Exam 2: Thinking Like an Economist

For economists, what are often used as substitutes for laboratory experiments?

What are factors of production?

What happens when two variables have a negative correlation?

Which statement best characterizes the money held by households in the circular-flow diagram?

Since natural experiments offered by history cannot be used in economics, carefully constructed laboratory experiments must be used.

Figure 2-11 -Refer to Figure 2-11. The opportunity cost to the economy of moving from point A to point B is 10 dishwashers.

Figure 2-2 -Refer to Figure 2-2. In which market are firms sellers?

Which statement is the best explanation for why policies such as rent control and import quotas persist in spite of the fact that experts are united in their opposition to such policies?

In the goods and services market, how do households and firms interact?

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

The field of economics is divided into two subfields:microeconomics and macroeconomics.

What do economists do when they attempt to simplify the real world and make it easier to understand?

Why is the use of theory and observation more difficult in economics than in sciences, such as physics?

The country of Econoland produces two goods: textbooks and widgets. Last year, it produced 300 textbooks and 600 widgets. This year, it produced 350 textbooks and 700 widgets. Given no other information, which of the following could NOT explain the change?

What are the three propositions about which most economists agree most often (in order from first to third)?

Which of the following is a difficulty economists face that some other scientists do not?

When a production possibilities frontier is linear, what does it show?

What happens in the markets for factors of production?

What do economists at Industry Canada do?

What happens in the markets for goods and services?