Problem 4
What are the similarities between a consumer's budget constraint and society's production possibilities frontier, not just graphically but analytically?
Problem 6
Would an op-ed piece in a newspaper urging the adoption of a particular economic policy be a positive or normative statement?
Problem 12
Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?
Problem 13
Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.
Problem 14
What are diminishing marginal returns?
Problem 15
What is productive efficiency? Allocative efficiency?
Problem 16
What is the difference between a positive and a normative statement?
Problem 20
During the Second World War, Germany's factories were decimated. It also suffered many human casualties, both soldiers and civilians. How did the war affect Germany's production possibilities curve?
Problem 22
What assumptions about the economy must be true for the invisible hand to work? To what extent are those assumptions valid in the real world?
Problem 23
Do economists have any particular expertise at making normative arguments? In other words, they have expertise at making positive statements (i.e., what will happen) about some economic policy, for example, but do they have special expertise to judge whether or not the policy should be undertaken?