Microeconomics: Positive Statements, Resource Allocation, and GDP

This assignment delves into fundamental microeconomic principles, addressing topics such as positive economics, resource allocation, and opportunity cost. It begins by identifying a given statement about the avocado market as a positive economic statement due to its testable nature and reliance on factual data. The assignment then explores whether resources used in the military sector can be considered productive resources, affirming that they can be classified as land, labor, or capital regardless of the sector. Finally, it examines the opportunity cost of North Korea's significant military spending, highlighting the trade-offs in terms of forgone improvements in food availability and electricity. This document is available on Desklib, a platform providing students with AI-based study tools and a wealth of academic resources.

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HAND UP ASSIGNMENT

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Table of contents
Question 1..................................................................................................................................3
Question 2..................................................................................................................................3
Question 3..................................................................................................................................3
Reference....................................................................................................................................4

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Question 1
The given question is regarding the microeconomics branch of economics. Microeconomics
is the branch of economics that deals with the behaviours and features of customers, sellers,
and product specific markets such as rice, potato, pen and many more. The given statement
only talks about the market of avocados and hence, therefore, comes under the study of
microeconomics.
The statement given in the question is positive. The positive economics refers to the fact and
statistical figures which can be tested in order to check the reliability. Contrasting with the
normative economics or statements, positive economics does not state individual opinions
regarding the economic activities (Baumol and Blinder, 2015). In this case, the given
statement says the price of avocados has increased by 60% and this is due to the decrease in
the supply of the market. At any given time, the relationship between the heavy rainfall and
the supply in the market can be tested. Apart from that, the impact of the reduction in supply
on the price level of the market can also be tested through the demand-supply theory. Thus,
the given statement is a positive statement corresponding to positive economics.
Question 2
Yes, they can be the example of land, labour, and capital as the definition of the productive
resources does not depend on the sector where they belong (Goodwin et al. 2015). The
productive resources inputs in the production which gets converted into output. In this case,
these factors of the production help in the production in the sector of military and hence can
be the example of productive resources like land, labour, and capital.
Question 3
According to the article, North Korea spent more than 20% of the GDP on the military. Now
as per the principle of economics, the opportunity cost of some activity is the forgone value
of some other activity which could have been enjoyed if the amount was spent on the
alternative activity (Baumol and Blinder, 2015). Therefore, the opportunity cost of spending

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more than 20% of GDP on the military is improved food availability and electricity which
could have been achieved had the government spent the same amount of money for the
development.

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Reference
Baumol, W.J. and Blinder, A.S., 2015. Microeconomics: Principles and policy. Cengage
Learning.
Goodwin, N., Harris, J.M., Nelson, J.A., Roach, B. and Torras, M., 2015. Microeconomics in
context. Routledge.