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17 Cards in this Set
- Front
- Back
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Production possibilities frontier |
A model summarizing the different ways a society's production resources could be used to full capacity, assuming those resources remain fixed |
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By comparing opportunity costs and gains from trade for two parties each making the same two goods, can one determine the exact exchange ratio at which the parties should agree to trade? |
False |
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Is an economic model always a simplification? |
Yes
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In a product market, the households are... |
...the buyers and the sellers |
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In a resource market, the households... |
...act as the sellers. Firms are the buyers. |
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Name three things that an economics may do to test a hypothesis. |
Gather historical data. Conduct experiments. Wait for real-world events to confirm/refute the hypothesis. |
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If a community of woodworkers gains five new members who specialize only in chairs, will the community be able to produce both more tables and more chairs (because the increase in labor resources has expanded the entire PPF upward and outward)? |
No. |
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What is the difference between a positive statement and a normative one? |
A positive statement can be tested and validated by gathering data. By contrast, a normative statement is assessed in light of values and opinions. |
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In one year, Wynn Debbler can make 90 pairs of trousers or 30 coats, while Peg Michaels can make 100 pairs of trousers or 30 coats. They discuss an arrangement in which Peg gives Wynn trousers in exchange for coats, so that they both benefit. Which of the following arrangements should be acceptable to both Wynn and Peg? |
8 coats for 25 trousers 4 coats for 13 trousers |
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Name three characteristics of a good economic model |
Flexible in design Able to make powerful predictions Simple to understand |
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How does money make the circular flow model more efficient? |
Having a common medium of exchange, like money, eliminates the need to barter |
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A commodity that buyers and sellers both have will increase the efficiency of the market – true or false? |
False |
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A pro football quarterback has to move. What would be a good economic reason for him to do his own moving rather than hiring someone else? |
If he is retired, he no longer has the trade-off of missing practice or a game |
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What is a production possibilities frontier? |
According to the law of increasing relative cost, as a society produces more and more of a certain good, further production increases involve ever-greater opportunity costs |
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What are the six steps of the scientific method? |
Observe phenomenon Develop a hypothesis Construct a model Design experiments Collect results Assess the hypothesis |
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In one week, Jedidiah Schlepp can produce 24 gizmos or 20 whatsits. What is the opportunity cost ratio, in gizmos per whatsit? Give the answer to one decimal place. |
24/20 = 1.2 gizmos per whatsit |
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What simplifying assumption would explain the straight-line appearance of the PPF in the figure? |
All workers have the same pizza-making skills and the same wing-making skills |
