Question

1. When a conflict arises between when individuals maximize societies net benefit, which of the following is the most likely result:

A. we have a valid argument for government regulation in that market

B. The individuals making choices will not get the maximum amount of net benefit

C. Society will receive more net benefit than individuals in the situations

D. The cost associated with individuals making choices will be too high

2. The comment "if Kentucky raises the gasoline tax by $1 per gallon, then this will eventually lead to an increase in the demand for compact cars" is a(n):

A. analytical assumption

B. positive exonomic statement

C. normative economic statement

D. behavioral assumption

3. When conducting economic analysis, suppose we adopt the analytical assumption of ceteris paribus. This assumption leads us to do which of the following:

A. we allow all variables in our analysis to change so that we can determine an overall affect

B. we assume that all individuals involved in our analysis are interested in maximizing their own net benefit

C. we determine the relationship between two variables in terms of percentage change

D. we simplify our model by eliminating variables that will make our analysis too complicated

E. we analyze how changes in one variable affect another variable, while holding all other variables constant

4. If political conflict occurs in Mexico and workers leave that country to enter the United States, then how does this migration affect the Production Possibilities Curve (PPC) of Mexico?

A. this migration leads to Mexico producing at a different point along the PPC

B. this migration leads to Mexico producing at a point that's closer to their PPC

C. this migration leads to Mexico producing at a point inside their PPC

D. this migration decreases Mexico's potential output

E. this migration increases Mexico's potential output

Answer 1

1. When a conflict arises between when individuals maximize societies net benefit, which of the following is the most likely result:

B. The individuals making choices will not get the maximum amount of net benefit

2. The comment "if Kentucky raises the gasoline tax by $1 per gallon, then this will eventually lead to an increase in the demand for compact cars" is a(n):

Normative economic statements contains opinions that cannot be verified. Positive economic statements contains facts that can be tested. As the above comment can be easily verified, it is a positive economic statement.

B. positive economic statement

3. When conducting economic analysis, suppose we adopt the analytical assumption of ceteris paribus. This assumption leads us to do which of the following:

E. we analyze how changes in one variable affect another variable, while holding all other variables constant

4. If political conflict occurs in Mexico and workers leave that country to enter the United States, then how does this migration affect the Production Possibilities Curve (PPC) of Mexico?

Migration leads to an inward shift in the PPC of Mexico. Therefore,

D. this migration decreases Mexico's potential output