MBA439 Business Economics

Trimester 3 2021
Problem Set One

1. Why does economic activity arise? Who are the participants and why do they participate?

2. Discuss the role of economic models to economic analysis.

3. State the problem and identify the variables if you had to create a model of the following:
a. Inflation in Fiji.
b. Distribution of household work within a household.
c. Exports of a firm based in Fiji.

4. What is the primary clue that tells us whether one productive resource is relatively scarce
than another? If water is such an important necessity, why is it so cheap compared to
other goods?

5. When deciding between renovating a water treatment plant or building a new community
pool, what would you recommend the government to consider? Argue the implications
(costs and benefits) of your recommendation.

6. Thinking like an economist: why is wearing seat belt compulsory and not an option?

7. If scarcity is the mother of allocation, state some simple allocation principles that you
would utilize in allocation of very scarce medical interventions such as organs, vaccines
or equipment (for instance, ventilators – which are complex, expensive machines used to
support critically ill COVID-19 patients).

8. Identify what you consider to be three of the most challenging economic problems in
Pacific Island countries.