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Chapter 4--MacroTB - CHAPTER 4 A Model of Production...

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MULTIPLE-CHOICE 1. A model is a __________ representation of __________ world that we use to study economic phenomena. a. false; a toy b. mathematical; a toy c. accurate; the real d. mathematical; the real e. accurate; a toy Answer: b. Section: 4.1 2. The text uses this analogy of the economic model: “As the model-builder, __________ what actions the robots can take and __________ the raw materials that fill the robot world. After constructing the world, you switch on the power source and __________.” a. you determine; you provide; you know what happens b. reality determines; reality provides; watch what happens c. reality determines; reality provides; you know what happens d. you determine; you provide; watch what happens e. None of the above is correct. Answer: d. Section: 4.1 3. Mathematically, an economic model is __________. 4. Which of the following are we likely going to want to explain with an economic model? i. Why people in the United States are 50 times richer than Ethiopians. ii. What causes economic growth. iii. What we think politicians should do with taxes. 5. Consider an economy where the only consumption good is ice cream; firms in this economy must 26 A Model of Production CHAPTER 4
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A Model of Production | 27 6. Models simplify __________ of decisions into just a few equations. a. tens b. hundreds c. millions d. dozens e. thousands Answer: c. Section: 4.2 7. The following equation is an example of __________. Y = F ( K, L ) = A ± K a L 1 a a. a consumption function b. a utility function c. a production function d. the production possibilities frontier e. a growth model Answer: c. Section: 4.2 8. The following equation is an example of __________. Y = F ( K, L ) = A ± K 1/3 L 2/3 9. In the equation Y = F ( K , L ) = A ± K 1/3 L 2/3 , the “bar” over the A means that it is
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