Hrs. Working/wk. / Hrs. in School/wk.
42 / 0
36 / 3
30 / 6
24 / 9
18 / 12
12 / 15
6 / 18
0 / 21

Unit 1 Performance Assessment - Fundamentals of Economics

Marginal Benefits Chart

DIRECTIONS: COMPLETE EACH OF THE THREE PARTS BELOW

Part 1:

A.)Create a Production Possibilities Curve illustrating the information in the Marginal Benefits Chart. Be sure to label all sides of your graph.

B.)Answer the following: How are factors of production illustrated in your chart for both going to school and performing your job?

  1. Labor-
  2. Capital-
  3. Land-

C.)Illustrate how your production possibilities frontier could move “out and to the right” on your Production Possibilities Curve and explain how this could happen for either or both of your resources (your time in labor and human capital (education)). Give examples of what could cause your frontier line to move “out and to the right”. Explain how this move to the right could be effected by investments in equipment and technology.

D.)Name one resource/good/service that could benefit you in your endeavor to go to school and/or go to work. Create a personal savings plan that could help you to reach the goal of attaining this resource and describe any possible investment plan.

E.)How can an investment in education lead to a higher standard of living? Give examples.

F.)Illustrate on your Production Possibilities Curve how you could reach a point of underutilization of your resources (time in labor and human capital in your education)

G.)Explain how SCARCITY is illustrated with the example provided in the Marginal Benefits Chart. What resources might be involved with going to school and going to work? Remember that money is a form of capital as well.

H.)Show how TRADE TROUGH GAIN is illustrated or might be explained with the example above.

I.)Explain the different costs and benefits for each of the options above. Think about everything that might go into going to school versus going to work.

PART 2

  1. Define the following terms:
  2. Voluntary Exchange-
  3. Economic Interdependence-
  4. Scarcity-
  5. Profit Motive-
  6. Creative Expression Short Essay: Write a short essay based on an event in your life or a situation from a movie/book. Please make sure the story illustrates all of the following themes from Economics:
  7. Two individuals, businesses, or nations must gain by voluntarily exchanging one good/service/resource for another.
  8. The reason why both parties considered their trade to be fair. Why did they agree to the particular “price” requested by the other?
  9. A benefit of relying on the other party for the good/service/resource and a cost of not being self-sufficient (due to limited resources).
  10. At least two ways scarcity affected the character’s choices.

Example:

Once upon a time, Luke Skywalker realized it was his destiny to bring down the evil empire of Darth Sidious. Unfortunately, he lacked the skills of a Jedi knight. His friends told him to visit a faraway planet and ask a Jedi Master name Yoda to train him. Luke was concerned about diverting valuable time and the use of his xwing ship away from helping the weakening rebel army. However, he knew that the cost of facing Darth Vader and the Darth Sidious without the skills of a Jedi was greater than the benefit his time and ship would provide to the rebel army. Knowing this, he set out to find Yoda.

Upon landing on the planet Dagobah, Luke inadvertently stumbles upon Yoda, Yoda recognizes the role Luke is destined to play in the war against the empire. Although Luke has no money to pay Yoda for his Jedi lessons, Yoda’s incentive to train Luke is his desire to have him defeat Darth Sidiousand restore peace to the galaxy. Although Luke had to give up time and fuel to travel to Dagobah, he could not have trained himself as well as Yoda trained him. Although Yoda had to use great amounts of energy and time to train Luke, it was worth the price because he could not have defeated Darth Sidious without Luke.

What you should have gained from this activity is that every decision incurs a cost and/or benefit. We use RATIONAL DECISION MAKING to compare choices and choose the option where the MARGINAL BENEFIT EXCEEDS THE COST. We can compare our options on a Production Possibilities Chart and Marginal Benefits Chart.

Terms

Opportunity Cost-Marginal Benefits-Production Possibilities-Growth through Investment-Incentives-Scarcity-Factors of Production-Marginal Decision Making-Costs-Benefits-Interdependence-Trade-Savings-Investment-Education