CRITICAL THINKING QUESTIONS
- Suppose you have a team of two workers: one is a baker and one is a chef. Explain why the kitchen can produce more meals in a given period of time if each worker specializes in what they do best than if each worker tries to do everything from appetizer to dessert.
- Can you think of any examples of goods; that is, goods or services that are not scarce?
- A balanced federal budget and a balance of trade are secondary goals of macroeconomics, while growth in the standard of living (for example) is a primary goal. Why do you think that is so?
- Macroeconomics is an aggregate of what happens at the microeconomic level. Would it be possible for what happens at the macro level to differ from how economic agents would react to some stimulus at the micro level? Think about the behavior of crowds.
- Why is it unfair or meaningless to criticize a theory as “unrealistic”?
- Suppose, as an economist, you are asked to analyze an issue unlike anything you have ever done before. Also suppose you do not have a specific model for analyzing that issue. What should you do? What would a carpenter do in a similar situation?
- During the Second World War, Germany’s factories were decimated. It also suffered many human casualties, both soldiers and civilians. How did the war affect Germany’s production possibilities curve?
- What assumptions about the economy must be true for the invisible hand to work? To what extent are those assumptions valid in the real world?
- Do economists have any particular expertise at making normative arguments? In other words, they might have expertise in making positive statements about some economic policy, for example (i.e., statements about what will happen), but do they have special expertise to judge whether or not the policy should be undertaken?