Exam 2: Model Building and Gains From Trade

You are considering the "dress well, test well" theory, which argues that you perform better on exams when you dress nicely than you do when you wear sweatpants. If you want to test this theory over the course of the semester, which of the following would be an endogenous factor in your experiment?

Refer to the following figure to answer the next questions. -In the figure, point E is:

The process of using current resources to create new capital is:

Consider the following scenario to answer the next questions: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie. -What is Joey's opportunity cost of baking 1 pie?

Is it always better to forgo current consumption in order to invest more in capital goods that will provide more growth in society's production possibilities frontier (PPF) and make us better off in the future?

Consider the following scenario to answer the next questions: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie. -What is Joey's opportunity cost of baking 1 loaf of bread?

Suppose Jim is a brilliant attorney who can draft especially persuasive legal briefs. He also happens to possess some excellent administrative skills such as typing, filing, assembling binders and notes, and making reservations. Which best describes whether Jim should hire an administrative assistant to help him?

Which of the following is a normative statement?

Which of the following is necessary to build a good economic model?

A model without any simplifying assumptions:

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor, unemployment is illustrated by:

As you move from one efficient point on the production possibilities frontier (PPF) to another efficient point on the PPF, you experience:

Refer to the following figure for the next questions. -According to the figure, a new technology that makes it easier to peel, core, and prepare apples will cause:

Goods that are produced for current consumption are called:

Comment on the role of models in economics. What are the strengths and weaknesses of using them to explore the world around us?

Refer to the graph below. This society could reach point F when there is a(n):

Think of the production possibilities frontier (PPF) model. When society is producing the largest possible output from its resources, it is operating:

When testing a model rocket on your campus quad, which of the following would be an endogenous factor?

The opportunity cost of every investment in capital goods is:

Refer to the accompanying figure to answer the next questions. -The inefficient point(s) is (are):