AppliedEconMidtermAnswerKey.docx - I.From the given set of...

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I.From the given set of words at the bottom of the page, identify the following items. 1. A formal statement of an economic theory often composed of diagrams and equations. Economic model 2. Classification of economics that takes a close-up view of the economy and analyzes individual parts of an economy rather than the whole economy. Microeconomics 3. The negative relationship between price and quantity demanded. It tells us what would happen to the quantity of a good that people would choose to buy if only the price of that good changed and all other factors affecting demand for that good remained unchanged. Law of demand 4. A statement or set of related statements of a presumed relationship between two or more economic variables. Economic model 5. Distinction of economics that attempts to determine how the world is and how the world works. It can be tested whether it is right or wrong by checking it against the facts. Positive economics 6. The study of how individuals, business firms, governments, and societies as a whole make choices under conditions of scarcity. Economics 7. The value we place on the best opportunity that will have to be given up if that action is taken.
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