1.What is an opportunity cost? How does the idea relate to the definition of economics? Which of the following decisions would entail the greater opportunity cost: Allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot? Explain.

2.What is meant by the term "utility" and how does the idea relate to purposeful behavior?

3.State (a) a positive economic statement of your choice, and then (b) a normative economic statement relating to your first statement.

4. How does the slope of a budget line illustrate opportunity cost and trade-offs? How does a budget line illustrate scarcity and the effect of limited incomes? Answer the same questions using the Production Possibilities curve, if applicable.

5.Specify and explain the typical shapes of marginal-benefit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefit, should more or fewerresources be allocated to this product? Explain.

3 pts each Due 6/4