EC120 Lecture Notes - Lecture 2: Opportunity Cost, Scientific Method, European Cooperation In Science And Technology
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Economists play 2 roles: scientists (try to explain the world), and policy advisors (try to improve the world) When they"re scientists, they employ the scientific method, the dispassionate development and testing of theories about how the world works. Assumptions simply the world and makes it easier to understand. E. g. to study intl trade, assume 2 countries and 2 goods: unrealistic, but gives useful insights about the real world. Model: a highly simplified representation of a more complicated reality; economists use models to study economic issues. Circular flow diagram: visual model of economy, shows how dollars flow through markets among households and firms. Households: own the factors of production, sell/rent them to firms for income; buy/consume g/s. Firms: buy/hire factors of production, use them to produce g/s, sells g/s. 2 markets: market for goods and services, market for factors of production". Factors of production: resources the economy uses to product g/s (e. g. labour, land, capital buildings & machines used in production)
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Related Questions
21. The English word that comes from the Greek word for "one who manages a household" is
A- market
B- consumer
C- producer
D- economy
B- should be counted only to the extent that they are more expensive at college than elsewhere. C- usually exceed the opportunity cost of going to college. D- plus the cost of tuition, equals the opportunity cost of going to college. |
B- in most economies, wealthy people consume disproportionate quantities of goods and services. C- governments restrict the production of too many goods and services. D- resources are limited. |
B- markets guiding economic activity. Today many countries that did not have this system have implemented it. C- government guiding economic activity. Today many countries that had this system have abandoned it. D- government guiding economic activity. Today many countries that did not have this system have implemented it. |
B- we should agree with Senator Johnson. C- a good decision requires that we recognize both viewpoints. D- there are no tradeoffs between equity and efficiency. |
B- it does not matter if they charge $10 or $15. C- they would do better charging $15 than $10. D- they should raise the price even more. |
B- helps to explain how the economy is organized. C- incorporates all aspects of the real economy. D- Both (a) and (b) are correct. |
B- households provide firms with labor, land, and capital. C- firms provide households with output. D- firms provide households with profit. |
B- grew rapidly, due to several increases in the minimum wage during those decades. C- grew rapidly, due to government policies that discouraged the importation of foreign products during those decades. D- grew slowly, due to the slow growth of the output of goods and services per hour of U.S. workers' time during those decades. |
Question 30. 30. For economists, statements about the world are of two types: |
A- assumptions and theories.
B- true statements and false statements.
C- specific statements and general statements.
D- positive statements and normative statements.