Reference no: EM131754

Question 1) For many years most people in kaur have either worked on farms or owned businesses, or they have been unemployed. Last December a manufacturer of office furniture overtake 50 acres of land and announced it would build a new factory. The company would employ 250 workers and have a yearly payroll of nearly $6,000,000.

Explain the effects of the new factory on the items below. Then place the number of each item on the circular-flow diagram to show whether the activity takes place in the product market or resource market

1. The number of people wanting to buy homes in kasur

2. The sales of clothing and other goods in kasur's stores

3. The number of people employed in kasur's stores

4. the number of stores rented in kasur

5. the number of cars sold at the local dealership

6. the wages paid to local construction workers

7. the number of tickets sold at the local movie theater

8. the profit earned by local grocery stores

9. consider you own a business that sells insurance in kasur. How will the new factory prepare entrepreneurial opportunities for you?

Question 2) Is free market best solution to the fundamental economic problem? Explain in detail.

Question 3) Consider that an economy produces only two goods, X and Y.

a. Show a reasonable production possibilities frontier for the economy.  Explain why you drew it as you did.

b. Consider that a new technological advance makes the economy much more productive in producing good Y.  Illustrate how this discovery might affect the production possibilities frontier that you drew.  Describe.

c. Does this technological change permit society to produce more of good X?

d. Pick a point on the original production possibilities frontier and label it A.  After the technological modification occurs is A an efficient production point?  Why or why not?

e. Explain what the opportunity cost of producing more X is at point A before and after the technological change occur

Question 4) what Describes why millions of economic resources tend to get arranged logically and productively rather than haphazardly and unproductively?

Question 5) On average, household in china save 40 percent of their annual income each year, whereas household in US save less than 5 percent. PPC are grown at 9 percent annually in china and 3.4 percent in US. In your view why is the difference in growth rates. Describe with the help of graph showing 'present goods' and 'future goods'.