Trade deficits, foreign exchange, and international trade take top billing in an economics quiz. Main Idea: The changing economy has brought along a changing job market. Time to take a quiz on the market economy! 1.2 Microeconomics and Macroeconomics; 1.3 How Economists Use Theories and Models to Understand Economic Issues; 1.4 How Economies Can Be Organized: An Overview of Economic Systems; Chapter 2. •Apply the concepts of elasticity to changes in prices. 1 contains chapters on value and price, rent, wages, time-value and interest, enterprise and profit, and dynamic economic change. Welcome to Economics! • What occupational trends exist in the U.S. economy? A major cost of the Executive MBA program is the value of The Basic Search Model 229 3. • What is temporary employment? Basic Equilibrium Search Framework 229 1. Economists do not figure out the answer to the problem first and then draw the graph to illustrate. What does rational self-interest involve? Both micro and macroeconomics are explained in terms of theories and models. Put knowledge to the test with a short quiz. In the diagram, firms produce goods and services, which they sell to households in return for revenues. 4. There are five multiple choice and five matching questions total. What is an example of a problem in the world today, not mentioned in the chapter, that has an economic dimension? It pictures the economy as consisting of two groups—households and firms—that interact in two markets: the goods and services market in which firms sell and households buy and the labor market in which households sell labor to business firms or other employees. (c) the minimum possible output of an economy. Models are used to test theories, but for this course we will use the terms interchangeably. There are many such problems. Surprise your class, use this as a pop quiz! Chapter 3. As you read Section 1, fill in two supporting facts or details under each main idea by answering each question. An economy that is using its resources to produce the maximum number of goods and 2. Also, suppose you do not have a specific model for analyzing that issue. 1: Economic Principles Volume 1 of Fetter’s 2 volume survey of economics written while he was a professor at Princeton University. Draw an arrow in the reverse direction representing payments for imports. In this course, we will mostly use graphs.) Use a production possibilities frontier to illustrate society’s trade-off between two “goods”—a clean environment and the quantity of industrial output. The purpose of a theory is to take a complex, real-world issue and simplify it down to its essentials. Positive Externalities and Public Goods, Introduction to Positive Externalities and Public Goods, 13.1 Why the Private Sector Under Invests in Innovation, 13.2 How Governments Can Encourage Innovation, Chapter 14. If trade opens between the two economies and the terms of trade are 1.5, then Alpha will produce more washing machines and fewer computers (moving to a point such as R 2 ), while Beta will produce more computers and fewer washing machines (moving to a point such as S 2 ). Main Idea: The Bureau of Labor Statistics (BLS) tracks changes in the labor force. Companies often build models of their new products, which are more rough and unfinished than the final product will be, but can still demonstrate how the new product will work. A good model to start with in economics is the circular flow diagram, which is shown in Figure 2. Then they use the theory to derive insights about the issue or problem. •Explain how economic models can be used to predict and explain price changes. The cost of every decision is measured in terms of its opportunity cost, which is the cost of the next best alternative use of money, time, or resources when one choice is made rather than another. 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