econ-1 (2) - 1 Economic models A are of limited use because...

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1. Economic models: A) are of limited use because they cannot be tested empirically. B) are limited to variables that are directly related to one another. C) emphasize basic economic relationships by abstracting from the complexities of the real world. D) are unrealistic and therefore of no practical consequence. 2. Which of the following statements pertains to macroeconomics? A) Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force. B) A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. C) The national productivity rate grew by 2.7 percent last year. D) The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point. 3. The science of economics stems from the fact that: A) the production possibilities curve is bowed inward to the origin. B) resources are scarce relative to people's demand for goods and services. C) individuals and institutions behave only in their self-interest. D) historically the production possibilities curve has been shifting toward the origin. 4. The money payments made to owners of land, labor, capital, and entrepreneurial ability are: A) interest, wages, rent, and profits respectively. B) rent, wages, dividends, and interest respectively. C) rent, profits, wages, and interest respectively. D) rent, wages, interest, and profits respectively. 5. Productive efficiency refers to: A) the use of the least-cost method of production. B) the production of the product-mix most wanted by society. C) the full employment of all available resources. D) production at some point inside of the production possibilities curve. 6. Which of the following will not produce an outward shift of the production possibilities curve? A) an upgrading of the quality of a nation's human resources B) the reduction of unemployment C) an increase in the quantity of a society's labor force Page 1
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D) the improvement of a society's technological knowledge Use the following to answer question 7: 7. Refer to the above diagram. Starting at point A , the opportunity cost of producing each successive unit of tractors is: A) a constant 2 units of bread. B) 2, 4, 6, and 8 units of bread. C) 8, 6, 4, and 2 units of bread. D) the reciprocal of the output of tractors. 8. The law of increasing opportunity costs states that: A) if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so. B)
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econ-1 (2) - 1 Economic models A are of limited use because...

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