Economics

Daviana Gomez

January 10, 2015

KG596 - WEEK 1 HW

1. (Definition of Economics) What determines whether or not a resource is scarce? Why is the concept of scarcity important to the definition of economics?

I would think demand determines scarcity. If you have less than people want, it’s scarce. A resource is scare when the amount of people desire exceeds the amount available. The concept of scarcity is important to the definition of economics because scarcity forces people to choose how they will use their resources in an attempt to satisfy their unlimited wants and desires. Economics is about making choices, without scarcity there would be no economic problem, and therefore no need to choose between competing wants and desires.

2. (Slope) suppose you are given the following data on wage rates and number of hours worked:

| Hourly | Hours Worked |

Point | Wage | Per Week |

a | $0 | 0 |

b | 5 | 0 |

c | 10 | 30 |

d | 15 | 35 |

e | 20 | 45 |

f | 25 | 50 |

a. Construct and label a set of axes and plot these six points. Label each point a, b, c, and so on. Which variable do you think should be measured on the vertical axis, and which variable should be measured on the horizontal axis?

b. Connect the points. Describe the resulting curve. Does it make sense to you?

a. It is conventional in economics to measure prices on the vertical axis. Here the wage rate is the price of an hour of labor, so it goes on the vertical axis. Hours worked is measured on the horizontal axis.

d

a

b

c

e

f

d

a

b

c

e

f

b. The graph shows that at very low wage rates, the person chooses not to work at all. It’s just not worth for little or no money. However, once the wage reaches $10 per hour, we begin to see that the labor market time starts increasing. More time in the labor market by being willing to work 30 hours...