Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. It is the explanation that is important.

A1-1Your decision to spend Sunday afternoon working on your Econ course carries no opportunity cost.

A1-2. The circular flow of income and expenditure tells us that an increase household income is associated with an increase in the revenues flowing to firms.

A1-3. The statement: “Rainfall was ample this year so this should lead to high crop yields and low crop prices” is a positive economic statement based on a model in which the endogenous variables are the crop yields and prices and the exogenous variable is amount of rainfall.

A1-4. Suppose the output per unit of resources is 6 units of X OR 3 units of Y in country A, while the output per unit of resources is 12 units of X OR 4 units of Y in country B. B has an absolute advantage in the production of both goods and A has a comparative advantage in the production of good Y.