A.increase in the short-run.

b.decrease in the short-run.

c.increase in the long-run.

d.decrease in the long-run.

2. Introduction: Thinking Like an Economist

11.

Which of the following is FALSE, regarding economics as a science?

a.Economic knowledge is obtained through the scientific method, just as in any other science.

b.It is difficult to conduct experiments in economic matters.

c.Economists pay close attention to natural experiments resulting from historical events.

D.Economic theories represent irrefutable facts.

12.

Economists use assumptions in order to:

a.recreate real situations accurately, with all their complexity.

b.avoid dealing with issues they would rather not talk about.

C.simplify economic theories, so as to make it possible to answer economic questions.

d.make their theories more realistic.

13.

Economic models are:

a.simplified versions of economic theories.

b.created by making assumptions.

c.usually composed of diagrams and equations.

D.all of the other options are true.

14.

All of the following are characteristics of the Circular Flow Model of the economy, EXCEPT:

a.the model has two markets: one for goods and services and one for factors of production.

b.the model includes two sectors: the Firms sector and the Households sector.

c.the model describes two circular flows: one for inputs and one for resources.

d.the two flows described by the model move in opposite directions.

15.

The circular flow model of the economy demonstrates that:

a.the economy actually has only two sectors: firms and households.

B.dollars in the economy are used over and over in an endless cycle.

c.firms produce and provide factors of production.

d.government is the source of revenue for households to purchase goods and services from firms.

16.

Which of the following is true regarding the Production Possibilities Frontier Model of the economy?

A.Any point along the PPF represents an efficient level of production.

b.Any point in the area below the PPF represents a combination of production that is not feasible.

c.The opportunity cost of producing one more unit of one of the goods represented in the PPF remains the same at any point along the PPF.

d.Increases in the resources available for production will cause the PPF to shift towards the origin.

17.

Economic growth in the economy can be portrayed in the Production Possibilities Frontier model as a:

a.movement up and to the left along the PPF.