ECON 101 LATEST EXAM COMPREHENSIVE ALL
QUESTIONS AND ANSWERS SURE A+
✔✔Why the PPF Might Be Bow-Shaped - ✔✔As the economy shifts resources from
beer to mountain bikes:
PPF becomes steeper
opp. cost of mountain bikes increases
Each point on graph will have a different pop cost.
So, PPF is bow-shaped when different workers have different skills, different opportunity
costs of producing one good in terms of the other.
The PPF would also be bow-shaped when there is some other resource, or mix of
resources with varying opportunity costs
(E.g., different types of land suited for different uses).
✔✔Microeconomics - ✔✔is the study of how households and firms make decisions and
how they interact in markets.
✔✔Macroeconomics - ✔✔is the study of economy-wide phenomena, including inflation,
unemployment, and economic growth.
✔✔As scientists, economists make positive statements... - ✔✔which attempt to describe
the world as it is.
, ✔✔As policy advisors, economists make normative statements... - ✔✔which attempt to
prescribe how the world should be. Positive statements can be confirmed or refuted,
normative statements cannot.
✔✔Positive or Normative?
Prices rise when the government increases the quantity of money. - ✔✔Positive -
describes a relationship, could use data to confirm or refute.
✔✔Positive or Normative?
The government should print less money. - ✔✔Normative - this is a value judgment,
cannot be confirmed or refuted.
✔✔Positive or Normative?
A tax cut is needed to stimulate the economy. - ✔✔Normative - another value judgment.
✔✔Positive or Normative?
An increase in the price of burritos will cause an increase in consumer demand for
music downloads. - ✔✔Positive - describes a relationship. Note that a statement need
not be true to be positive.
✔✔Interdependence - ✔✔Every day you rely on many people from around the world,
most of whom you've never met, to provide you with the goods and services you enjoy.
✔✔Example of why trading is better:
Production Possibilities?
Which country has an absolute advantage in computers? - ✔✔Two countries: the U.S.
and Japan
Two goods: computers and wheat
One resource: labor, measured in hours
We will look at how much of both goods each country produces and consumes
if the country chooses to be self-sufficient
if it trades with the other country
The U.S. has 50,000 hours of labor available for production, per month.
Producing one computer requires 100 hours of labor.
Producing one ton of wheat requires 10 hours of labor.
Producing one computer requires 125 labor hours in Japan, but only 100 in the U.S.
The U.S. has an absolute advantage in both goods!
✔✔Exports: - ✔✔goods produced domestically and sold abroad
QUESTIONS AND ANSWERS SURE A+
✔✔Why the PPF Might Be Bow-Shaped - ✔✔As the economy shifts resources from
beer to mountain bikes:
PPF becomes steeper
opp. cost of mountain bikes increases
Each point on graph will have a different pop cost.
So, PPF is bow-shaped when different workers have different skills, different opportunity
costs of producing one good in terms of the other.
The PPF would also be bow-shaped when there is some other resource, or mix of
resources with varying opportunity costs
(E.g., different types of land suited for different uses).
✔✔Microeconomics - ✔✔is the study of how households and firms make decisions and
how they interact in markets.
✔✔Macroeconomics - ✔✔is the study of economy-wide phenomena, including inflation,
unemployment, and economic growth.
✔✔As scientists, economists make positive statements... - ✔✔which attempt to describe
the world as it is.
, ✔✔As policy advisors, economists make normative statements... - ✔✔which attempt to
prescribe how the world should be. Positive statements can be confirmed or refuted,
normative statements cannot.
✔✔Positive or Normative?
Prices rise when the government increases the quantity of money. - ✔✔Positive -
describes a relationship, could use data to confirm or refute.
✔✔Positive or Normative?
The government should print less money. - ✔✔Normative - this is a value judgment,
cannot be confirmed or refuted.
✔✔Positive or Normative?
A tax cut is needed to stimulate the economy. - ✔✔Normative - another value judgment.
✔✔Positive or Normative?
An increase in the price of burritos will cause an increase in consumer demand for
music downloads. - ✔✔Positive - describes a relationship. Note that a statement need
not be true to be positive.
✔✔Interdependence - ✔✔Every day you rely on many people from around the world,
most of whom you've never met, to provide you with the goods and services you enjoy.
✔✔Example of why trading is better:
Production Possibilities?
Which country has an absolute advantage in computers? - ✔✔Two countries: the U.S.
and Japan
Two goods: computers and wheat
One resource: labor, measured in hours
We will look at how much of both goods each country produces and consumes
if the country chooses to be self-sufficient
if it trades with the other country
The U.S. has 50,000 hours of labor available for production, per month.
Producing one computer requires 100 hours of labor.
Producing one ton of wheat requires 10 hours of labor.
Producing one computer requires 125 labor hours in Japan, but only 100 in the U.S.
The U.S. has an absolute advantage in both goods!
✔✔Exports: - ✔✔goods produced domestically and sold abroad
