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Chapter 1: Q 3 (page 14)

Does the phrase “unlimited wants and limited resources” apply to both a low-income household and a middle-income household? Can the same phrase be applied to a very high-income household?

Short Answer

Expert verified

The phrase can be allowed to all the three households low-income, middle-income, and very high-income.

Step by step solution

01

Step 1. Definition of economics

Economics refers to the study of wants and the allocation of resources to fulfill the unlimited wants by the best and most efficient utilization of resources.

02

Step 2. Low-income and middle-income.

Yes, the phrase 'unlimited wants and limited resources can be applied to both low-income households as well as middle-income households. The person belonging to whichever group will always have wants that will be comparatively greater than his income and also because the resources in the economy are limited.

03

Step 3. Very high-income group.

The phrase is also true in the case of very high-income households as the wants will change with change in the standard of living and hence the resources being limited the wants will always be unlimited.

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Most popular questions from this chapter

Review Figure, and then state whether each of the following paired observations is on, above, or below the x-axis and on, to the left of, or to the right of the y axis.

a. (-10, 4)

b. (20, -2)

c. (10, 0)

For each of the following approaches that an economist might follow in examining a decision-making process, identify whether the approach relies on the rationality assumption or on the assumption of bounded rationality:

(a) An economic study of the number of online searches that individuals conduct before selecting a particular item to purchase online presumes that people are interested only in their own satisfaction, pursue their ultimate objectives, and consider every relevant option.

(b) An economist seeking to predict the effect that an increase in a state's sales tax rate will have on consumers' purchases of goods and services resumes that people are limited in their ability to process information about how the sales-tax-rate increase will influence the after-tax prices those consumers will pay.

(c) To evaluate the impact of an increase in the range of choices that an individual confronts when deciding among devices for accessing the Internet, an economic researcher makes the assumption that the individual is unable to take into account every new Internet-access option available to her.

Given the function y=8-2x, complete the following schedule and plot the curve.

y
x

-4

-2

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4

Centralized command and control prevail throughout a certain nation's economy. What three key economic questions have been addressed in this nation, and what has been the common element of the nation's answers to those questions?

Write a sentence contrasting positive and normative economic analysis.
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