Which of the following is the most accurate statement about production possibilities?

• A - An economy can produce only on the production possibilities frontier.
• B - An economy can produce at any point inside or outside a production possibilities frontier.
• C - An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
• D - An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.

7Which of the following is an example of an economic model?

• A - the production possibilities frontier
• B - the concept of opportunity cost
• C - the concept of capital
• D - All of the above are economic models.

8Which is the best statement about the roles of economists?

• A - Economists are best viewed as policymakers.
• B - Economists are best viewed as scientists.
• C - In trying to explain the world, economists are policymakers; in trying to improve the world, they are scientists.
• D - In trying to explain the world, economists are scientists; in trying to improve the world, they are policymakers.

9For economists, statements about the world are of two types:

• A - assumptions and theories.
• B - true statements and false statements.
• C - specific statements and general statements.
• D - positive statements and normative statements.

10Which of the following is an example of a positive statement?

• A - Prices rise when the government prints too much money.
• B - If welfare payments increase, the world will be a better place.
• C - Inflation is more harmful to the economy than is unemployment.
• D - When public policies are evaluated, the benefits to the economy of improved equity should be considered more important than the costs of reduced efficiency.