inquizitive 2 - model building &
gains from trade 2025/2026
QUESTIONS AND 100% ANSWERS HIGHLY
GRADED A+
T/F: An economic model is always a simplification. - CORRECT ANSWERS--True
What methods may an economist use to test a hypothesis? - CORRECT ANSWERS--
Method to Test a Hypothesis:
- Conduct one or more experiments.
- Gather historical data
- Wait for real-world events to confirm or refute the hypothesis.
Not a Method to Test a Hypothesis:
- Frame the hypothesis as a normative statement.
- Formulate an alternative hypothesis
Match the appropriate label to each specific good. - CORRECT ANSWERS--Capital
good:
- Cement mixing truck
- Commercial laser printer
Consumer good:
- Running shoes
- Trip to Disneyland
- Mountain bike
The figure shows an increase in resources that shifts the production possibilities frontier
from PPF1 to PPF2.
Suppose the economy was and is only producing pizzas. How many more pizzas can
the economy produce after the shift to PPF2? - CORRECT ANSWERS--20
(The maximum number of pizzas the economy could produce with the resources given
by PPF1 was 100, and the maximum number of pizzas the economy can now produce
with the resources given by PPF2 is 120. Thus, the increase is 20)
In one day, Al's Furniture can make 3 tables or 4 chairs, whereas BIG Furniture
Warehouse can make 20 tables or 30 chairs.
, Match the concept to the corresponding description. - CORRECT ANSWERS--Gain
from trade:
BIG and Al's could both benefit if they coordinated their production efforts.
Comparative advantage:
Al's can make tables at a lower opportunity cost than BIG.
Absolute advantage:
BIG can make more tables than Al's.
Trade-off:
For BIG to make more tables, it has to make fewer chairs.
Tahani and Chidi produce ties and belts. Chidi can produce a maximum of 120 ties or
40 belts and Tahani can produce 90 ties or 60 belts. They decide to specialize in their
respective comparative advantage of production, and they agree to trade at a rate of 2
ties = 1 belt.
If Chidi agrees to trade 50 ties with Tahani, which of the following represents Tahani's
PPF and what she can have after trade? - CORRECT ANSWERS--Tahani has the
comparative advantage in belts whereas Chidi has the comparative advantage in ties.
If Tahani specializes in belts (60), she will give up 25 belts to get 50 ties.
Trade allows Tahani to have 5 more belts and ties than producing them alone.
Which country is a good example of a high present rate of investment and a low present
rate of consumer goods consumption? - CORRECT ANSWERS--Mexico
Identify whether these statements are normative or positive. - CORRECT ANSWERS--
Normative Statement:
- Everyone should wear a face mask because it is civically responsible to do so.
- Steph Curry is the best point guard because he has the highest shooting average of
anyone in the NBA.
- We need a progressive tax system to improve equality and fairness for taxpayers in a
society.
- Income inequality should be minimized in a developed society.
Positive Statement:
- Carla will get more exercise at the fair than at a movie.
- The average person lies four times a day.
- If you practice tennis two hours a day, you will win more matches.
T/F: Juan and Wanda both make pancakes and bacon. If we compare the opportunity
costs and possible gains from trade for Juan and Wanda, we can determine the exact
exchange ratio at which the parties will agree to trade. - CORRECT ANSWERS--False
gains from trade 2025/2026
QUESTIONS AND 100% ANSWERS HIGHLY
GRADED A+
T/F: An economic model is always a simplification. - CORRECT ANSWERS--True
What methods may an economist use to test a hypothesis? - CORRECT ANSWERS--
Method to Test a Hypothesis:
- Conduct one or more experiments.
- Gather historical data
- Wait for real-world events to confirm or refute the hypothesis.
Not a Method to Test a Hypothesis:
- Frame the hypothesis as a normative statement.
- Formulate an alternative hypothesis
Match the appropriate label to each specific good. - CORRECT ANSWERS--Capital
good:
- Cement mixing truck
- Commercial laser printer
Consumer good:
- Running shoes
- Trip to Disneyland
- Mountain bike
The figure shows an increase in resources that shifts the production possibilities frontier
from PPF1 to PPF2.
Suppose the economy was and is only producing pizzas. How many more pizzas can
the economy produce after the shift to PPF2? - CORRECT ANSWERS--20
(The maximum number of pizzas the economy could produce with the resources given
by PPF1 was 100, and the maximum number of pizzas the economy can now produce
with the resources given by PPF2 is 120. Thus, the increase is 20)
In one day, Al's Furniture can make 3 tables or 4 chairs, whereas BIG Furniture
Warehouse can make 20 tables or 30 chairs.
, Match the concept to the corresponding description. - CORRECT ANSWERS--Gain
from trade:
BIG and Al's could both benefit if they coordinated their production efforts.
Comparative advantage:
Al's can make tables at a lower opportunity cost than BIG.
Absolute advantage:
BIG can make more tables than Al's.
Trade-off:
For BIG to make more tables, it has to make fewer chairs.
Tahani and Chidi produce ties and belts. Chidi can produce a maximum of 120 ties or
40 belts and Tahani can produce 90 ties or 60 belts. They decide to specialize in their
respective comparative advantage of production, and they agree to trade at a rate of 2
ties = 1 belt.
If Chidi agrees to trade 50 ties with Tahani, which of the following represents Tahani's
PPF and what she can have after trade? - CORRECT ANSWERS--Tahani has the
comparative advantage in belts whereas Chidi has the comparative advantage in ties.
If Tahani specializes in belts (60), she will give up 25 belts to get 50 ties.
Trade allows Tahani to have 5 more belts and ties than producing them alone.
Which country is a good example of a high present rate of investment and a low present
rate of consumer goods consumption? - CORRECT ANSWERS--Mexico
Identify whether these statements are normative or positive. - CORRECT ANSWERS--
Normative Statement:
- Everyone should wear a face mask because it is civically responsible to do so.
- Steph Curry is the best point guard because he has the highest shooting average of
anyone in the NBA.
- We need a progressive tax system to improve equality and fairness for taxpayers in a
society.
- Income inequality should be minimized in a developed society.
Positive Statement:
- Carla will get more exercise at the fair than at a movie.
- The average person lies four times a day.
- If you practice tennis two hours a day, you will win more matches.
T/F: Juan and Wanda both make pancakes and bacon. If we compare the opportunity
costs and possible gains from trade for Juan and Wanda, we can determine the exact
exchange ratio at which the parties will agree to trade. - CORRECT ANSWERS--False
