Session:1 Welcome to Economics
Review Questions
Principles of Microeconomics 3e | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-microeconomics-3e
8. Explain why scarcity leads to tradeoffs.
9. Explain why individuals make choices that are directly on the budget constraint, rather than inside the
budget constraint or outside it.
budget constraint or outside it.
10. What is comparative advantage?
11. What does a production possibilities frontier illustrate?
12. Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?
44 2 • Self-Check Questions
13. Explain why societies cannot make a choice above their production possibilities frontier and should not
make a choice below it.
13. Explain why societies cannot make a choice above their production possibilities frontier and should not
make a choice below it.
14. What are diminishing marginal returns?
15. What is productive efficiency? Allocative efficiency?
16. What is the difference between a positive and a normative statement?
17. Is the economic model of decision-making intended as a literal description of how individuals, firms, and
the governments actually make decisions?
the governments actually make decisions?
18. What are four responses to the claim that people should not behave in the way described in this chapter?