Activity 1

1/Discuss the extent to which society can change each of the four factors of
production. Give some examples.

Economists commonly categorize the elements of production into four categories;

land, labor, capital and entrepreneurship.
 Land; While the quantity of land remains constant within a society its
usage can be adapted. For instance, an area once used for farming could
be repurposed for housing. Transformed into a zone, near a residential
area.
 Labor; Enhancing education and healthcare can enhance the quality of the
workforce while factors like immigration or birth rates can influence labor
quantity. Additionally, regulations and laws concerning labor can impact its
availability in sectors.
 Capital; Both physical capital (e.g., tools and machinery) and human capital
(e.g., enhancing worker skills) contribute to growth. Technological
progressions further boost capital efficiency.
 Entrepreneurship; Although direct control over entrepreneurship is limited
fostering a environment through policies supporting small business
development facilitating access, to funding and safeguarding intellectual
property rights can encourage entrepreneurial activities.

2. Education is sometimes referred to as “human capital.” In what sense is

education like capital goods?
Education is often likened to "human capital", much like capital goods such as
machines. Just like buying machinery, investing in education means putting in
money and time now for rewards later. Education involves costs. Tuition fees and
study hours are some examples. These are direct investments toward future
success and earnings. Education also enriches an individual's abilities and knowle-
dge. This can lead to more efficiency and output, mirroring how capital goods
boost a company's productivity and output.
3. What are some options that a country has if it wishes to raise its standard of
living? Canwe say that people are happier in a country with a higher standard of
living?
There are various options a nation can use to improve life quality. These
methods encompass:
 Educational or training investments: Enhanced workers skills can boost
productivity and could result in elevated earnings and living standards.
 Infrastructure investments: Establishing or upgrading transport networks,
communication systems and additional infrastructures could facilitate
business and consequently spark economic growth.
 Boosting international commerce: Trading can expand access to fresh
markets and resources driving an economic growth and thus an
improvement in living standards.

Overall, it is difficult to say whether people are happier in a country with a

higher standard of living. While a higher standard of living can lead to increased
access to resources , it does not necessarily equate to greater happiness.
Happiness is a complex issue that is influenced by a wide range of factors,
including personal relationships, health, social support, and individual values and
beliefs. Nevertheless, world happiness reports and studies usually figure
developped countries usually on the top of the rankings proving that estimating a
country's happiness is based on an insights into the well-being of its citizens and
the allocation of resources and the development of policies that promote the
overall quality of life.

Activity 2

4.
1. a MacintoshTM computer: Capital
2. an electronics engineer: Labor
3. a Boeing 767TM: Capital
4. crude petroleum: Land
5. Buildings: Capital
6. energy and extractions: Land
7. Bill Gates: Entrepreneurship
8. college graduates: Labor
5.
1. the Mustapha's family: Not applicable (not an enterprise)
2. Marjane: Tertiary (service)
3. Ministry of finance: Not applicable (government)
4. the University of Tangier: Tertiary (education)
5. the Grocery: Tertiary (service)
6. Toyota Motors, Ltd.: Secondary (manufacturing/industry)
Activity 3
6.
1. the effect of protecting the trees on the price of lumber: Microeconomics
2. causes of the rise in inflation during the 2008's: Macroeconomics
3. the persistent deficit in our trade with Spain: Macroeconomics
4. effect of a proposed increase in the gas tax on demand: Microeconomics
5. the impact of a change in the exchange rate between the German Mark and
the US dollar on employment in the US and Germany: Macroeconomics
6. a cost-benefit analysis of federal exhaust emission standards:
Microeconomics
Activity 4
7.
1. Problem 1: GDP = (Quantity of yogurt produced x Price per yogurt cup) +
(Quantity of economics textbook produced x Price per economics textbook)
GDP = (5000 x 1) + (100 x 80) = $13,000
2. Problem 2: If the quantities produced remain constant, but prices double:
GDP = (Quantity of yogurt produced x Price per yogurt cup doubled) +
(Quantity of economics textbook produced x Price per economics textbook
doubled) GDP = (5000 x 2) + (100 x 160) GDP = $26,000
3. Problem 3: Doubling the price but not the quantity produced in the second
year doubled the gross domestic product, despite no increase in the actual
output, illustrating how changes in prices can impact GDP even if there is
no increase in the quantity of goods produced.
Activity 5
8. Year 1:
Nominal GDP = ($10 x 200) + ($50 x 100) = $2000 + $5000 = $7000

Since year 1 is the base year, the real GDP for year 1 is also $7000.

Year 2:
Nominal GDP = ($12 x 190) + ($60 x 110) = $2280 + $6600 = $8880

Using year 1 as the base year, we can calculate the real GDP for year 2 by using
the formula:

Real GDP = (Price of Pizza from Year 1 x Quantity of Pizza from Year 2) + (Price of
Smartphone from Year 1 x Quantity of Smartphone from Year 2)

Real GDP = ($10 x 190) + ($50 x 110) = $1900 + $5500 = $7400

Activity 6

Ex1

In terms of calculating GDP, only the fruits that are sold on the market would
count as a part of GDP in this list. The other activities such as Mrs. Miller picking
flowers in her garden, patients being treated in a hospital, pensioners doing
community work for free, and the garage buying spare tires in order to sell them
later would not count towards a country's GDP.

Ex2
Generally, there are 3 different methods to calculate the gdp:
 The Output Method (all value added by each producer),
 The Income Method (all income generated) and.
 The Expenditure Method (all spending).

Ex3

GDP = C + I + G + (X - M)

Result: GDP = 310 + 115 + 60 + (305 - 245) = 310 + 115 + 60 + 60 = 545

Ex4
The formula (I - S) + (G - T) + (X - M) = 0 represents the equilibrium condition in
the economy where total investment minus total saving, plus government
purchases minus taxes, and exports minus imports equals zero.

(I-S) is the saving-investment balance or I-S balance is a balance of national

savings and national investment. A surplus balance means households and
businesses together are net savers, building their financial asset position

(G-T) is the budget balance, budget deficits are a negative balance between a
government's spending and revenues.
(X-M) is the current account balance, which is a record of a country's
international transactions with the rest of the world, it is in surplus if
When G > T and I > S, it indicates that the economy is running a budget deficit.

Ex5
X=M+T+S–I–G
= 150 + 80 + 30 – 40 – 60 = 160

GDP = C +I + G + X – M = 350

Ex6
Value added = Output – Input =230 – 60 = 170

Activity7
Bread price Fuel price Basket of goods CPI Inflation rate
price

2015 1 2 8 100 0%
2016 2 3 14 175 75%
2017 3 4 20 250 43%
Activity 8
1- 4
2- 2
3- 1
4-3
5- 1
6- 1
7- 4
8- 4
9-4
10- 1