Solutions to Quick Quizzes
Chapter 1

the frontier), point B is an inefficient point (inside the frontier), and point C is an infeasible point
(outside the frontier).

Chapter 2
1. Economics is like a science because economists devise theories, collect data, and analyze the data in an attempt to verify or refute their theories. In other words, economics is based on the scientific method. Figure 1 shows the production possibilities frontier for a society that produces food and clothing.
Point A is an efficient point (on

Quantity of Clothing Produced

2. There are many possible answers.
3. The three principles that describe how the economy as a whole works are: (1) a country’s standard of living depends on its ability to produce goods and services;
(2) prices rise when the government prints too much money; and
(3) society faces a short-run tradeoff between inflation and unemployment. A country’s standard of living depends largely on the productivity of its workers, which in turn depends on the education of its workers and the access its workers have to the necessary tools and technology. Prices rise when the government prints too much money because more money in circulation reduces the value of money, causing inflation. Society faces a short-run trade-off between inflation and unemployment that is only temporary. Policymakers have some short-term ability to exploit this relationship using various policy instruments.

C
A

B

Quantity of Food Produced

Figure 1

The effects of a drought are shown in Figure 2. The drought reduces the amount of food that can be produced, shifting the production possibilities frontier inward. Quantity of Clothing Produced

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