Question 11 (4 points) Positive economics: Question 11 options: Question 12 (4 p

Question

Question 11 (4 points)

Positive economics:

Question 11 options:

Question 12 (4 points)

Reference: Ref 2-22

(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Eastland is:

Question 12 options:

Question 13 (4 points)

Reference: Ref 2-9

(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing at point A and it wants to produce at point B, it needs to:

Question 13 options:

Question 14 (4 points)

Reference: Ref 2-3

(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. If the economy is producing at alternative X, the opportunity cost of producing at Y instead of X is ________ units of consumer goods per period.

Question 14 options:

Question 15 (4 points)

A good is normal if which of the following is true?

Question 15 options:

Question 16 (4 points)

You notice that the price of DVD players falls and the quantity of DVD players sold increases. This set of observations can be the result of the:

Question 16 options:

Question 17 (4 points)

“In 2008, air travel decreased substantially despite significant reductions in ticket prices.” If this information is correct, it indicates that the law of demand did not apply to air travel in 2008.

Question 17 options:

Question 18 (4 points)

Reference: Ref 3-7

(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. Given the equilibrium after a change in supply from S1 to S2:

Question 18 options:

Question 19 (4 points)

A decrease in demand and a decrease in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price.

Question 19 options:

Question 20 (4 points)

If goods A and Z are complements, an increase in the price of good Z will:

Question 20 options:

Question 21 (4 points)

Over the past several years, consumers have had an increasing interest in getting a tattoo. This means that the ________ for tattoos has ________.

Question 21 options:

Question 22 (4 points)

________ illustrates an inverse relationship between price and quantity.

Question 22 options:

A) describes opinions and perspectives on how the world should work. B) is based on opinion polls. C) describes how the world does work. D) is the same as normative economics.

Explanation / Answer

11. Ans: describes how the world does work.

Explanation: Positive economics is objective and fact based. Positive economic statements do not have to be correct, but they must be able to be tested and proved or disproved.

12. Ans: 1 box of oranges.

Explanation: Opportunity cost of producing 1 box of peaches for Eastland = 100 / 100 = 1 box of oranges

13. Ans: use its existing resources efficiently.

14. Ans: 6 (i.e. 14 - 8 = 6)

15. Ans: When income increases, the demand increases.

16. Ans: supply of DVD players shifting to the right.

17. Ans: False (Their may be some other reason for fall in air travel)

18. Ans: at the old price of $2.50, there will be pressure for the price to fall.

19. Ans: a decrease; an indeterminate change

20. Ans: decrease the demand for both good A and good Z.

21. Ans: demand; increased

22. Ans: A demand curve

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