1. What are the three basic questions that all economic systems must answer? How does the United States answer these questions

2. A consultant works for $200 per hour. She likes to eat vegetables, but is not very good at growing them. Why does it make more economic sense for her to spend her time at the consulting job and just go the market to buy her vegetables?

3. When a widget producer hired its 20th worker, the output of the factory increased by 5 widgets per month. If the firm hires 4 more workers, would you expect output to increase by 20 widgets per month? Explain.

4. If you stuff your savings into your mattress rather than putting it into the bank, what is happening to the nominal and the real value of your savings? (If you are having trouble with this one, check the Web or look in Chapter 8 of our text.) When might stuffing it under the mattress be a good idea

5. Suppose you could save $200 by going to a different city to buy a new car. If that city is 50 miles away, what would you have to consider in making the decision to buy the car there?

6. "There are no free lunches"- explain

7. Can the United States, a country with many resources, produce everything its citizens want? Explain

8. What are two factors that could shift the production possibilities frontier outward