Deck 2: True False

Question 1

An economic model can accurately explain how the economy is organized because it is designed to include,to the extent possible,all features of the real world.

Answer 1

False

Question 2

Economic models omit many details to allow us to see what is truly important.

Answer 2

True

Question 3

Historical episodes allow economists to illustrate and evaluate current economic theories.

Answer 3

True

Question 4

Good assumptions simplify a problem without substantially affecting the answer.

Question 5

Economic models are most often composed of diagrams and equations.

Question 6

Economic models can help us understand reality only when they include all details of the economy.

Question 7

Economists devise theories,collect data,and then analyze these data in an attempt to verify or refute their theories.

Question 8

Economists usually have to make do with whatever data the world happens to give them.

Question 9

For economists,conducting experiments is often difficult and sometimes impossible.

Question 10

All scientific models,including economic models,simplify reality in order to improve our understanding of it.

Question 11

Economists use one standard set of assumptions to answer all economic questions.

Question 12

Since economists cannot use natural experiments offered by history,they must use carefully constructed laboratory experiments instead.

Question 13

Economists try to address their subject with a scientist's objectivity.

Question 14

Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.

Question 15

It is difficult for economists to make observations and develop theories,but it is easy for economists to run experiments to generate data to test their theories.

Question 16

Assumptions can simplify the complex world and make it easier to understand.

Question 17

The scientific method can be applied to the study of economics.

Question 18

The scientific method is the dispassionate development and testing of theories about how the world works.

Question 19

Historical episodes are not valuable to economists.

Question 20

While the scientific method is applicable to studying natural sciences,it is not applicable to studying a nation's economy.

Question 21

A circular-flow diagram is a visual model of the economy.

Question 22

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

Question 23

Figure 2-14
Refer to Figure 2-14.It is possible for this economy to produce 45 doghouses and 30 dishwashers.

Question 24

In the circular-flow diagram,factors of production are the goods and services produced by firms.

Question 25

In the circular-flow diagram,one loop represents the flow of goods,services,and factors of production,and the other loop represents the corresponding flow of dollars.

Question 26

In the circular-flow diagram,the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

Question 27

Figure 2-14
Refer to Figure 2-14.It is possible for this economy to produce 75 doghouses.

Question 28

In the circular-flow diagram,one loop represents the flow of goods and services,and the other loop represents the flow of factors of production.

Question 29

In the circular-flow diagram,payments for labor,land,and capital flow from firms to households through the markets for the factors of production.

Question 30

Figure 2-14
Refer to Figure 2-14.If this economy uses all its resources in the dishwasher industry,it produces 35 dishwashers and no doghouses.

Question 31

In the circular-flow diagram,firms produce goods and services using the factors of production.

Question 32

In the circular-flow diagram,households and firms are the decision makers.

Question 33

In the circular-flow diagram,factors of production include land,labor,and capital.

Question 34

In the circular-flow diagram,firms own the factors of production and use them to produce goods and services.

Question 35

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Question 36

In the markets for the factors of production in the circular-flow diagram,households are buyers and firms are sellers.

Question 37

In the circular-flow diagram,firms consume all the goods and services that they produce.

Question 38

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

Question 39

Figure 2-14
Refer to Figure 2-14.It is possible for this economy to produce 30 doghouses and 20 dishwashers.

Question 40

The circular-flow diagram explains,in general terms,how the economy is organized and how participants in the economy interact with one another.

Question 41

Figure 2-14
Refer to Figure 2-14.The opportunity cost of an additional doghouse increases as more doghouses are produced.

Question 42

Figure 2-14
Refer to Figure 2-14.This economy fully employs its resources when it produces 35 dishwashers and zero doghouses.

Question 43

Figure 2-14
Refer to Figure 2-14.Points A,B,and D represent efficient outcomes for this economy.

Question 44

Figure 2-14
Refer to Figure 2-14.When this economy produces 30 doghouses and 25 dishwashers there is full employment.

Question 45

Figure 2-14
Refer to Figure 2-14.Given the technology available for manufacturing doghouses and dishwashers,this economy does not have enough of the factors of production to support the level of output represented by point C.

Question 46

Figure 2-14
Refer to Figure 2-14.Points A,B,and D represent feasible outcomes for this economy.

Question 47

Figure 2-17​
Refer to Figure 2-17.It is possible for this economy to produce 1000 shoes.

Question 48

Figure 2-14
Refer to Figure 2-14.The opportunity cost of moving from point B to point A is zero.

Question 49

Points inside the production possibilities frontier represent inefficient levels of production.

Question 50

Figure 2-14
Refer to Figure 2-14.Unemployment could cause this economy to produce at point B.

Question 51

Figure 2-17​
Refer to Figure 2-17.The opportunity cost of producing an additional pair of shoes increases as more shoes are produced.

Question 52

Points inside the production possibilities frontier represent feasible levels of production.

Question 53

Figure 2-14
Refer to Figure 2-14.Points B and C represent infeasible outcomes for this economy.

Question 54

Figure 2-14
Refer to Figure 2-14.The opportunity cost of moving from point A to point D is 10 dishwashers.

Question 55

Figure 2-14
Refer to Figure 2-14.The opportunity cost of moving from point B to point D is 15 doghouses.

Question 56

With the resources it has,an economy can produce at any point on or outside the production possibilities frontier,but it cannot produce at points inside the frontier.

Question 57

Figure 2-17​
Refer to Figure 2-17.The opportunity cost of moving from point A to point B is zero.

Question 58

Figure 2-17​
Refer to Figure 2-17.Point B represents an inefficient outcome for this economy.

Question 59

Figure 2-17​
Refer to Figure 2-17.This economy fully employs its resources when it produces 4000 shoes and zero t-shirts.

Question 60

Figure 2-14
Refer to Figure 2-14.Point B represents an inefficient outcome for this economy.

Question 61

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

Question 62

Points outside the production possibilities frontier represent infeasible levels of production.

Question 63

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Question 64

The trade-off between the production of one good and the production of another good can change over time because of technological advances.

Question 65

A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

Question 66

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

Question 67

The opportunity cost of something is what you give up to get it.

Question 68

Unemployment causes production levels to be inefficient.

Question 69

When a production possibilities frontier is bowed outward,the opportunity cost of the first good in terms of the second good increases as more of the second good is produced.

Question 70

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

Question 71

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other is constant.

Question 72

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

Question 73

When a production possibilities frontier is bowed outward,the opportunity cost of the second good in terms of the first good increases as more of the second good is produced.

Question 74

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Question 75

While the production possibilities frontier is a useful model,it cannot be used to illustrate economic growth.

Question 76

If a major union goes on strike,then the country would be operating inside its production possibilities frontier.

Question 77

If an economy can produce more of one good without giving up any of another good,then the economy's current production point is inefficient.

Question 78

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

Question 79

Economists believe that production possibilities frontiers rarely have a bowed shape.

Question 80

Points on the production possibilities frontier represent efficient levels of production.