Econ

Chapter 2 Answers to End-of-Chapter Questions:

ANSWERS TO END-OF-CHAPTER QUESTIONS
2-1 Critically analyze: “Wants aren’t insatiable. I can prove it. I get all the coffee I want to drink every morning at breakfast.” Explain: “Wants change as we move from childhood to adulthood, but they do not diminish.” It may be that you get all the coffee you want on a particular morning, but will that satisfy your wants forever? Not if you want coffee in the future. Therefore, even your desire for coffee is insatiable over time. As people age their wants for specific goods change (“The difference between men and boys is the size of their toys.”), but the fact that their wants are insatiable does not. Like the coffee example, even if immediate wants for a specific good are currently satisfied, there are still wants for other goods and possibly for the original good sometime in the future. What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Explain: “If resources were unlimited and freely available, there would be no subject called economics.” Economic resources are the natural, human, and manufactured inputs used to produce goods and services. Economic resources fall into four main categories: labor, land (natural resources), real capital (machines, factories, buildings, etc.,) and entrepreneurs. Economic resources are also called factors of production because they are used to produce goods and services. If resources were unlimited and freely available, many of our current choices would be unnecessary. Every person could have as much as they wanted of any good or service, rendering economics, the science of choice, largely unnecessary. However, given our definition of resources, there would still be applications in terms of our allocation of time and space, for example. Even with an absence of scarcity of goods to consume, these natural limitations influence what and how much we choose to...