Quiz Thinking Like a Economist

Quiz : thinking like a economist part 1 The scientific method requires that a. scientists are objective. b. only incorrect theories are tested. c. only correct theories are tested. d. scientists use precision equipment. e. scientists use test tubes and have clean labs. Which of the following is most likely to produce scientific evidence about a theory? a. an economist employed by the AFL/CIO doing research on the impact of trade restrictions on workers' wages b. a tenured economist employed at a leading university analyzing the impact of bank regulations on rural lending c. a lawyer employed by General Motors addressing the impact of airbags on passenger safety d. a radio talk show host collecting data on how capital markets respond to taxation Which of the following statements regarding the circular-flow diagram is true? a. The factors of production are owned by households. b. If Susan works for IBM and receives a paycheck, the transaction takes place in the market for goods and services. c. If IBM sells a computer, the transaction takes place in the market for factors of production. d. The factors of production are owned by firms. e. None of the above is true. In which of the following cases is the assumption most reasonable? a. To address the benefits of trade, an economist assumes that there are two people and two goods. b. To address the impact of money growth on inflation, an economist assumes that money is strictly coins. c. To estimate the speed at which a beach ball falls, a physicist assumes that it falls in a vacuum. d. To address the impact of taxes on income distribution, an economist assumes that everyone earns the same income. Economic models are a. useless if they are simple. b. usually made of wood and plastic. c. built with assumptions. d. created to duplicate reality. Which of the following is not a factor of production? a. land b. labor c. capital d. money e. All of the above are factors of production. Points on the production possibilities frontier are a. efficient. b. inefficient. c. unattainable. d. normative. e. none of the above. Which of the following will not shift a country's production possibilities frontier outward? a. an advance in technology b. a reduction in unemployment c. an increase in the capital stock d. an increase in the labor force Economic growth is depicted by a. a movement along a production possibilities frontier toward capital goods. b. a shift in the production possibilities frontier outward. c. a movement from inside the curve toward the curve. d. a shift in the production possibilities frontier inward. If the economy is operating at point C, the opportunity cost of producing an additional 15 units of bacon is a. 10 units of eggs. b. 40 units of eggs. c. 20 units of eggs. d. 50 units of eggs. e. 30 units of eggs. Rember: - An economic model is a simplified description of reality, designed to yield hypotheses about economic behavior that can be tested. - An economic model is a simplified description of reality, designed to yield hypotheses about economic behavior that can be tested. - The Production Possibilities Frontier (PPF) is a graph that shows all the different combinations of output of two goods that can be produced using available resources and technology. - The factors of production are resources that are the building blocks of the economy; they are what people use to produce goods and services. Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship. - Assumption: a thing that is accepted as true or as certain to happen, without proof. - The circular flow model shows the interaction between two groups of economic decision-makers—households and businesses—and two types of economic markets—the market for resources and the market for goods and services. - The scientific method is the technique used by economists to determine economic laws or principles