Exam 2: Thinking Like an Economist

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

A circular-flow diagram is a model that

When a relevant variable that is not named on either axis changes,

Figure 2-3 -Refer to Figure 2-3. The opportunity cost of this economy moving from point A to point B is

"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

Is the following a positive or normative statement? The federal minimum wage is lower than many state minimum wages.

A circular-flow diagram is a visual model of the economy.

What type of statement is a prescriptive statement about how the world ought to be?

In surveys of professional economists, fourteen propositions were endorsed by an overwhelming majority of respondents.

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

Figure 2-12 ​ ​ ​ ​ ​ ​ -Just like other scientific models, economic models simplify reality using

Normative statements are

Figure 2-12 ​ ​ ​ ​ ​ ​ -Refer to Figure 2-12. What do the outer arrows represent in the figure?

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

From which of the following agencies does the President not receive economic policy advice from economists?

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

An economy's production of two goods is efficient if

Figure 2-4 Graph (a) Graph (b) -Refer to Figure 2-4, Graph (a) and Graph (b). A shift of the economy's production possibilities frontier from Graph (a) to Graph (b) could be caused by

Figure 2-10 ​ ​ ​ ​ ​ -Refer to Figure 2-10. Given the technology available for manufacturing doghouses and dishwashers, this economy does not have enough of the factors of production to support the level of output represented by point C.

Figure 2-8 -Refer to Figure 2-8. The slope of the curve between points A and B is