Introduction to Economics - HOTS Question - With Special reference to Poland Economy

Topic – Introduction to Economics – Unit 1




Note – Most Important How does a Political disturbance affect PPC


Business cycle depressions are not the only reason why an economy might be inside the PPF An economy might suffer from inefficiency or dislocations because of strikes, political disturbances or revolution Such a change occurred during the early 1990 in Poland after that country substituted a free market economy with its socialist command economy. Because of the dramatic change in the country system, output fell and unemployment rose as people attempted to adjust to change law ,price and incomes A political and economic revolution pushed Poland temporarily inside the PPF



Questions and Answers relating to PPC
Must for a students who want to score a perfect score of 100 and want to develop a acumen of the subject

Q1 Assume Econoland produces haircuts and shirts with inputs of labor. Econoland has 1000 hours of labor available. A haircut requires ½ hour of labor ; while shirt requires 5 hours of labor Construct Econoland PPC

Q2 From 1982 to 1990 , the American economy grew rapidly as unemployment fell and capital equipment was utilized more intensively . Draw PPC for 1982 and 1990 and put in two points to illustrate where the economy might have been in both those years

Q3 Many scientists believe that we are rapidly depleting our natural resources . Assume that there are only 2 inputs labor and natural resources producing two goods haircuts and gasoline with no improvement in society technology over time
Show what would happen over time if natural resources are exhausted with the help of PPC
How would invention and technology modify your answer
On the basis of this example , explain why it is said that “ economic growth is a race between depletion and invention”

 Q4 Consider a following problem for a student After 8 hours a day of sleep, you have 16 hours a day to divide between leisure and study . Plot the straight line relationship between all combination of leisure and study on the graph

Q5  Identify which of the following are normative and positive statement
1.       The 1990 Persian Gulf crisis raised oil prices , which led to lower consumption of gasoline .
2.       The Chinese economy has grown more rapidly than has the Indian economy
3.       The deserving poor should pay no tax
4.       The oil companies are making excessive profits and should be subject to windfall profit tax
5.       Rising food prices contributed to the French revolution


Note – The above extract is taken from the book – Paul A Samuelson and William D Nordhaus
For suggestions , queries , feedback and discussion do feel to connect me
Pankaj Bhanwani
#9899971997
#pankajbhanwani@gmail.com



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