Chapter 2 - Thinking Like An Econ

Question 1

Production possibility frontier

Answer 1

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 2

Any point outside the production possibly frontier is

Answer 2

Not feasible because there is not enough resources for that

Question 3

Points on the ppf is considered

Answer 3

Efficient, it is using all of the resources it can

Question 4

Anything on the inside of the ppf is considered to be

Answer 4

Inefficient because it is not using all the resources it possibly can

Question 5

Microeconomics

Answer 5

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

Question 6

Macroeconomics

Answer 6

The study if economy wide phenomenon, including inflation l, unemployment, and the economic growth

Question 7

Positive statement

Answer 7

Claims that attempt to describe the world as it is

Positive : minimum wage laws cause unemployment

Question 8

Normative statements

Answer 8

Claims that attempt to prescribe how world should be

Normative : the government should raise minimum wage

Question 9

Economists disagree about

Answer 9

On validlity of alternative positive theories about how world works
And
Have many different values and therefor different normative be views about what gov policy should aim to accomplish

Question 10

Circular flow diagram

Answer 10

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