Exam 2: Thinking Like an Economist

Graph 2-9 -Refer to Graph 2-9.In the graph shown, the movement from point A to point C is a:

Economic models:

Both scientists and economists make assumptions to simplify their analysis.

For economists, positive statements are:

Factors of production are factors like labour, land and capital.

Graph 2-4 -Refer to Graph 2-4.On the production possibilities frontier shown, the opportunity cost of moving from point A to point D is:

The revenue that households receive from selling the factors of production can be described as:

The slope of a line is defined as:

In a circular-flow diagram:

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

If computers become easier to produce because of technological improvements, then producing more computers will mean a larger trade-off in the production of other goods.

An economist who says that all policy decisions are easy is an economist not to be trusted.

A normative statement describes what people usually do.

Graph 2-4 -Refer to Graph 2-4.On the production possibilities frontier shown, the opportunity cost of getting five additional bikes by moving from point A to point C is:

Most economic theories have been developed and tested by using controlled experiments.

If we know an assumption about an economic system is not true, what is the justification for keeping this assumption in a model?

The efficient production points for the production possibilities frontier, all lie on the actual frontier itself.

Economic models always attempt to include as many real life factors as possible.

Economists may disagree on how the government can reduce unemployment.

The parameters chosen by economists may be a reason why differences of judgements result from the same issue.