Review Exam 1

Economics seeks to understand how limited resources get allocated to satisfy limitless wants.

• TRUE

• FALSE

A company that pays employees a commission on each unit sold is providing a(n) ________ incentive.

• negative

• positive

• indirect

• reverse

In a world of scarcity only some decisions incur costs.

• TRUE

• FALSE

What type of statement is the following:

"The government should provide universal healthcare."

• NORMATIVE

• POSITIVE

What type of statement is the following:

"The minimum wage should be raised to provide a living wage."

• NORMATIVE

• POSITIVE

What type of statement is the following:

"Higher tax rates tend to increase consumer demand."

• NORMATIVE

• POSITIVE

If someone has a comparative advantage then they have a lower opportunity cost of producing that good.

• TRUE

• FALSE

The PPF reflects how firms should price new products.

• TRUE

• FALSE

The PPF reflects how price and quantity are related for a single good.

• TRUE

• FALSE

The PPF reflects the trade-off between the efficient production of two different goods.

• TRUE

• FALSE