Economics Ch 2 – Flashcards
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A model refers to:
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-A simplified description, or representation, of reality.
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Economic models are often based on assumptions because they:
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-Help simplify complex real-world phenomena.
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Which of the following is most likely to be an example of causation?
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-A firm producing CFLs installs new machinery. The per-day production of CFLs increases
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When two variables move in opposite directions, they are said to be:
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-Negatively correlated.
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Which of the following statements correctly indicates a property of good economic questions?
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-A good economic question addresses topics that are important to economic agents and/or to the society
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Which of the following statements is true?
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-Optimization implies choosing the best option from a set of alternatives.
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Optimization in differences analyzes:
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-The change in the net benefits resulting from a shift from one alternative to another.
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If the total cost incurred in hiring ten workers by a firm is $45, and the total cost incurred when the eleventh worker is hired is $60, the marginal cost of hiring the eleventh worker is:
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-$15.
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In choosing between apartments in two different locations, the marginal commuting cost is given by:
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-The difference between the commuting cost from two different apartments to the destination.
