Labor and Human Capital-Managerial Economics Assignment Sample

QUESTION

 

Managerial Economics: Assignment requirement

How does scarcity relate to the study of economics?
 

What is the difference between labor and human capital?

What is the circular flow model? Explain how the two types of flows relate to each other.

Give examples of one resource that is scarce in your country and an example of one that is in abundance. Describe how these resources are traded in the world market, if at all?

The table below, Table 1, shows the Production Possibility Frontier of an island community. Choose the best statement and state some reasons for your choice.

  1. This community has enough resources to produce 2 pounds of fish and 36 pounds of berries.
  2. This community cannot produce 2 pounds of fish and 36 pounds of berries because this combination is inefficient.
  3. This community will waste resources if it produces 2 pounds of fish and 22 pounds of berries.
  4. This community can produce 2 pounds of fish and 30 pounds of berries but this combination is inefficient.

The table above shows the PPF of an island community. Choose the best statement.

  1. Suppose that this community produces 3 pounds of fish and 20 pounds of berries. If it decides to gather more berries, it faces a tradeoff.
  2. When this community produces 4 pounds of fish and 12 pounds of berries it faces a tradeoff, but it is inefficient.
  3. Suppose that this community produces 5 pounds of fish and 0 pounds of berries. If it decides to gather some berries, it will get a free lunch.
  4. If this community produces 3 pounds of fish and 22 pounds of berries, production is efficient but to produce more fish it faces a tradeoff.

How could the PPF of a hypothetical country be expanded in the most effective way?

Provide three recommendations intended to enhance the well-being of the economy of any hypothetical country? Explain the reason for such recommendations.

Table 1

 

 

ANSWER

 

Managerial Economics: Assignment requirement

How does scarcity relate to the study of economics?
Scarcity is the gap between unlimited human wants and scarce resource, due to which some decisions are to be made, which makes it related to economics. Economics helps in taking decision, how to utilize scarce resource in order to earn maximum satisfaction.

 

What is the difference between labor and human capital?

The basic difference between labor and human capital is that human capital refers to the workforce who are available for doing various jobs whereas labor is the measure of work done by human capital.
What is the circular flow model? Explain how the two types of flows relate to each other.
Circular Flow model depicts how goods and services are produced, market by the firms and consumed by the households and in return households pay them with money which becomes a part of factor of production which again let the firm produce goods and services.

There are two flows in circular flow model, first is flow of factors and other is flow of goods and services.

In one flow household sells the factor of production i.e land, labor and capital, by which the households get money. In second flow the firm sells the goods and services, produced by employing factors of production from flow 1, to the household and get money in consideration paid to them while acquiring factors of production.

Hence it is a interlinked continuous process.

Give examples of one resource that is scarce in your country and an example of one that is in abundance. Describe how these resources are traded in the world market, if at all?

The resource which is scarce in my country is petroleum, the global supply and demand decides the price of petroleum. As it is scarce resource worldwide the prices are moving high and the demand of the petroleum is growing with growing economies, hence high demand and limited supply is causing high prices which are expected to grow higher in future too. Water is the abundant resource in my country. Water is not traded in world market but the concept which correlates with the export and import of water is “virtual water”, virtual water is the amount of water used in the exported and imported agricultural and industrial water. Currently as per UNESCO 1040 billion square meters of virtual water is traded each year at the global level.

The table below, Table 1, shows the Production Possibility Frontier of an island community. Choose the best statement and state some reasons for your choice.

  1. This community has enough resources to produce 2 pounds of fish and 36 pounds of berries.
  2. This community cannot produce 2 pounds of fish and 36 pounds of berries because this combination is inefficient.
  3. This community will waste resources if it produces 2 pounds of fish and 22 pounds of berries.
  4. This community can produce 2 pounds of fish and 30 pounds of berries but this combination is inefficient.

Answer

 

PPF as per data in table 1 is as above where berries are on Y axis and Fishes are on X-axis.

Statement C stands true with the data, as the point 2 and 22 will fall below the PPF which means it is and inefficient combination, which will lead to underutilization of resources.

The table above shows the PPF of an island community. Choose the best statement.
  1. Suppose that this community produces 3 pounds of fish and 20 pounds of berries. If it decides to gather more berries, it faces a tradeoff.
  2. When this community produces 4 pounds of fish and 12 pounds of berries it faces a tradeoff, but it is inefficient.
  3. Suppose that this community produces 5 pounds of fish and 0 pounds of berries. If it decides to gather some berries, it will get a free lunch.
  4. If this community produces 3 pounds of fish and 22 pounds of berries, production is efficient but to produce more fish it faces a tradeoff.

Answer

The best statement is D, as the production level of 3 pound of fish and 22 pounds of berries the point is on the PPF but to add more fishes the community has to give up berries to be efficient and properly utilize the available resources.

How could the PPF of a hypothetical country be expanded in the most effective way?
To expand the PPF in the most effective way, a country has to employ more factors of production. One of the factor of production is capital goods, these are the goods which enable the production of other goods. Hence if the economy employs it scarce resources in producing capital goods it can expand its PPF.
Provide three recommendations intended to enhance the well-being of the economy of any hypothetical country? Explain the reason for such recommendations.
Economic wellbeing is the state of present and future financial security. GDP had been an indicator of economic wellbeing of an economy, but economic wellbeing is somewhat much more than numbers.

The recommendation to improve economic wellbeing of a country are as under:

  • Improvement of material living conditions-as it shows the possibility of people’s consumption and command over resources
  • Improved quality of life- improved quality has an intrinsic value which is measured by availability of opportunities and choices of people. It can be enhanced by improving employment and health facilities
  • Injecting sustainability of the socio economic and natural systems- Sustainability is shown by the stocks of the resources of different type of capital resources human are using. Sustainability provides a sense of future security which can be improved by producing more capital goods which will lead to production of resources.

Table 1

 

 

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