Ch. 2 Questions for review 1-5

Ch. 2 Questions for review 1-5 - this and therefore the...

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Mike Weisman 9-3-07 ECO 211 Ch. 2 Questions for review 1-5 1. How is economics like a science? a. Economics is like science because most economists follow the scientific method. They go through the process just using different tests and models. 2. Why do economists make assumptions? a. Assumptions are necessary to create models which therefore allow economists to test theories during the scientific method. 3. Should an economic model describe reality exactly? a. No. This should not be because in economics you have to do multiple tests and because it is the real world, you cannot change things or do things multiple times. During the normal scientific method, everything can be controlled in a lab. In the world, everything is going to go as usual no matter what you want it to do. You have to make assumptions about
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Unformatted text preview: this and therefore the models cannot describe reality exactly. 4. Draw and explain a production possibilities frontier for an economy that produces milk and cookies. What happens to this frontier if disease kills half of the cow population? The curve becomes steeper as shown in the diagram above. Because the cow population is cut in half, it is safe to assume that the outcome of milk is also cut in half. 5. Use a production possibilities frontier to describe the idea of efficiency. a. Any combination of quantity of both items that falls along the frontier curve results in an efficient production. Any point in side the curve is an inefficient use, meaning that all available resources were not used. Any point on the outside is not possible and therefore not efficient....
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