Ch2 &5 - Textbook Questions Answers(from the...

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Textbook Questions Answers (from the Publisher) Ch 2 Questions for Review 1. Economics is like a science because economists use the scientific method. They devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories about how the world works. Economists use theory and observation like other scientists, but they are limited in their ability to run controlled experiments. Instead, they must rely on natural experiments. 2. Economists make assumptions to simplify problems without substantially affecting the answer. Assumptions can make the world easier to understand. 3. An economic model cannot describe reality exactly because it would be too complicated to understand. A model is a simplification that allows the economist to see what is truly important. 4. Figure 3 shows a production possibilities frontier between corn and rice ( PPF 1 ). If a new fertilizer is developed that increases the amount of corn that can be produced on each acre of land, the production possibilities frontier shifts out. Note that if the economy produces all rice, it does not use the new fertilizer and production is unaffected. But if the economy produces any corn at all, then there will be more production possible after the new fertilizer is developed. Figure 3
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