PROBLEM 1

A student spends the summer working as an intern at a financial services company, gaining valuable experience, and receives $2,000 in pay for the summer. The student could have worked for the family business and earned $2,500 for the summer, or at a popular restaurant and earned $4,000 for the summer. Between these two alternative summer jobs, the student considered working for the family business as their next-best alternative to the internship. Based on the information given, what is the opportunity cost of working at the internship? Briefly explain your answer.

PROBLEM 2

For each statement below, determine whether it is a positive or normative statement. Briefly explain each answer.

a. In 2012, the Chinese economy grew at a 7.8% rate.

b. It is unreasonable that companies must pay an average of $15,000 per year to provide health insurance for an employee and their family.

c. The inflation rate for the U.S. last year was 2.1%.

d. A growth rate of 2.2% in the U.S. economy is too slow.