Podcast
Questions and Answers
A bowed-outward PPF shows increasing opportunity costs as more of one good is produced.
A bowed-outward PPF shows increasing opportunity costs as more of one good is produced.
True
Economists as scientists focus on collecting data, developing theories, and verifying or refuting them through analysis.
Economists as scientists focus on collecting data, developing theories, and verifying or refuting them through analysis.
True
A positive statement expresses a value judgment, while a normative statement can be tested or verified.
A positive statement expresses a value judgment, while a normative statement can be tested or verified.
False
"The government should raise the minimum wage" is an example of a normative statement.
"The government should raise the minimum wage" is an example of a normative statement.
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Economists sometimes disagree because they have different values or differing views about the effects of policies.
Economists sometimes disagree because they have different values or differing views about the effects of policies.
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Economists always agree on policy advice because they rely on objective data.
Economists always agree on policy advice because they rely on objective data.
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In the circular-flow diagram, households own the factors of production and provide them to firms in exchange for income.
In the circular-flow diagram, households own the factors of production and provide them to firms in exchange for income.
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A country that devotes all its resources to producing soybeans can still produce airplanes without reducing soybean production.
A country that devotes all its resources to producing soybeans can still produce airplanes without reducing soybean production.
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On the PPF, producing 80 airplanes and 1,000 tons of soybeans is efficient.
On the PPF, producing 80 airplanes and 1,000 tons of soybeans is efficient.
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The opportunity cost of producing 20 airplanes in the PPF example is 1,000 tons of soybeans.
The opportunity cost of producing 20 airplanes in the PPF example is 1,000 tons of soybeans.
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Study Notes
Production Possibilities Frontier (PPF)
- A bowed-outward PPF indicates increasing opportunity costs as production of one good increases.
Economists as Scientists
- Economists use data and theories to test and verify or refute their hypotheses.
Positive vs. Normative Statements
- A positive statement can be verified or tested.
- A normative statement expresses a value judgment.
- "The government should raise the minimum wage" is a normative statement.
Economic Disagreements
- Economists can disagree due to different values or differing views on policy effects.
Circular Flow Diagram
- Households provide factors of production to firms in exchange for income.
Opportunity Cost
- The opportunity cost of producing 20 airplanes is the 1,000 tons of soybeans that could have been produced instead.
- A country cannot produce airplanes without sacrificing soybean production if all resources are dedicated to soybeans.
Efficiency
- A point on the PPF represents an efficient use of resources.
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Description
This quiz explores the concept of production possibilities frontier (PPF) and its bowed-outward shape, indicating increasing opportunity costs. Test your knowledge on how this economic principle affects production choices and resource allocation.
