Econ: Chapter 2

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that _____ has an absolute advantage in _____.

Laurence; both programs and sunglasses

Which statement is FALSE about the circular-flow diagram?

Money flows from households to firms as households offer factors of production for sale.

Which statement is normative? Women's labor force participation rate has increased during the past 100 years. The best way to encourage growth in the economy is through government spending. Children in the United States are required to go to school until they reach a certain age. The federal minimum wage is higher today than it was in 1990.

The best way to encourage growth in the economy is through government spending.

Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources. Which scenario BEST sets the stage for economic growth: The unemployment rate in Indiana rises from 5% to 6%. The percentage of Indiana residents with a college degree rises from 25% to 30%. The United States imports more and more low-cost steel from Asian countries. The Midwest has a devastating drought.

The percentage of Indiana residents with a college degree rises from 25% to 30%

If an economy is producing at a point on its production possibilities frontier, it is

efficient in production but not necessarily in allocation

The importance of an economic model is that it allows us to

focus on the effects of only one change at a time

When a nation's economy grows

its production possibility frontier shifts outward

Unemployment decreased to its lowest level in 10 years last month. This statement is a(n):

positive economic statement.

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that

the US has a comparative advantage in producing automobiles

To achieve gains from trade, each nation should specialize in the production of a good or service if

the country can make that good or service while forgoing the production of fewer alternative products than any other country

Economists who are asked to choose between two government policies may disagree because:

they base their conclusions on models that make different assumptions