Unformatted text preview: CHAPTER 1 SHORT ANSWER AND ESSAY QUESTIONS
1. What are the three interrelated features of the economic perspective? 2. What is the economic meaning of the statement “there is no such thing as a free
lunch”? 3. What are the differences and similarities between hypotheses, theories,
principles, laws, and models? 4. Why do economists use the “other-things-equal” assumption? 5. Why are economic principles necessarily generalized and abstract? 6. Explain the difference between macroeconomics and microeconomics. 7. What are some current examples of positive economic statements and normative
economic statements? 8. Explain what the term “economizing problem” means for an individual and for
society. 9. What is a budget line for an individual? How can it be used to illustrate tradeoffs
and opportunity costs? 10. What are the four economic resources? How is each resource defined? 11. What four assumptions are made in drawing a production possibilities curve or
schedule? 12. What is the law of increasing opportunity costs? Why do costs increase? 13. What determines the optimal product mix for society’s production possibilities? 14. How can unemployment be illustrated with the production possibilities curve? 15. What will be the effect of increasing resource supplies on production
possibilities? 16. Describe how technological advances will affect the production possibilities
curve. 17. Explain the tradeoff between goods for the present and goods for the future and
the effect of this tradeoff on economic growth. 18. What qualification does international specialization and trade make for the
interpretation of production possibilities? 19. Explain how the production possibilities curve can be used to explain the
economics of war. 20. Explain each of the five pitfalls to sound economic reasoning. ...
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.
- Spring '09