Exam 2: Thinking Like an Economist

Why do economists use models?

Which concept is NOT illustrated by the production possibilities frontier?

If Hank chooses to buy fewer burgers per month at each price, what will happen to his demand curve?

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

An economy can produce at any point on or inside the production possibilities frontier, but it cannot produce at points outside the frontier.

What does evaluating a positive statement involve?

Figure 2-9 -Refer to Figure 2-9. What is this type of graph known as?

Which statement best describes the way economists study the economy?

What would a macroeconomist NOT study?

What do economists at the Canadian International Development Agency do?

In the simple circular-flow diagram, in which market are firms sellers?

Figure 2-6 -Refer to Figure 2-6. What is the opportunity cost of moving from D to B?

In economics, what does capital refer to?

Figure 2-5 -Refer to Figure 2-5. What most likely caused the shift of the production possibilities frontier from A to B?

What does microeconomics study?

-Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of toy cars from 0 to 100?

Sir Isaac Newton developed the theory of gravity after observing an apple fall from a tree. What is this an example of?

What happens when scientists make good assumptions?

Why are production possibilities frontiers usually bowed outward?

What are tariffs and quotas?