Exam 2: Thinking Like an Economist: Part B

Economic models omit many details to allow us to see what is truly important.

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

Economists try to address their subject with a scientist's objectivity.

While the scientific method is applicable to studying natural sciences,it is not applicable to studying a nation's economy.

When a variable that is not named on either axis of a graph changes,we read the change as a movement along the curve.

Figure 2-14 -Refer to Figure 2-14.The opportunity cost of moving from point B to point D is 15 doghouses.

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Figure 2-14 -Refer to Figure 2-14.It is possible for this economy to produce 75 doghouses.

The slope of a horizontal line is infinite,and the slope of a vertical line is zero.

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

A pie chart is a way to display information regarding two variables.

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

Microeconomics and macroeconomics are closely intertwined.

When economists are trying to explain the world,they are scientists,and when they are trying to help improve the world,they are policy advisers.

The President counts among his economic advisors the Congressional Budget Office.

When a variable that is named on an axis of a graph changes,the curve shifts.

Economists usually have to make do with whatever data the world happens to give them.

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other is constant.

Figure 2-14 -Refer to Figure 2-14.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.

Different values are not a reason for disagreement among economists.