and higher income is the effect? (Hint:
Review the distinction between causation and correlation) (10% of grade)
Problem
Life is Good is a remote island in the Atlantic. The inhabitants grow wheat and breed
poultry. The accompanying table shows the maximum annual output combinations of
Wheat and poultry that can be produced. Obviously, given their limited resources and
available technology, as they use more of their resources for wheat production, there
are fewer resources available for breeding poultry.
Maximum annual output
options
1
2
3
4
5
6
7
Quantity of wheat
(pounds)
1200
1100
900
600
400
200
0
Quantity of Poultry
(pounds)
0
300
450
600
725
775
850
1. What is the opportunity cost (in terms of poultry given up) of increasing the annual
output of wheat from 900 to 1100 pounds? (10% of grade)
2. What is the opportunity cost (in terms of poultry given up) of increasing the annual
output of wheat from 200 to 400 pounds? (10% of grade)
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opportunity cost
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