Answer to Question 1
On May 6, 2014, the top economic news story discussed a report claiming that climate change is already harming the economy. The report asserted that climate change is already bringing extreme weather such as floods, drought, and other weather-related disasters, all of which harm the nation's economy.
This story implicitly discusses the how question: Will goods and services be produced in ways that limit climate change or not? It also discusses the what question: Will goods and services that limit climate change, such as solar panels, be produced?
The story implicitly illustrates a tradeoff: If choices are taken to limit climate change, such as reducing carbon emissions from generating power, consumers will pay higher prices but the extent of climate change will be decreased.
Answer to Question 2
If the present value of the income stream associated with an investment is less than the full cost of the investment project, the investment should not be undertaken. If the present value of the income stream is greater than or equal to the full cost of the investment project, it should be undertaken.
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The Eye and the Eye Wall—a Closer Look
Economic and Social Development
Conventional view of economic activity
Economic recession in 2008 saw a small decrease in demand
economic