Economics Chapter 2 Study Guide/Test Review

Philosophers draw a distinction between positive statements, which describe the world as it is, and _____s, which describe how the world should be.

• Positive Statement

• PPF

• Normative Statement

• Negative

Attending college is a case where the ________ exceeds the monetary cost.

• Budget Constraint

• Opportunity Cost

• Normative Statement

• Opportunity Set

As depicted in __________, it is necessary to give up some of one good to gain more of the other good.

• Marginal Analysis

• Data Tables

• The Production Possibilities Frontier

• Positive Statements

Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from:

• C to D

• B to C

• C to F

• G to E

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is:

• Point F

• Point C

• Point A

• Point B

Refer to Figure 2-1. The most inefficient point depicted is:

• Point G

• Point C

• Point E

• Point D

Why is there scarcity?

• Too many people

• People are too selfish

• Global warming

• Unlimited wants, limited resources

Scarcity implies that:

• There are no resources with high enough quality to be used efficiently

• There are not enough resources to meet everyone's wants and needs

• There are not enough people to create and supply goods

• People's greed causes a lack of resources

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:

• Scholarships

• Money

• Grades

• Energy

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

• $40 in lost wages

• $4 in parking fees

• $44 in lost wages

• $10 per hour