Econ 318 (A+ graded)

Define scarcity and explain why the concept is so central to neoclassical economics. correct answers - The concept of scarcity arise as individuals have unlimited wants but the available resources are limited. The concept of scarcity is so central to neoclassical economics, as scarcity directs individuals to make rational choices to survive in a world of scarcity. - Thus, under the condition of scarcity it is not possible to satisfy everyone's wants. Individuals should be able to make choices on how to effectively use the available resources In everyday language cost generally means the amount of money it takes to purchase a commodity. Can this meaning be tied to the concept of opportunity cost and, if so, how? correct answers - Opportunity cost can be defined as value of something that must be given up to acquire something else. As Individuals have rational choices, they can make alternative use of the resources available Thus, their choices are associated with the opportunity cost - The term "cost" refers to the amount spent by an individual to buy something. The concept of cost can be tied to the concept of opportunity costs in both concepts individuals have to give up a value in order to obtain some other value. Discuss the uses and abuses of simplifying assumptions in economic models. correct answers The assumptions of Economic models state that people are perfectly rational with perfect information. But, a theory is not always successful in describing the reality - When we analyze the underling ideas these can be justified or unjustified in many ways. Individual's wants and needs differ. They have unlimited wants and the resources are limited scarce. But at the same time as substitutes are available for the individuals, the amount of scarcity can be reduced. What is the relationship between economic development and women's labor force participation? correct answers - The value of final goods and services divided by population measures GDP per capita of an economy. GDP per capita is the reflection of economic development. Through empirical studies, a relationship between economic development and women participation in labor force has been found. - The relationship between economic development and women labour force as found by empirical studies is U shaped - Economic development measured by gross domestic product (GDP) per capita which is measured on the horizontal axis. Women labour force participation rate is defined as the share of economically active women where economic activity both paid and non-paid activities.