Econ Chapter 2

A production possibilities frontier shifts outward when

The economy experiences economic growth

When economists make normative statements, they are

Speaking as policy advisors

Factors of production are

Inputs into the production process

Refer to figure 2-4. If the economy moves from point a to point D, the opportunity cost is

20 toasters (A[30]-->D[10]... 30-10=20)

Here are some production possibilities for an imaginary economy for a given year. Cars Newspapers 10 400 12 360 14 ? If the production possibilities frontier is bowed outward, then in place of "?" we might have

320

Economists, like mathematicians, physicists, and psychologists,

All of the above are correct

Refer to figure 2-1. Which arrow represents the flow of goods and services?

B (Top inside/middle arrows)

Refer to figure 2-3. The economy has the ability to produce at which point or points?

B, D, E (On or inside/below the curved line)

Refer to figure 2-1. Which arrow shows the flow of land, labor, and capital?

C (Bottom inside/middle arrows)

Economic models

Can be useful, even if they are not particularly realistic

In the circular-flow diagram,

Households are sellers in the market for the factors of production

Microeconomics is best described as the study of

How households and firms make decisions and how they interact in specific markets

"Prices rise when the quantity of money rises rapidly" is an example of a

Positive economic statement

For economists, statements about the world are of two types:

Positive statements and normative statements