Why do economists use graphs?
What will be an ideal response?
Graphs help economists, and others, to visualize the relationships between economic variables. Graphs that plot variables together help economists understand if the variables are related and how they are related. Graphs also help provide a visual picture of economic models that link different variables. Indeed, many other disciplines use such visual models. For example, architects work with blueprints (their model) and the blueprints represent every detail of a building. Economists' models do not reflect of every detail of the real world, but the graphs that they use nonetheless are valuable because they help clarify the linkages between the variables.
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Policies taken to move the economy closer to potential output
A) must necessarily be contractionary policies. B) are lagging policies or automatic policies. C) are called stabilization policies. D) must necessarily be expansionary policies.
Scarcity applies to both the rich and the poor
Indicate whether the statement is true or false
Refer to Figure 12-6. Which of the following statements is true?
A) Jason should produce where MC equals $3 (point d) where he will minimize his losses. B) Jason cannot earn a profit from selling any number of apples. C) Jason should produce where MC equals $3 (point d) where he will maximize his profit. D) Jason should produce where the distance between MC and his demand curve is greatest (point b).
The long-run average cost curve shows
A) the average cost of producing where diminishing returns are not present. B) the plant size or scale that the firm should build. C) the lowest average cost of producing every level of output in the long run. D) where the most profitable level of output occurs.