Exam 2: Thinking Like an Economist: Part B

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

Production possibilities frontiers can be used to illustrate scarcity,trade-offs,opportunity cost,efficiency,unemployment,technological advances,and economic growth.

"Society would be better off if the welfare system were abolished" is a normative statement,not a positive statement.

Figure 2-14 -Refer to Figure 2-14.It is possible for this economy to produce 45 doghouses and 30 dishwashers.

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

Trade-offs are involved in most policy decisions.

Figure 2-17​ -Refer to Figure 2-17.The opportunity cost of moving from point A to point B is zero.

The scientific method is the dispassionate development and testing of theories about how the world works.

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Figure 2-14 -Refer to Figure 2-14.Unemployment could cause this economy to produce at point B.

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

Economic models are most often composed of diagrams and equations.

Two variables that have a positive correlation move in the same direction.

Because almost all economists oppose policies that restrict trade among nations,policymakers do not restrict imports of certain goods.

Economists believe that production possibilities frontiers rarely have a bowed shape.

It is difficult for economists to make observations and develop theories,but it is easy for economists to run experiments to generate data to test their theories.

Examples of graphs of a single variable include pie charts,bar graphs,and time-series graphs.

Points on the production possibilities frontier represent efficient levels of production.

Figure 2-17​ -Refer to Figure 2-17.This economy fully employs its resources when it produces 4000 shoes and zero t-shirts.