ECO204 Quiz01

Microeconomics is not concerned with the behaviour of

• inflation

• consumers

• industries

• firms

Which of the following statements is correct about the roles of economists?

• Economists are best viewed as policy advisers

• Economists are best viewed as scientists

• In trying to explain the world, economists are policy advisers; in trying to improve the world, they are scientists

• In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers

One way to characterize the difference between positive statements and normative statements is as follows

• Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future

• Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be

• Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation

• Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements

Which statement/(s) is/(are) correct?

• Comparative advantage is the ability to produce a good at a lower opportunity cost

• Absolute advantage is the ability to produce a good using fewer inputs

• both of the above are correct

• both of the above are incorrect

The production possibilities frontier is used to illustrate some basic economic ideas, including

• scarcity

• opportunity cost

• economic growth

• all of the above are correct

When the coffee price rises, the coffee quantity demanded falls. This statement is __________ and related to __________.

• positive, macroeconomics

• normative, macroeconomics

• positive, microeconomics

• normative, microeconomics

If Jim’s opportunity cost of producing baseball bats is lower than Tom’s opportunity cost of producing baseball bats, then

• Tom must have an absolute advantage in the production of baseball bats

• Jim must have an absolute advantage in the production of baseball bats

• Tom has a comparative advantage in the production of baseball bats

• Jim has a comparative advantage in the production of baseball bats

Trade can make everybody better off because it

• increases cooperation among nations

• allows people to specialize according to comparative advantage

• requires some workers in an economy to be retrained

• reduces competition among domestic companies

Which of the following would not result from all countries specializing according to the principle of comparative advantage?

• The size of the economic pie would increase

• Worldwide production of goods and services would increase

• The well-being of citizens in each country would be enhanced

• Each country’s production possibilities frontier would shift outward

Economics is the study of

• production methods

• how society manages its scarce resources

• how households decide who performs which tasks

• the interaction of business and government