ASU ECON 211 FINAL EXAM
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📋 DOCUMENT OVERVIEW 106 Qs
This document, "ASU Econ 211 Final Exam," covers microeconomic concepts such as production
possibilities frontier, opportunity cost, comparative and absolute advantage, trade, and aggregate
demand, as well as macroeconomic topics like velocity and interest rates. The document provides 106
questions with correct answers and detailed explanations, serving as a study resource for understanding
and reviewing these economic concepts. Students can utilize this document to review and reinforce their
understanding of key economic principles, helping to solidify their knowledge and prepare for exams.
✓ Verified Answers ✓ Exam Ready ✓ Study Guide
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EXAM QUESTIONS
QUESTION 1
What does a production possibilities frontier display?
CORRECT ANSWER
Possible combinations of output an economy can produce given available factors of production and
technology.
RATIONALE: A production possibilities frontier displays the possible combinations of output an economy can produce
given available factors of production and technology because it represents the boundary between what is achievable
with the available resources and what is not. By showing the trade-offs between different goods or services, the
production possibilities frontier illustrates the concept of scarcity and the economy's capacity to produce with limited
resources.
QUESTION 2
What is a normative statement?
CORRECT ANSWER
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, Policymakers should increase the minimum wage to improve standard of living.
RATIONALE: A normative statement is a claim that expresses a value judgment or recommendation, rather than a
neutral or objective fact, and it relies on moral, social, or personal values to justify its assertion. "Policymakers should
increase the minimum wage to improve standard of living" is a normative statement because it prescribes a specific
action (increasing the minimum wage) based on a value judgment (improving standard of living), rather than stating an
objective fact about the current minimum wage or its effects.
QUESTION 3
The opportunity cost of helping a friend move is...
CORRECT ANSWER
the next best use of the time and energy spent helping your friend.
RATIONALE: Opportunity cost is the value of the next best alternative that is given up when a choice is made, and in
this case, helping a friend move represents a choice of how to spend time and energy. The correct answer, "the next
best use of the time and energy spent helping your friend," calculates the opportunity cost by considering what could be
done with this time and energy if it weren't spent helping the friend move.
QUESTION 4
An entity has a comparative advantage if it can produce what?
CORRECT ANSWER
At a lower opportunity cost than another entity.
RATIONALE: An entity has a comparative advantage if it can produce a good or service at a lower opportunity cost than
another entity because this means it has the ability to give up less of something else to produce one more unit of that
good or service. This is in contrast to the other entity, which would have to give up more of something else to produce
one more unit, making the first entity more efficient in its production.
QUESTION 5
T/F: Suppose the United States has an absolute advantage in the production of oil and wheat. This
means that the U.S. would not gain from trading these goods.
CORRECT ANSWER
FALSE
RATIONALE: Having an absolute advantage in the production of oil and wheat means that the United States can
produce both goods more efficiently than any other country, including its trading partners. This is a sufficient condition
for trading to occur, as the U.S. can specialize in producing the good for which it has the absolute advantage, allowing it
to gain from trade through comparative advantage.
QUESTION 6
The United States has a comparative advantage in the production of wheat and an absolute advantage
in the production of both apples and wheat relative to Canada. If the U.S. and Canada specialize and
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, trade, the U.S. should produce what?
CORRECT ANSWER
Wheat
RATIONALE: The U.S. should produce wheat because it has a comparative advantage in wheat production, meaning it
can produce wheat at a lower opportunity cost relative to Canada. Specializing in wheat allows the U.S. to take
advantage of its comparative advantage and allocate resources more efficiently.
QUESTION 7
The law of the demand states that if price rises, quantity demanded does what?
CORRECT ANSWER
Decreases
RATIONALE: The law of demand holds that as the price of a good increases, consumers have less disposable income to
spend on it, leading to a decrease in the quantity demanded due to its higher relative cost. This inverse relationship
between price and quantity demanded is a fundamental principle of microeconomics, illustrating how price changes
influence consumer behavior and market outcomes.
QUESTION 8
We would expect demand for cars to increase if...
CORRECT ANSWER
The price of gasoline falls.
RATIONALE: When the price of gasoline falls, it reduces the cost of owning and operating a car, making it more
affordable for people to buy or use cars. This affordability increase in turn leads to an increase in demand for cars, as
more people are likely to purchase or rent them.
QUESTION 9
As income increases, consumers purchase more cars. Cars what type of good?
CORRECT ANSWER
Normal goods
RATIONALE: As income increases, consumers are able to afford more cars, indicating that the demand for cars is
sensitive to changes in income, which is a characteristic of normal goods. This means that as income rises, the quantity
demanded of the good also increases, causing it to be classified as a normal good.
QUESTION 10
Supply curves show the relationship between price and quantity demanded. Assuming the law of
supply holds, supply curves are what?
CORRECT ANSWER
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📋 DOCUMENT OVERVIEW 106 Qs
This document, "ASU Econ 211 Final Exam," covers microeconomic concepts such as production
possibilities frontier, opportunity cost, comparative and absolute advantage, trade, and aggregate
demand, as well as macroeconomic topics like velocity and interest rates. The document provides 106
questions with correct answers and detailed explanations, serving as a study resource for understanding
and reviewing these economic concepts. Students can utilize this document to review and reinforce their
understanding of key economic principles, helping to solidify their knowledge and prepare for exams.
✓ Verified Answers ✓ Exam Ready ✓ Study Guide
Trusted by thousands of students and professionals worldwide
EXAM QUESTIONS
QUESTION 1
What does a production possibilities frontier display?
CORRECT ANSWER
Possible combinations of output an economy can produce given available factors of production and
technology.
RATIONALE: A production possibilities frontier displays the possible combinations of output an economy can produce
given available factors of production and technology because it represents the boundary between what is achievable
with the available resources and what is not. By showing the trade-offs between different goods or services, the
production possibilities frontier illustrates the concept of scarcity and the economy's capacity to produce with limited
resources.
QUESTION 2
What is a normative statement?
CORRECT ANSWER
Trusted by thousands of students and professionals worldwide Page 1 of 28
, Policymakers should increase the minimum wage to improve standard of living.
RATIONALE: A normative statement is a claim that expresses a value judgment or recommendation, rather than a
neutral or objective fact, and it relies on moral, social, or personal values to justify its assertion. "Policymakers should
increase the minimum wage to improve standard of living" is a normative statement because it prescribes a specific
action (increasing the minimum wage) based on a value judgment (improving standard of living), rather than stating an
objective fact about the current minimum wage or its effects.
QUESTION 3
The opportunity cost of helping a friend move is...
CORRECT ANSWER
the next best use of the time and energy spent helping your friend.
RATIONALE: Opportunity cost is the value of the next best alternative that is given up when a choice is made, and in
this case, helping a friend move represents a choice of how to spend time and energy. The correct answer, "the next
best use of the time and energy spent helping your friend," calculates the opportunity cost by considering what could be
done with this time and energy if it weren't spent helping the friend move.
QUESTION 4
An entity has a comparative advantage if it can produce what?
CORRECT ANSWER
At a lower opportunity cost than another entity.
RATIONALE: An entity has a comparative advantage if it can produce a good or service at a lower opportunity cost than
another entity because this means it has the ability to give up less of something else to produce one more unit of that
good or service. This is in contrast to the other entity, which would have to give up more of something else to produce
one more unit, making the first entity more efficient in its production.
QUESTION 5
T/F: Suppose the United States has an absolute advantage in the production of oil and wheat. This
means that the U.S. would not gain from trading these goods.
CORRECT ANSWER
FALSE
RATIONALE: Having an absolute advantage in the production of oil and wheat means that the United States can
produce both goods more efficiently than any other country, including its trading partners. This is a sufficient condition
for trading to occur, as the U.S. can specialize in producing the good for which it has the absolute advantage, allowing it
to gain from trade through comparative advantage.
QUESTION 6
The United States has a comparative advantage in the production of wheat and an absolute advantage
in the production of both apples and wheat relative to Canada. If the U.S. and Canada specialize and
Trusted by thousands of students and professionals worldwide Page 2 of 28
, trade, the U.S. should produce what?
CORRECT ANSWER
Wheat
RATIONALE: The U.S. should produce wheat because it has a comparative advantage in wheat production, meaning it
can produce wheat at a lower opportunity cost relative to Canada. Specializing in wheat allows the U.S. to take
advantage of its comparative advantage and allocate resources more efficiently.
QUESTION 7
The law of the demand states that if price rises, quantity demanded does what?
CORRECT ANSWER
Decreases
RATIONALE: The law of demand holds that as the price of a good increases, consumers have less disposable income to
spend on it, leading to a decrease in the quantity demanded due to its higher relative cost. This inverse relationship
between price and quantity demanded is a fundamental principle of microeconomics, illustrating how price changes
influence consumer behavior and market outcomes.
QUESTION 8
We would expect demand for cars to increase if...
CORRECT ANSWER
The price of gasoline falls.
RATIONALE: When the price of gasoline falls, it reduces the cost of owning and operating a car, making it more
affordable for people to buy or use cars. This affordability increase in turn leads to an increase in demand for cars, as
more people are likely to purchase or rent them.
QUESTION 9
As income increases, consumers purchase more cars. Cars what type of good?
CORRECT ANSWER
Normal goods
RATIONALE: As income increases, consumers are able to afford more cars, indicating that the demand for cars is
sensitive to changes in income, which is a characteristic of normal goods. This means that as income rises, the quantity
demanded of the good also increases, causing it to be classified as a normal good.
QUESTION 10
Supply curves show the relationship between price and quantity demanded. Assuming the law of
supply holds, supply curves are what?
CORRECT ANSWER
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