Principles of Microeconomics Chapter 2&3 Thinking Like an Economist; Interdependence & Gains from Trade

Inner

________ loop represents flows of inputs & outputs.

Specialization

________ allows the total production in economy to rise (increase efficiency)

International trade

________ can make INDIVIDUALS worse off, but COUNTRY as a whole better off.

Policy decisions

________ are difficult because of TRADEOFFS.

Opportunity cost

________ is greater when frontier is steeper.

loop

Outer ________ represents corresponding flow of $ $.

Endpoints

________ represent extreme possibilities.

Positive views

________ affect normative views about what policies are desirable.

Models

What are simplified to improve understanding? Answer with a single words or term.

Remainder of revenue

What is profit for firm owners, who are themselves members of households? Answer with a single words or term.

Normative statements

________: prescriptive; claim about how the world ought to be; evaluated using values /ethics AND facts.

Positive statements

________: descriptive; claim about how the world is; can be evaluated using evidence.

Economists advice

Why ________ is not always followed.