Macroeconomics-Econ 2 Lesson 3 Essay

706 WordsOct 29, 20133 Pages
Email Assignment- Lesson 3 How Costly can it be to society and a country if a firm refuses to specialize and exchange? When a firm does not realize its comparative advantage and specialize and trade, it hurts society and the country as a whole. They are allowing higher opportunity costs and lowering the standard of living. We receive and consume fewer goods if a firm refuses to specialize and exchange. What does the "Fruit Picker Principle" as Opportunity Cost suggest? This principle suggests that you should always be sure to take advantage of your most favorable opportunities. So pick the low hanging fruit first! It’s easier and cheaper. Why have some countries been so slow to specialize? Some countries have been slow to specialize because they do not have enough people. You need to have a decent size population in order to start specializing and have regulation and privilege rights set up by their government, i.e. property rights, contract enforcement, and judicial independence from outside forces. Markets exist and thrive because of risks taken by individuals and firms. These risks are less likely to be taken if the individuals and firms are not properly protected. What does Chaplin’s "Modern Times" imply with intensive specialization practices? This example implies that too much specialization is not always good. Sometimes narrowly specializing tasks ends up costing more in a psychological sense on workers. Repetitive tasks with no variety and no room for growth can drive them to boredom, exhaustion and anger. The Production Possibility Frontier (PPF) examines the wants of individuals, businesses and governments and resources such as land, labor, capital and entrepreneur. 1) Explain how each of these elements can affect the PPF curve? Increases in resources such as land, labor and capital equipment cause the PPF curve to shift outward. They are the

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