Exam 2: Thinking Like an Economist: Part B

In the circular-flow diagram,one loop represents the flow of goods,services,and factors of production,and the other loop represents the corresponding flow of dollars.

For economists,conducting experiments is often difficult and sometimes impossible.

Figure 2-14 -Refer to Figure 2-14.The opportunity cost of moving from point B to point A is zero.

When a production possibilities frontier is bowed outward,the opportunity cost of the first good in terms of the second good increases as more of the second good is produced.

Figure 2-14 -Refer to Figure 2-14.The opportunity cost of an additional doghouse increases as more doghouses are produced.

In the 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.

If a line passes through the points (20,5)and (10,10),then the slope of the line is -2.

Two variables that have a negative correlation move in opposite directions.

A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

In the circular-flow diagram,payments for labor,land,and capital flow from firms to households through the markets for the factors of production.

If an economy can produce more of one good without giving up any of another good,then the economy's current production point is inefficient.

The effects of foreign competition on the U.S.textile industry would be studied by a microeconomist rather than a macroeconomist.

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

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.

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

Positive statements can be evaluated using data alone,but normative statements cannot.

If a major union goes on strike,then the country would be operating inside its production possibilities frontier.

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

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

Economists acting as scientists make positive statements,while economists acting as policy advisers make normative statements.