Exam 1: What Is Economics

It has been found that people die at a much higher rate in hospitals than in most other environments, leading some to conclude that hospitals cause death. What is the problem with this reasoning?

How is a production indifference map helpful?

Which of the following is an example of an externality?

Economic theory is necessary and extremely important because of its relationship to economic policy.

Suppose that a curve has a slope equal to zero at some point A. To the right of A, the curve may

If you leave your money in the bank at a fixed interest rate and allow for compounding of interest, show what will happen to your savings over time. Indicate with a graph whether there is a negative or positive slope between savings and time and what happens to the slope over time.

A graph conveys information about a cause-and-effect relationship.

Opportunity cost is the highest possible price you can receive when you sell an object.

An economic model is a realistic depiction of the operation of the economy.

Abstraction ignores many details in order to focus on the most important elements of a problem.

Figure 1-1 The slope of the line in Figure 1-1 is

When residents surrounding an airport complain about noise from aircraft landings and takeoffs, the relevant economic analysis is that of

A theory is a deliberate simplification or abstraction of factual relationships.

Slope is measured as run/rise.

The law of comparative advantages explains why

When voluntary trade takes place,

In 1980, in order to stimulate agricultural production, Fidel Castro allowed Cuban farmers to sell their goods directly to consumers and keep whatever profit they made. Some farmers were earning $50,000 per year, compared with the average worker income of $2,400. The workers resented this. Castro denounced the farmers as "capitalist gangsters" and closed the free markets. Cuban cash income declined 5 percent and fresh vegetables were in short supply. This illustrates the economic concept of the

The dramatic increase in the standard of living since the Industrial Revolution

Arguably, the most important factor affecting economic well-being is

A theory is an abstraction used often by economists to