2.5-1 (4).docx Week 2 assignment Name: Directions: Complete the questions below by referring to the corresponding websites located above each question set (I & II). Answer the questions in RED text. 1. Factors of Production A. Analyzing the Factors of Production Economist Alfred Marshall (1842- 1924) exerted much inuence on the British. In this excerpt from his Principles of Economics, Marshall speaks about what distinguishes the factor of land. Land is on a different footing from man himself and those agents of production which are made by man; among which are included improvements made by him on the land itself. For while the supplies of all other agents of production respond in various degrees and various ways to the demand for their services, land makes no such response. Thus an exceptional rise in the earnings of any class of labor tends to increase its number, or eiciency, or both; and the increase in supply of efficient work of that class tends to cheapen the services which it renders to the community. If the increase is in their numbers then the rate of earnings of each will tend downwards towards the old level. But if the increase is in their eiciency; then, though they will probably earn more per head than before, the gain to them will come'om an increased national dividend, and will not be at the expense of other agents of production. And the same is true as regards capital; but it is not true as regards land. Please answer the following _questions in RED text: 1. What is the central theme of the above paragraph paragraph? 2. What is meant by "land makes no such response"? 3. According to Marshall, what is the relationship between land, labor and capital? 4. Marshall, in another portion of his book, states that land is but a particular form of capital from the point of View of the manufacturer. Is this a contradiction? Explain. 5. Give other examples of how capital and land are considered the same thing. B. Classifying Terms Classify each term from the list below as either: capital, labor or land. If you do not think that the item belongs in any of the categories, place it in the fouWand explain why 2.5-1 (4).docx C Hit Dy b no In? 9-3 Och-u You and your friends have been doing a good business at the hot dog stand you have been operating on weekends in a local parking lot. Sales are brisk! You have decided that, rather than just blowing your prots on a big party, to invest in a way to expand your business and -- you hope -- bring in even more prot. You have been selling 200 hot dogs each weekend at $1.00 each. Supplies cost you $100, and rent for your space in the parking lost was $25. You and a friend each spent ve hours working at the stand. That means you have $75 left to divide between your wages, and money to invest in expanding your business. The more wages you pay yopurself and your helper, the less you will have to invest. Now that you know the denitions of the three factors that you need in order to produce wealth, perhaps this knowledge can help you approach this business decision. Describe your plan for investing your hot-dog prots in the space below. Identify and evaluate specic investments in additional land, labor and capital - and try to estimate, as best you can, how many additional dogs each option will allow you to sell, and how much prot the investment will bring in. Your plan: II. Production Possibilities Frontier T h_e production possibility frontier illustrates the ejfect of limited resources on the passibilities for production, and how production possibilities curve. Copy and paste the following link into your browser and answer the questions below in RED text. Mp://www.netmba.com/econ/rnicro/production/possibility_/ Questions: 1. What two goods did the Island community produce? 2. Explain what Production Possibility Frontier is all about in 3 sentences minimum. 3. With this concept, if more than one item is produced, what happens to the production levels of the other item? 4. Explain point A in the rst graph. 2.5-1 (4).docx the same thing. B. Classifying Terms Classify each term from the list below as either: capital, labor or land. If you do not think that the item belongs in any of the categories, place it in the fourth column, non-applicable -- and explain why you put it there. - taxi cab - CEO of GM - river - salesperson - teacher - slave - store owner - school bus - owers for your sweetie - factory - personal computer - a $10 bill - apple pie for your dessert - air - forest - savings bond - tires - wild boar Capital C Hiawatha-195w You and your friends have been doing a good business at the hot dog stand you have been operating on weekends in a local parking lot. Sales are brisk! You have decided that, rather than just blowing your prots on a big party, to invest in a way to expand your business and - you hope -- bring in even more prot. You have been selling 200 hot dogs each weekend at $1.00 each. Supplies cost you $100, and rent for your space in the parking lost was $25. You and a friend each spent ve hours working at the stand. That means you have $75 left to divide between your wages, and money to invest in expanding your business. The more wages you pay yopurself and your helper, the less you will have to invest. Now that you know the denitions of the three factors that you need in order to produce wealth, perhaps this knowledge can help you approach this business decision. Describe your plan for investing your hot-dog prots in the space below. Identify and evaluate specic investments in additional land, labor and capital -- and try to estimate, as best you can, how many additional dogs each option will allow you to sell, and how much prot the investment will bring in. Your plan: II. Production-Bosmr