Outline briefly

a.      How people make decisions?

b.      How they interact?

c.       How economy as a whole works?

1.  Give three examples of important trade offs, that you face in your daily life.

2.  What is the role of incentives in your life? Give two examples.

3.  How inflation and unemployment are related in short run?

4.  What is the opportunity cost of seeing a movie?

5.  Draw a circular flow diagram and show how households and firms interact with each other.

6.  Draw a production possibility frontier for an economy that produces corn and rice. What happens to this frontier if a new fertilizer is developed that doubles the amount of corn that can be produced on each acre of land?

7.  Find out the opportunity cost of corn in terms of rice in both cases.

8.  Classify the following topics as relating to microeconomics or macroeconomics.

a.  Your decision about how many hours to study.

b.  The effect of government spending on the national unemployment rate.

c.   A workers choice among a set of two jobs.

d.  The relationship between education and economic growth.

e.  The optimal choice of output for a firm producing electric heaters.