{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

CHAPTER 2 TEXTBOOK ANSWERS - QuickQuizzes 1...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 2 TEXTBOOK ANSWERS Quick Quizzes 1. Economics is like a science because economists devise theories, collect data, and analyze the  data in an attempt to verify or refute their theories.  In other words, economics is based on the  scientific method. Figure 1 shows the production possibilities frontier for a society that produces food and clothing.  Point A is an efficient point (on the frontier), point B is an inefficient point (inside the frontier), and  point C is an infeasible point (outside the frontier). Figure 1 The effects of a drought are shown in Figure 2.  The drought reduces the amount of food that can  be produced, shifting the production possibilities frontier inward. 15
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 2/Thinking Like an Economist   16 Figure 2 Microeconomics is the study of how households and firms make decisions and how they interact  in markets.  Macroeconomics is the study of economy-wide phenomena, including inflation,  unemployment, and economic growth. 2. An example of a positive statement is “higher taxes discourage work effort” (many other answers  are possible).  That’s a positive statement because it describes the effects of higher taxes,  describing the world as it is.  An example of a normative statement is “the government should  reduce tax rates.”  That is a normative statement because it’s a claim about how the world should  be. Parts of the government that regularly rely on advice from economists are Finance Canada in  designing tax policy, Industry Canada in designing and enforcing Canada’s antimonopoly laws,  and International Trade Canada in helping to negotiate trade agreements with other countries.  3. Economic advisers to the prime minister might disagree about a question of policy because of  differing scientific judgments or differences in values. 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.
Image of page 2
Chapter 2/Thinking Like an Economist   17 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.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern