Questions for review - quiz 1 (work in progress)

Which of the following is most likely to produce scientific evidence about a theory?

A radio talk show host collecting data from listeners on how capital markets respond to taxation.

Which of the following can lead to an increase in the supply for good X?

An increase in consumers' income, assuming good X is a normal.

Which of the following events will cause an increase in the market demand for Guinness (a brand of beer)?

An increase in the price of Heineken (another brand of beer)

The production possibilities frontier is bowed outward because the trade-offs between the production of any two goods are constant. (T/F)

False—changes based on wants and needs. Shouldn't be constant, it's variable.

Points outside the production possibilities frontier are attainable but inefficient. (T/F)

False—that potential is unattainable but more efficient

Which of the following is not a factor of production?

Money

Positive statements are:

Statements of description that can be tested

A local grocery store orders 200 cases of Pepsi each week and sells them at a price of $6.00 per case. At the end of the first week, they have only sold 160 cases. What economic situation is the grocery store facing and what will have to happen to price for equilibrium to be attained?

Surplus; prices will fall

The scientific method requires that:

The scientist be objective

Which of the following statements is normative?

The unemployment rate should be lower

If an economy is operating on its production possibilities frontier, it must produce less of one good if it produces more of another. (T/F)

True

If an economy were experiencing substantial unemployment, the economy is producing inside the production possibilities frontier. (T/F)

True

Normative statements can be refuted with evidence. (T/F)

True

Most economists believe that tariffs and import quotas usually reduce general economic welfare. (T/F)

True—99% of economists do not believe in trade barriers/tariffs

An advance in production technology would cause the production possibilities curve to shift outward. (T/F)

True—reaching outside the curve is because of technology. Technology is a significant factor for any economy.

When economists make positive statements, they are more likely to be acting as scientists. (T/F)

True—they rely on theories and the scientific method (note: if the word was *normative*, the answer would be false)