Exam 1: Introduction

The testing of economic models facilitates

Which of the following is an example of a positive statement?

Microeconomic models are used to

Economic models are only applicable to free-market countries.

Which of the following is not considered an ingredient to an economic model?

Economists make simplifying assumptions to

Explain how a market helps determine which goods and services will be produced,how to produce them,and who gets them.

A "twinkie tax" on fatty foods would aim to

Which choice below illustrates the tradeoff faced by surfboard manufacturers after Clark foam shut down in 2005,eliminating 80% of the world's foam blanks used to shape surfboards? The firms decide to

A microeconomic model CANNOT be used to

Most modern financial centers use computers to match buyers and sellers.This absence of personal contact contradicts the definition of a market.

Economic models are most useful in

Which of the following is an example of a normative statement?

Who or what is responsible for bringing together scarce resources to produce most of the goods and services in the U.S.?

Under most circumstances,the application of taxes on goods will only affect who gets the goods.

If a model fits reality but doesn't generate testable predictions,it is of little value to economists.

Normative statements are easily debated whereas positive statements are simply rhetorical.

If actual experience supports two competing theories,then both theories are proven to be true.

Society faces trade-offs because of

Most microeconomic models assume that decision makers wish to