Course: ECO 110

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Unit 1 Practice Problem

Unit 1 Practice Problem

Identify the elements of scarcity, choice, and opportunity cost in each of the following two situations:

1. The Environmental Protection Agency is considering an order that a 500-acre area on the outskirts of a large city be preserved in its natural state, because the area is home to a rodent that is considered an endangered species. Developers had planned to build a housing development on the land.

2. The manager of an automobile assembly plant is considering whether to produce cars or sport utility vehicles (SUVs) next month. Assume that the quantities of labor and other materials required would be the same for either type of production.

Now consider the following:

3. What is the approximate dollar cost of the tuition and other fees associated with the economics course you are taking? Does this dollar cost fully reflect the opportunity cost to you of taking the course?

Consider the following multiple choice problem:

Explain whether each of the following is labor, capital, or a natural resource.

1. An unemployed factory work era.
2. A college professor.
3. The library building on your campus.
4. An untapped deposit of natural gas.