A Level Economics 1.1 to 1.4

What distinguishes a positive statement from a normative statement?

• Positive statements cannot be tested, while normative statements can.

• Positive statements are based on facts and can be tested, while normative statements involve value judgments and cannot be tested.

• Positive statements are always correct, while normative statements are opinions.

• Positive statements express opinions, while normative statements are factual.

Which of the following is a positive statement?

• The government ought to reduce inflation.

• Increasing the minimum wage would be a good idea.

• Inflation is 5.4%.

• Households should try to save energy.

Why is the statement “I think increased spending on education would improve GCSE results” considered positive, not normative?

• It is an opinion and therefore cannot be tested.

• It contains a value judgment.

• It can be tested to see if spending correlates with improved results.

• It does not involve economics.

What does a point inside the PPF indicate?

• All resources are being used efficiently.

• Resources are not being fully utilized.

• The economy is producing at maximum capacity.

• More capital goods are being produced than consumer goods.

What would cause a PPF to shift outward?

• A reduction in the workforce.

• An increase in the quality or quantity of factors of production.

• The production of more consumer goods than capital goods.

• A rise in unemployment.

Why is the PPF typically curved rather than a straight line?

• Resources are used inefficiently.

• Opportunity cost remains constant along the curve.

• Factors of production are not equally suited to producing all goods.

• The economy is always at full employment.

What does a point beyond the PPF represent?

• Efficient resource allocation.

• Unattainable production with current resources.

• Inefficient use of resources.

• Equal production of capital and consumer goods.

What is opportunity cost?

• The value of the next best alternative foregone.

• The total cost of producing one good.

• The profit made from a particular choice.

• The cost of using all available resources efficiently.

Why does opportunity cost increase along a curved PPF?

• Resources are equally suited to producing all goods.

• Resources are specialized, making them less efficient when moved away from their primary use.

• Resources are used inefficiently.

• Capital goods are always more expensive than consumer goods.

Which of the following illustrates an opportunity cost?

• A government choosing to build more hospitals instead of schools.

• Producing at a point inside the PPF.

• Expanding the economy’s resource base.

• Moving from one point to another along the PPF with no loss of output.