Question 1

Figure 2-17​  
-Refer to Figure 2-17. Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 2

One way to characterize the difference between positive statements and normative statements is as follows:

Accepted Answer

A) Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. 
B) Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. 
C) Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. 
D) Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements. 
A) Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. 
B) Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. 
C) Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. 
D) Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements.

Question 3

Figure 2-2  
-Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Accepted Answer

A) flows of goods and services from households to firms. 
B) flows of inputs from households to firms. 
C) flows of rent payments paid to owners of land. 
D) flows of wages and salaries paid to workers. 
A) flows of goods and services from households to firms. 
B) flows of inputs from households to firms. 
C) flows of rent payments paid to owners of land. 
D) flows of wages and salaries paid to workers.

Question 4

A relatively flat demand curve indicates that

Accepted Answer

A) quantity demanded will adjust only slightly to a price change. 
B) quantity demanded will adjust significantly to a price change. 
C) quantity demanded will not adjust to a price change. 
D) the change in quantity demanded will exactly equal a change in price. 
A) quantity demanded will adjust only slightly to a price change. 
B) quantity demanded will adjust significantly to a price change. 
C) quantity demanded will not adjust to a price change. 
D) the change in quantity demanded will exactly equal a change in price.

Question 5

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

Accepted Answer

A) True 
 B)False

Question 6

Economic models can help us understand reality only when they include all details of the economy.

Accepted Answer

A) True 
 B)False

Question 7

According to economist John Maynard Keynes, a great economist must also be a(n)

Accepted Answer

A) mathematician. 
B) historian. 
C) philosopher. 
D) All of the above are correct. 
A) mathematician. 
B) historian. 
C) philosopher. 
D) All of the above are correct.

Question 8

Figure 2-2  
-Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

Accepted Answer

A) Box D must represent the markets for factors of production. 
B) Box C must represent the markets for goods and services. 
C) firms are buyers in the markets represented by Box D. 
D) All of the above are correct. 
A) Box D must represent the markets for factors of production. 
B) Box C must represent the markets for goods and services. 
C) firms are buyers in the markets represented by Box D. 
D) All of the above are correct.

Question 9

The scientific method is

Accepted Answer

A) the use of modern technology to understand the way the world works. 
B) the use of controlled laboratory experiments to understand the way the world works. 
C) the dispassionate development and testing of theories about how the world works. 
D) the search for evidence to support preconceived theories about how the world works. 
A) the use of modern technology to understand the way the world works. 
B) the use of controlled laboratory experiments to understand the way the world works. 
C) the dispassionate development and testing of theories about how the world works. 
D) the search for evidence to support preconceived theories about how the world works.

Question 10

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Accepted Answer

A) Indiadesh decreased unemployment. 
B) Indiadesh experienced an improvement in textile-making technology. 
C) Indiadesh experienced an improvement in computer-making technology. 
D) Indiadesh experienced a reduction in resources. 
A) Indiadesh decreased unemployment. 
B) Indiadesh experienced an improvement in textile-making technology. 
C) Indiadesh experienced an improvement in computer-making technology. 
D) Indiadesh experienced a reduction in resources.

Question 11

Differences in scientific judgment between economists are similar to all of the following except

Accepted Answer

A) astronomers debating whether the sun or earth was at the center of the solar system. 
B) meteorologists debating the existence of global warming. 
C) two politicians arguing about the fairness of the tax code. 
D) explorers debating whether or not the earth was flat before the time of Christopher Columbus. 
A) astronomers debating whether the sun or earth was at the center of the solar system. 
B) meteorologists debating the existence of global warming. 
C) two politicians arguing about the fairness of the tax code. 
D) explorers debating whether or not the earth was flat before the time of Christopher Columbus.

Question 12

Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a(n)

Accepted Answer

A) pie chart. 
B) bar graph. 
C) time-series graph 
D) coordinate system. 
A) pie chart. 
B) bar graph. 
C) time-series graph 
D) coordinate system.

Question 13

Figure 2-8  
-Refer to Figure 2-8. Inefficient production is represented by which point(s)?

Accepted Answer

A) K, M 
B) L 
C) L, M 
D) M 
A) K, M 
B) L 
C) L, M 
D) M

Question 14

Figure 2-20
Relationship Between Years of Education and Annual Income  
-Refer to Figure 2-20. The graph above is a

Accepted Answer

A) bar graph 
B) scatterplot 
C) pie chart 
D) time series analysis 
A) bar graph 
B) scatterplot 
C) pie chart 
D) time series analysis

Question 15

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

Accepted Answer

A) True 
 B)False

Question 16

Factors of production are

Accepted Answer

A) the mathematical calculations firms make in determining their optimal production levels. 
B) social and political conditions that affect production. 
C) the physical relationships between economic inputs and outputs. 
D) inputs into the production process. 
A) the mathematical calculations firms make in determining their optimal production levels. 
B) social and political conditions that affect production. 
C) the physical relationships between economic inputs and outputs. 
D) inputs into the production process.

Question 17

When two variables move in the same direction, the curve relating them is

Accepted Answer

A) upward sloping, and we say the variables are positively related. 
B) upward sloping, and we say the variables are negatively related. 
C) downward sloping, and we say the variables are positively related. 
D) downward sloping, and we say the variables are negatively related. 
A) upward sloping, and we say the variables are positively related. 
B) upward sloping, and we say the variables are negatively related. 
C) downward sloping, and we say the variables are positively related. 
D) downward sloping, and we say the variables are negatively related.

Question 18

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Accepted Answer

A) True 
 B)False

Question 19

In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 20

Figure 2-2  
-Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

Accepted Answer

A) Box B 
B) Box C 
C) Box D 
D) Any one of the other boxes (B, C, or 
D)  could represent households. 
A) Box B 
B) Box C 
C) Box D 
D) Any one of the other boxes (B, C, or 
D)  could represent households.

Exam 2: Thinking Like an Economist

Figure 2-17​ -Refer to Figure 2-17. Point B represents an inefficient outcome for this economy.

One way to characterize the difference between positive statements and normative statements is as follows:

Figure 2-2 -Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

A relatively flat demand curve indicates that

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

Economic models can help us understand reality only when they include all details of the economy.

According to economist John Maynard Keynes, a great economist must also be a(n)

Figure 2-2 -Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

The scientific method is

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Differences in scientific judgment between economists are similar to all of the following except

Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a(n)

Figure 2-8 -Refer to Figure 2-8. Inefficient production is represented by which point(s)?

Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. The graph above is a

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

Factors of production are

When two variables move in the same direction, the curve relating them is

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

Figure 2-2 -Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Figure 2-17 -Refer to Figure 2-17. Point B represents an inefficient outcome for this economy.