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 Toronto for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot? Explain.

2. Cite three examples of recent decisions that you made in which you (at least implicitly)weighed marginal cost and marginal benefit.

3. Indicate whether each of the following statements applies to microeconomics or macroeconomics:

a. The unemployment rate in Canada was 7.4 percent in November 2011.

b. A Canadian software firm discharged 15 workers last month and transferred the work to India.

c. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

d. Canadian output, adjusted for inflation, grew by 3.3 percent in 2010.e. Last week, Scotiabank lowered its interest rate on business loans by one-half of 1 percentage point.

f. The consumer price index rose by 1.8 percent in 2010.

7. What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?

8. Why is money not considered to be a capital resource in economics? Why is entrepreneurial ability considered a category of the economic resource, distinct from labor? What are the major functions of the entrepreneur?

10. Explain if and how each of the following events affects the location of a country's production possibilities curve:

a. The quality of education increases.

b. The number of unemployed workers increases.

c. A new technique improves the efficiency of extracting iron from ore.

d. A devastating earthquake destroys numerous production facilities