1.1 Application 1.1 Trade-offs

You have learned that people and businesses face trade-offs. Read the CASE STUDY Coal or Sun - or do you not care provided you have electricity? in N. Gregory Mankiw, Mark P. Taylor, and Andrew Ashwin. (2013) p.5-6. 1.

(1) Explain the trade-offs lessons in the Case Study. 1.2 Application 1.2 Production Possibility Frontier(PPF): A theoretical Model to illustrate Trade-offs

Read the concept of PPF on https://opentextbc.ca/principlesofeconomics2eopenstax/chapter/the-production-possibilities-frontier-and-social-choices/ and answer the following questions.

1. What does a production possibilities frontier (PPF) illustrate?

2. Why is a production possibilities frontier (PPF) typically drawn as a curve, rather than a straight line?

3. Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it. 4. What is productive efficiency? and Allocative efficiency?

1.3 Application 2.1 People and Businesses Respond to Incentives

Read the Article by Sebastian James (September, 2013) Tax and Non-Tax Incentives and Investments: Evidence and Policy Implications. Try to answer the following questions. http://www.estimacionestributarias.com/ archivos/Effectiveness.pdf

1. After reading this article, suppose you're asked by Namibia Chambers of Commerce and Industry (NCCI) to make a presentation to the Minister of Industrialization and SME Development about the importance of incentives specifically on the question: Do incentives matter? When and how? Prepare a presentation with well rounded arguments to the minister.

After reading the article by Sebastian James (2013), read the article on: Foreign Direct Investment in Ireland: Sustaining the success July 2014. https://www.shannonchamber.ie/wp-content/uploads/2014/ 12/Grant-Thornton-Foreign-Direct-Investment-in-Ireland_FINAL-220714-16321.pdf

1. In reference to the article on FDI in Ireland, do you agree with this statement (motivate your answer)"Public policy makers should never forget about incentives, because many policies change the costs or benefits that people face and, therefore, alter behavior" Mankiw G. and others (2013).

2. Which incentives, and how did this incentives altered the behaviors of foreign investors toward investing in Ireland?