Exam 2: Thinking Like an Economist

The country of San Pedro produces two goods: beach towels and soccer balls. Last year, it produced 150 beach towels and 300 soccer balls. This year, it produced 175 beach towels and 350 soccer balls. Given no other information, which of the following could NOT explain the change?

Two economists, Tim and Henry, are discussing the possibility of substantially reforming the current financial system. Tim thinks the current system is fine, but Henry is in favour of reform. Which statement is the least likely explanation for the disagreement?

What does it mean if an economy is producing efficiently?

What does a normative statement describe?

If an economist develops a theory about international trade based on the assumption that there are only two countries and two goods, what is most likely?

For economists, what are often used as substitutes for laboratory experiments?

Tim has noticed that increases in unemployment insurance claims are associated with recessions, and therefore advocates limits on unemployment insurance so as to prevent recessions. Yana has noticed that most drunk drivers once attended schools, and therefore advocates getting rid of schools so as to prevent deaths resulting from drunk driving. What do we know about the reasoning of Tim and Yana?

In a simple circular-flow diagram, the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

In the simple circular-flow diagram, who owns the factors of production?

What is another term for factors of production?

Suppose an economy produces two goods: clothes and cars. This economy always operates on its production possibilities frontier. Last year, it produced 450 units of clothes and 25 cars. This year, it is producing 500 units of clothes and 30 cars. Which of the following would NOT explain the increase in output?

What observation did Albert Einstein once make about science?

What happens in the markets for factors of production?

What are the three propositions about which most economists agree most often (in order from first to third)?

Figure 2-4 -Refer to Figure 2-4. What is the opportunity cost to the economy of getting 30 additional toothbrushes by moving from point A to point D?

What is meant by scientific method?

What do economists from the Department of Finance provide?

In a simple circular-flow diagram, firms own the factors of production and use them to produce goods and services.

-Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of toy cars from 300 to 400?

Which statement is an example of a normative statement about the Toronto Maple Leafs?