PS1 E111 Answers

ANSWERS:

1. decision making

2. scarcity

3. study of mankind

4. households and firms

5.  economics matter

6. Eric's trade off is about what is more important for him to do if he should spend his time

    looking for jobs in washington or just stay in the library and study his lessons.

7. it states that whenever you take the regulation to control the environment or control the

    polution in occuring cost and those cost might come in terms of lost jobs, minds being closed

    by using alternatives.

8. much higher

9. The company always sets an attendance records but even in good times most of the seats go on sold so the owners and producers created a TKTS which is a discount outlet where theatre goers can buy half price seats.

10. exceeds

11. Example is the increase of your allowance with a condition. Let's say if my mother will tell me that if I will get high grades this semester then she will increase my allowance but if not my allowance will stay the same.

12. Really, its true - trade can make everyone better off.  A mistake most people make is to look at a slice of time, or a slice of people and ignore the huge effects that trade creates over time.

13. A market is any place where the sellers of a particular good or service can meet with the buyers of that goods and service where there is a potential for a transaction to take place. The buyers must have something they can offer in exchange for there to be a potential transaction.

14. In USA we have sellers of shoes such as NIKE, SKETCHERS, DC and etc.

15 .A market economy is an economy in which decisions regarding investment, production anddistribution are based on supply and demand and the prices of goods and services are determined in a free price system.

16. Adam Smith (1723-1790) was a Scottish philosopher and economist who is best known as the author of An Inquiry into the Nature and Causes of the Wealth Of Nations (1776), one of the most influential books ever written.

17. Suppose that consumers want more laptops than are currently available. As they fight for the ones that are available, they push the price up for laptops. The increase in price or reports from retailers of shortages is the signal for manufacturers to increase their supply.As you suggest, the price mechanism is the way the invisible hand works.