Econ 201 – Flashcards

. The scientific method is a. the use of modern technology to understand the way the world works. b. the use of controlled laboratory experiments to understand the way the world works. c. the dispassionate development and testing of theories about how the world works. d. the search for evidence to support preconceived theories about how the world works.

20. If an economy is producing efficiently, then a. there is no way to produce more of one good without producing less of another good. b. it is possible to produce more of both goods without increasing the quantities of inputs that are being used. c. it is possible to produce more of one good without producing less of another good. d. it is not possible to produce more of any good at any cost.

Table 2-2 The following table contains some production possibilities for an economy for a given year: Tennis Rackets Tennis Balls 100 8000 200 6500 300 ? 33. Refer to Table 2-2. If the production possibilities frontier is bowed outward, then "?" could be a. 6000. b. 5500. c. 5000. d. 4500.

49. The slope of a line is equal to a. the change in the value of x divided by the change in the value of y. b. the change in the value of y divided by the change in the value of x. c. the horizontal distance divided by the vertical distance. d. the value of y divided by the value of x.

Under what conditions is an economy's production possibilities frontier also its consumption possibilities frontier?

10. The gains from trade are a. evident in economic models, but seldom observed in the real world. b. evident in the real world, but impossible to capture in economic models. c. a result of more efficient resource allocation than would be observed in the absence of trade. d. based on the principle of absolute advantage.

28. Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then a. the two countries' combined output of both goods will be higher than it would be in the absence of trade. b. Greece will produce more fish than it would produce in the absence of trade. c. Germany will produce more cars than it would produce in the absence of trade. d. All of the above are correct.

39. Tom Brady should pay someone else to mow his lawn instead of mowing it himself, unless a. Brady has an absolute advantage over everyone else in mowing his lawn. b. Brady has a comparative advantage over everyone else in mowing his lawn. c. Brady's opportunity cost of mowing his lawn is higher than it is for everyone else. d. All of the above are correct.

40. Tom Brady should probably not mow his own lawn because a. his opportunity cost of mowing his lawn is higher than the cost of paying someone to mow it for him. b. he has a comparative advantage in mowing his lawn relative to a landscaping service. c. he has an absolute advantage in mowing his lawn relative to a landscaping service. d. he might sprain his ankle.