chapter 2 - Name: _ Date: _ Use the following to answer...

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Name: __________________________ Date: _____________ Use the following to answer question 1: Scenario: Linear PPF Largetown has a linear production possibility frontier and produces socks and shirts. The table below shows the number of units of labor necessary to produce one sock or one shirt. 1. (Scenario: Linear PPF) What happens to the opportunity cost of producing shirts in Largetown if its labor resource decreases by 40 hours? A) The opportunity cost of producing shirts increases. B) The opportunity cost of producing shirts decreases. C) The opportunity cost of producing shirts does not change. D) The opportunity cost may or may not change depending upon the number of units of socks it wishes to produce. 2. Roommates Sarah and Zoe are hosting a Halloween party and have to make food for their guests and costumes for themselves. To finish both tasks as quickly as possible, Sarah and Zoe know that each of them should focus on just one task, but they don't know who should do what. To decide which roommate should do the cooking, Sarah and Zoe should determine which roommate: A) has the absolute advantage in cooking. B) has the comparative advantage in cooking. C) has the largest production possibility frontier in cooking. D) can complete the cooking in the least amount of time. 3. All points outside the production possibility frontier represent: A) efficient production points. B) inefficient production points. Page 1
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C) nonfeasible production points. D) economic growth. 4. When building a model, economists: A) simplify reality in order to highlight what really matters. B) attempt to duplicate reality in all its complexity. C) ignore the facts, and instead try to determine what the facts should be. D) are careful to avoid the scientific method. 5. Which of the following is an example of a positive statement? A) The poverty rate should be 4%. B) A high rate of economic growth is good for the country. C)
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chapter 2 - Name: _ Date: _ Use the following to answer...

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