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CHAPTER 02 - Chapter2 1 a b c d

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Chapter 2/Thinking Like an Economist 7 Chapter 2 Thinking Like an Economist 1. A simplifying assumption a. affects the important conclusions of an economic model. b. increases the level of detail in an economic model. c. limits the validity of an economic model’s conclusion. d. eliminates unnecessary details from an economic model. ANSWER: d eliminates unnecessary details from an economic model. SECTION: 1 OBJECTIVE: 2 2. The ultimate purpose of an economic model is to a. explain reality as completely as possible. b. establish assumptions that closely resemble reality. c. help us to understand economic behavior. d. guide government policy decisions. ANSWER: c help us to understand economic behavior. SECTION: 1 OBJECTIVE: 2 3. An economic model 3. Which of the following activities would occur in a market for factors of production? 4. Which of the following activities would occur in a market for goods and services?
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5. The three sources of income for the household are a. taxes, subsidies from the government, and rent. b. wages, rent, and profit. c. wages, rent, and subsidies from the government. d. wages, rebates, and rent. ANSWER: b wages, rent, and profit. SECTION: 1 OBJECTIVE: 3
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