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WorksheetsThinking Like an Economist-Part one
Total questions: 7
Worksheet time: 4mins
An economic model can accurately explain how the economy is organized because it is designed to include, to the extent possible, all features of the real world.
True
False
In the circular-flow diagram, factors of production are the goods and services produced by firms.
True
False
Points outside the production possibilities frontier represent infeasible levels of production.
True
False
The circular-flow diagram
is an economic model.
incorporates two types of decision makers: households and firms.
represents the flows of inputs, outputs, and dollars.
All of the above are correct.
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
society’s preferences.
the available production technology.
a fair distribution of the output.
the available demand for the output.
Someone buys a car in exchange for a large amount of money. They have completed an exchange in which part of the circuclar flow model?
Product Market
Factor Market
Firms
Individuals
A firm is looking to purchase a new machine and factory. In the circular flow diagram, this transaction will take place in the
Product market.
factor (input) market
Foreign Exchange market
Public market
