Chapter 2

Question 1

What two variables can you find in a circle flow chart?

Answer 1

Model and Assumptions

Question 2

what is scientific method

Answer 2

it involves theory and more observation.
economists use theory like scientists but are unable to conduct experiements

Question 3

How assumptions helpful

Answer 3

They simplify the complex work and make it easier to understand.
- we must learn to use scientific thinking to know what assumptions to make

Question 4

what is a model

Answer 4

-they help us study the world in the form of diagrams and equations.
-they omit details to allow us to see what is truly important.

Question 5

what is a PPF

Answer 5

production possibility frontier
-a graph that shows combinations of output that an economy can produce given available factors and available production technology.

Question 6

innovation in ppf

Answer 6

we have an input that allows a better output.
Ex. technology of efficient workers.

Question 7

Macro vs Micro

Answer 7

Micro = individual markets or firms
Macro= the economy as a whole.

Question 8

Positive vs Normative

Answer 8

positive claims to attempt to describe the world as it is.
normative claims are a judgment value or opinion

Question 9

what is vertical slope?

Answer 9

Inifinity (undefined slope)

Question 10

what is horizontal slope?

Answer 10

it is always 0.