Principles of Microeconomics Fifth Edition Chapter 2

question

Economists approach economics by

answer

devising theories, collecting data, and analyzing data to verify or refute their theories

question

"The whole science is nothing more than the refinement of everyday thinking"

answer

Albert Einstein

question

In economics, conducting experiments is often

answer

difficult or impossible

question

Assumptions

answer

simplify the complexity of certain aspects in economics

question

The art in scientific thinking

answer

is deciding which assumption to make

question

Economists use different assumptions to

answer

answer different questions

question

Many prices in the economy change

answer

infrequently

question

Economics is often compared to

answer

science

question

Economic models are often composed of

answer

models and equations

question

All models are built with

answer

assumptions

question

Circular-Flow Diagram

answer

A visual model of the economy that shows how dollars flow through markets among households and firms

question

Firms produce goods and services using inputs such as

answer

land, labor, and capital

question

In markets for the factors of production

answer

households are sellers, firms are buyers

question

In markets for goods and services

answer

households are buyers, firms are sellers

question

The inner loop represents

answer

the flow of inputs and outputs

question

The outer loop represents

answer

the corresponding flow of dollars

question

Most economic models are built using

answer

the tools of mathematics

question

Production Possibilities Frontier

answer

A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

question

Because resources are scarce

answer

not every conceivable outcome is feasible

question

Points outside the PPF are

answer

not feasible

question

Points on the PPF are

answer

efficient

question

The only way of getting more of one good is

answer

producing less of the other

question

Microeconomics

answer

The study of how households and firms make decisions and how they interact in markets

question

Macroeconomics

answer

The study of how economy wide phenomena, including inflation, unemployment, and economic growth

question

PPF's highlight

answer

scarcity, efficiency, trade-offs, opportunity costs, and economic growth

question

Positive Statements

answer

Statements on how the world is

question

Normative Statements

answer

Statements on how the world should be

question

The key difference between positive and normative statements is

answer

how we judge their validity

question

Much of economics is

answer

positive

question

Wanted to find a one-armed economist

answer

Harry Truman

question

"The ideas of economists and political philosophers, right or wrong, are more powerful than commonly understood"

answer

John Maynard

question

"If Trivial Pursuit were designed for economists, it would have 100 questions and 3000 answers"

answer

Ronald Reagan

question

Economists give conflicting advice because sometimes they

answer

have different values

1 of 33

question

Economists approach economics by

answer

devising theories, collecting data, and analyzing data to verify or refute their theories

question

"The whole science is nothing more than the refinement of everyday thinking"

answer

Albert Einstein

question

In economics, conducting experiments is often

answer

difficult or impossible

question

Assumptions

answer

simplify the complexity of certain aspects in economics

question

The art in scientific thinking

answer

is deciding which assumption to make

question

Economists use different assumptions to

answer

answer different questions

question

Many prices in the economy change

answer

infrequently

question

Economics is often compared to

answer

science

question

Economic models are often composed of

answer

models and equations

question

All models are built with

answer

assumptions

question

Circular-Flow Diagram

answer

A visual model of the economy that shows how dollars flow through markets among households and firms

question

Firms produce goods and services using inputs such as

answer

land, labor, and capital

question

In markets for the factors of production

answer

households are sellers, firms are buyers

question

In markets for goods and services

answer

households are buyers, firms are sellers

question

The inner loop represents

answer

the flow of inputs and outputs

question

The outer loop represents

answer

the corresponding flow of dollars

question

Most economic models are built using

answer

the tools of mathematics

question

Production Possibilities Frontier

answer

A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

question

Because resources are scarce

answer

not every conceivable outcome is feasible

question

Points outside the PPF are

answer

not feasible

question

Points on the PPF are

answer

efficient

question

The only way of getting more of one good is

answer

producing less of the other

question

Microeconomics

answer

The study of how households and firms make decisions and how they interact in markets

question

Macroeconomics

answer

The study of how economy wide phenomena, including inflation, unemployment, and economic growth

question

PPF's highlight

answer

scarcity, efficiency, trade-offs, opportunity costs, and economic growth

question

Positive Statements

answer

Statements on how the world is

question

Normative Statements

answer

Statements on how the world should be

question

The key difference between positive and normative statements is

answer

how we judge their validity

question

Much of economics is

answer

positive

question

Wanted to find a one-armed economist

answer

Harry Truman

question

"The ideas of economists and political philosophers, right or wrong, are more powerful than commonly understood"

answer

John Maynard

question

"If Trivial Pursuit were designed for economists, it would have 100 questions and 3000 answers"

answer

Ronald Reagan

question

Economists give conflicting advice because sometimes they

answer

have different values

Order an Essay Now & Get These Features For Free:

Place an Order