Question

Ringtone Read Only - You can't save changes to t... TRUE/FALSE. Write "T" if the statement is true and 'F' if the statement is false. 1) An economic model is a complex version of reality used to analyze real-world economic situations. 2) On a diagram of a production possibilities frontier, economic decline (negative growth) is represented by the production possibilities frontier shifting inward. 3) A change in quantity supplied is represented by a movement along the supply curve. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 4) One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers, Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea? A) Optimal decisions are made at the margin. B) People respond to economic incentives. C) People are rational. D) The market system relies on the principle of voluntary exchange. 5) Comparative advantage means A) compared to others you are better at producing a product. B) the ability to produce more of a product with the same amount of resources than any other producer C) the ability to produce a good or service at a higher opportunity cost than any other producer. D) the ability to produce a good or service at a lower opportunity cost than any other producer Figur2 Roses (dozens) 0 20 40 60 80 Orchids (dozens) Figure 2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. 6) — 6) Refer to Figure 2. If Vidalia chooses to produce 40 dozen orchids, how many roses can it produce to maximize production? A) 30 dozen roses B) 50 dozen roses C) 100 dozen D) 150 dozen roses roses Figure 2-8 Costa Rica Guatemala Pineapples (tons) Pineapples (tons) 100 150 Coconuts (tons) 180 Coconuts (tons)

Answer 1

TRUE OR FALSE

1. An economic model is a complex version of reality used to analyze real-world economic situations.

Answer : FALSE

This statement is false because an economic model is not a complex version of reality instead it is a simplified version of reality used to analyze the real-world economic situations.

2. On a diagram of production possibilities, economic decline (negative growth) is represented by the production possibilities frontier shifting inward.

Answer : TRUE

This statement is true. An inward shift in production possibilities curve indicates that fall in supply side or decrease in means of output. This means that there is decline in economic growth or negative growth. Hence the statement is TRUE.

3. A change in quantity supplied is represented by a movement along the supply curve.

Answer : TRUE

This statement is TRUE. When there is change in quantity supplied, it is represented by movement along the supply curve. This will get confused with shift in supply curve sometimes. When there is a change in supply, then it will lead to the shift in supply curve and a movement along supply curve will takes place when there is change in quantity supplied.