How do demand and supply interact to clear the market

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Unformatted text preview: and policy advisers. 2. As scientists, economists rely on the use of models. You need to understand what models are, why economists (or scientists in general use them) and what the role of assumptions are. 3. As policy advisers, economists give recommendations based on the results that they find on models. You need to understand the difference, and distinguish, between normative statements and positive statements. 4. The circular- flow diagram. Specifically the flows of money, inputs or outputs (goods and services) and the directions in which they flow (that is, from households to firms or from firms to households). 5. PPF. Understand why the slope of the PPF measure the opportunity cost of producing one good versus another. You also need to understand what shifts the PPF and whether this shift is a paralle...
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This document was uploaded on 02/20/2014 for the course ECON 1002 at University of Minnesota Duluth.

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