Econ 7002 Tutorial 1

ECON 7002 Semester 1 2012 Tutorial motion 1 Tutorial subject area 1 CHAPTER 1 Practise political preservation nous 2 In light of your answer to question 1, win some explanations for the apparent differences in the relative share of government spending in the countries listed in the above table. Governments spend money on complaisant security, health services, infrastructure much(prenominal) as roads, bridges etc, and transfer payments such as unemployment benefits and pensions.The disparity within the table is art objectially a observation of the strength of the taxation schema (without a noniceable tax system the government will lack the revenue to cover use on the areas noted above) the need for government to replace private investment pulmonary tuberculosis and the position of the government within the economy, that is a planned versus a impoverished economy. In the case of Australia, although it is classified as a mixed economy the relatively high level of governm ent expenditure is accounted for by the strong taxation system and broad base of social security payments.Conceptual Questions Question 4 What are economic resources? Give some examples of each subject of economic resource. Economic resources are also termed Factors of Production and can be divided into Physical and Human Resources that can then be low-pitched down further into Land forests, arable land, minerals and water Labour animal(prenominal) and mental labour Capital physical capital such as factories, machinery and infrastructure. Remember MONEY is NOT an economic resource as it does not produce anything.Entrepreneurship the ability to put the various other resources together in an innovate manner- also a risk bearer One of the almost important points to remember is that all economic resources are scarce and whence we need to make choices. Analytical Questions Question 3 Graph the information in the table. Are there constant or increasing probability cost for the production of missiles? There are increasing opportunity costs in the production of missiles because the production of cars falls at a higher(prenominal) rate as larger quantities of missiles are produced. ECON 7002 Semester 1 2012 Tutorial Topic 1 40? Guided? Missiles? (thousands)? 35? 30? 25? 20? 15? 10? 5? 0? 0? 2? 4? 6? Cars? (millions)? P1? P2? P3? 8? 10? 12? Question 7 cerebrate improvement occurs in the technology of producing manoeuvre missiles but not in producing cars. (a) Draw the new production possibilities turn out on the diagram that you created in answering question 3. P1 is the original PPC and P2 represents an improvement in the technology of producing guided missiles but not in the production of cars.The production possibilities curve wherefore rotates clockwise with the maximum manageable production of cars (8 million) unchanged and an increase in the maximum possible number of missiles produced. (b) Now draw a curve that reflects technological improvement i n the production of both products. P3 represents an improvement in the technology of producing both cars and guided missiles and therefore an increase in the possible production of both. Discussion Questions Question 3 Comment on the adjacent statement from a ewspaper Our secondary school serves a splendid fervent meal for a dollar without costing the taxpayers anything, thanks in part to a government subsidy. All government subsidies are ultimately borne by taxpayers. The cost will either result in an increase in taxes to pay for the subsidy or some other government expenditure must be forgone, or the government will spend fresh created money, which will be inflationary and thus be paid for by taxpayers through higher prices for other goods and services. Thus, this statement is incorrect. 2