Managerial Economics Unit 1 Assignment Student Name Please ✓ Solved

Mt445 Managerial Economicsunit 1 Assignmentstudent Nameplease Ans

Please answer the following questions located in the template document.

1. Analyze whether each of the following is primarily a microeconomic or a macroeconomic issue:

   • Setting the price for a cup of coffee.
   • Measuring the impact of tax policies on total household spending in the economy.
   • A household’s decision regarding whether or not to go on vacation.
   • A worker’s decision regarding which job to accept.
   • Designing government policies to address issues with the social security program.

2. Explain why each of the following is either a positive or normative economic statement:

   • A 40-cent-per-pack tax on cigarettes will reduce teenage smoking by 10 percent.
   • The federal government should spend more on diabetes research.
   • Rising paper prices will increase book prices.
   • The price of bagels at Bruegger’s is too high.

3. Identify the effect of each of the following on the United States Production Possibilities Frontier (PPF):

   • A decrease in the average length of annual vacations.
   • An increase in immigration of foreign workers to the U.S.
   • An increase in the average retirement age.
   • The migration of skilled workers to Europe.

4. Identify whether each of the following would increase or decrease the opportunity costs for stay-at-home moms or dads. Briefly explain your answers:

   • Higher unemployment rates.
   • Lower average wages.
   • Higher demand for labor.
   • Lower income tax rates on wages earned.

Paper For Above Instructions

In addressing the questions posed in the MT445 Managerial Economics Unit 1 assignment, we first consider the distinction between microeconomic and macroeconomic issues. Microeconomics focuses on individual economic units such as households or firms, while macroeconomics looks at the economy as a whole. Hence, we will categorize the provided examples accordingly.

Microeconomic and Macroeconomic Issues

1. Setting the price for a cup of coffee is primarily a microeconomic issue. It directly involves individual consumers and the specific coffee shop's operations, determining pricing based on supply and demand.

2. Measuring the impact of tax policies on total household spending in the economy is a macroeconomic issue. It encompasses aggregate economic activity and the effects of government interventions on overall consumption.

3. A household’s decision regarding whether to go on vacation is a microeconomic issue. This choice involves individual preferences and budget constraints.

4. A worker’s decision regarding which job to accept is likewise microeconomic, reflecting personal circumstances and market demand for specific skills in individual sectors.

5. Designing government policies to address issues with the social security program is a macroeconomic issue because it pertains to national policy that influences the economic welfare of the entire population.

Positive and Normative Economic Statements

Next, we differentiate between positive and normative statements, which are crucial in economic discourse.

1. The statement “A 40-cent-per-pack tax on cigarettes will reduce teenage smoking by 10 percent” is positive as it can be tested and validated through empirical evidence.

2. “The federal government should spend more on diabetes research” is a normative statement, reflecting an opinion on what ought to be done rather than what is.

3. “Rising paper prices will increase book prices” is positive since it can be analyzed through market trends and economic laws.

4. “The price of bagels at Bruegger’s is too high” is normative, offering a subjective judgment about the pricing strategy rather than an objective fact.

Effects on the United States Production Possibilities Frontier (PPF)

In evaluating factors affecting the United States Production Possibilities Frontier (PPF), we will determine if the influences lead to inward, outward shifts, or no shift at all.

1. A decrease in the average length of annual vacations would likely shift the PPF outward, as more productive hours are available for labor.

2. An increase in immigration of foreign workers to the U.S. would also shift the PPF outward due to the addition of labor resources.

3. An increase in the average retirement age would shift the PPF outward as well, representing an increase in the labor force participation rate.

4. The migration of skilled workers to Europe could shift the PPF inward, as the country would lose human capital, thus reducing its productive capacity.

Opportunity Costs for Stay-at-Home Parents

Finally, we identify how various factors would impact the opportunity costs faced by stay-at-home parents.

1. Higher unemployment rates may decrease the opportunity costs for stay-at-home moms or dads as job opportunities diminish, making the decision to remain at home less costly in terms of foregone earnings.

2. Lower average wages would likely lessen the opportunity costs associated with staying at home, as the potential earnings from working decrease.

3. Higher demand for labor could increase opportunity costs, as stay-at-home parents might miss out on good job opportunities, resulting in a larger sacrifice by not working.

4. Lower income tax rates on wages earned would increase opportunity costs, encouraging more parents to enter the workforce, thus increasing the costs of staying at home due to lost potential earnings.

In conclusion, understanding these economic concepts is crucial for assessing decisions in both personal and policy contexts. The distinctions between micro and macroeconomic issues, as well as between positive and normative statements, inform our interpretation of economic phenomena and their implications.

References

• Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). McGraw-Hill.
• Mankiw, N. G. (2014). Principles of Economics (7th ed.). Cengage Learning.
• Case, K. E., & Fair, R. C. (2016). Principles of Economics (12th ed.). Pearson.
• Blanchard, O. (2017). Macroeconomics (7th ed.). Pearson.
• Krugman, P., & Wells, R. (2018). Microeconomics (5th ed.). Worth Publishers.
• Parkin, M. (2018). Microeconomics (12th ed.). Pearson.
• Gordon, R. J. (2013). The US Economy in the 21st Century. University of Chicago Press.
• Stiglitz, J. E., & Walsh, C. E. (2018). Principles of Microeconomics (5th ed.). W.W. Norton & Company.
• Froyen, R. T. (2013). Macroeconomics (10th ed.). Pearson.
• Perloff, J. M. (2016). Microeconomics (7th ed.). Pearson.