Problem

1) Explain the logic behind the economist's quip that "there is no such thing as a free lunch"

2) Suppose that your bank pays 4% interest per year on your savings account. Each $100 in the banks grows to 104 over a one - year period. If prices increase by 3% per year, how much do you really gain by keeping $100 in the bank for a year

3) What is the opportunity cost of your MBA education? How does the opportunity cost to you can benefit from a generous federally sponsored tuition grant?

4) Does my son pulling weeds in the backyard at my command constitute Labor? Does your answer change if my son and I agree that he will be paid $25 per bucket of weeds pulled? Explain

5) Two simplifying assumptions are used extensively in economics. What are they?

6) Would the following events cause a change in demand or a change in quantity demanded in the market for automobiles?

a) A limit is placed on the number of cars that can be imported from Japan.

b) Malaysia becomes a major new exporter of cars to the United states.