Exam 2: Economic Models

Use the following to answer questions : -(Table: Production Possibilities Schedule I) Look at the table Production Possibilities Schedule I. If the economy produces two units of consumer goods per period, it also can produce at most _____ units of capital goods per period.

The importance of an economic model is that it allows us to:

The process observed when an economy's production possibility frontier shifts outward is:

Unemployment decreased to its lowest level in 10 years last month. This statement is:

Use the following to answer questions : Figure: Production Possibilities and Circular-Flow Diagram -(Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram. Assume the two figures represent the same economy. Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital flowing to both coconut producers and fish producers. If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward:

The simplest circular-flow model shows the interaction between households and firms. In this model:

Use the following to answer questions : -(Table: Production of Good Z and Good X in Urbanville) Look at the table Production of Good Z and Good X in Urbanville. Suppose this table shows the production possibility frontier. Urbanville is producing at combination C and moves to combination D. What is the opportunity cost of this move?

Use the following to answer questions : Figure: Strawberries and Submarines II -(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. The downward slope of the production possibility frontier implies that resources:

An economy is said to have a comparative advantage in the production of one good if it:

Use the following to answer questions : -(Table: Production Possibilities Schedule I) Look at the table Production Possibilities Schedule I. If the economy produces 24 units of capital goods per period, it also can produce at most _____ units of consumer goods per period.

Use the following to answer questions : Figure: Sugar and Freight Trains -(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point B. The opportunity cost of producing the third freight train would be _____ tons of sugar.

Use the following to answer questions : Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. -(Figure: Comparative Advantage) Look at the figure Comparative Advantage. Westland has a comparative advantage in producing:

If they bake only cakes, in a single day George can bake 10 cakes and Greta can bake 5 cakes. If they make only pies, in a single day George can bake 10 pies while Greta can bake 4 pies. We know that _____ has an absolute advantage and a comparative advantage in making _____.

Technological improvements will:

Economists may disagree about policies because they:

Leaders of a small town are tired of looking at a vacant and dilapidated warehouse that sits on a prime piece of real estate. The town finds an investor who purchases the warehouse and promises to renovate the old building and build condominiums in the old building. Is this economic growth?

Use the following to answer questions : -(Table: Production Possibilities Schedule I) Look at the table Production Possibilities Schedule I. The opportunity cost of producing the fourth unit of consumer goods is _____ units of capital goods.

Which of the following is FALSE about the circular-flow diagram?

Use the following to answer questions : Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. -(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Eastland is _____ box(es) of oranges.

Positive economics is the branch of economics that makes prescriptions about the way the economy should work.