1) Production Possibilities Frontier
a) Draw a production possibilities frontier for a society that produces corn and cars.
b) Show an efficient point of production –label it A
c) Show an inefficient point of production – label it B
d) Show an infeasible point of production – label it C
( Click for Larger Image to see the proper graph, and points a,b,c)
e) In a separate graph, show how the frontier changes with improved economic growth.
f) In a separate graph, show how the frontier changes with decreased economic growth.
2) What 3 concepts are illustrated by the production possibilities frontier?
a) efficiency , equity, tradeoffs
b) efficiency, equity, opportunity costs
c) equity, tradeoffs, opportunity costs
d) efficiency, tradeoffs, opportunity costs
3) Circular flow diagram:
a) What does the inner loop represent?
ANS: flow of inputs and outputs
b) What does the outer loop represent?
ANS: flow of dollars
4) In what way do economists take a scientific approach to studying the economy?
they develop theories; they collect and analyze data to evaluate theories
5) Which of the following statements ( there may be more than 1 ) are propositions about which most economists agree? Hint: compare these statements with the ones in your text on page 35 (5th edition)or notes from lecture.
a) A minimum wage helps reduce poverty among young and unskilled workers
b) Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings
c) Corporations should be taxed if profits become excessive
d) The government should pass regulations to limit pollution and protect the environment
e) A minimum wage increases unemployment among young and unskilled workers