Question 1

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the:

Accepted Answer

A) amount of the other good that must be given up 
B) market price of the additional amount produced 
C) amount of resources that must be devoted to its production 
D) number of dollars that must be spent to produce it 
A) amount of the other good that must be given up 
B) market price of the additional amount produced 
C) amount of resources that must be devoted to its production 
D) number of dollars that must be spent to produce it

Question 2

Microeconomics is the study of decision making at the level of the individual household and firm, while macroeconomics is the study of the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 3

Australia harvests five to seven million kangaroos a year.Consider the statement 'Australia would be better off if the harvest of kangaroos was banned'.This is an example of a normative statement.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an example of a normative statement?

Accepted Answer

A) prices coordinate the actions of people buying and selling in a marketplace 
B) trade makes countries better off 
C) productivity is important in increasing wages 
D) looking after the environment is more important than economic growth 
A) prices coordinate the actions of people buying and selling in a marketplace 
B) trade makes countries better off 
C) productivity is important in increasing wages 
D) looking after the environment is more important than economic growth

Question 5

The rationale for using assumptions in economics is:

Accepted Answer

A) it avoids having to collect any data 
B) it is a useful way to ensure models are as realistic as possible 
C) because economics is not a science 
D) that it makes the world easier to understand 
A) it avoids having to collect any data 
B) it is a useful way to ensure models are as realistic as possible 
C) because economics is not a science 
D) that it makes the world easier to understand

Question 6

The policy results from economic modelling:

Accepted Answer

A) focus on the cheapest price option 
B) focus on the fairest result for everyone 
C) tend to be aimed at winning the most political votes 
D) none of the above 
A) focus on the cheapest price option 
B) focus on the fairest result for everyone 
C) tend to be aimed at winning the most political votes 
D) none of the above

Question 7

Economists use models in order to:

Accepted Answer

A) develop insights into how the economy works 
B) develop insights into mathematical theorems 
C) make economics hard for students to understand 
D) help businesses decide what investments will be profitable 
A) develop insights into how the economy works 
B) develop insights into mathematical theorems 
C) make economics hard for students to understand 
D) help businesses decide what investments will be profitable

Question 8

Draw a production possibilities frontier for a country that produces green energy and four-wheel drives.How does your graph illustrate a trade-off between the two? If an engineering firm discovered how to reduce the cost of producing each four-wheel drive by $50, what would this do to the production possibilities frontier?

Accepted Answer

This graph should duplicate the essentia

Question 9

Given a two-good production possibilities frontier, an increase in the economy's productivity will cause the frontier to shift outward.

Accepted Answer

A) True 
 B)False

Question 10

Economists might disagree on a question of policy because:
(i) They have made different assumptions
(ii) They have different normative views on policies
(iii) They disagree about the role economics should play in society

Accepted Answer

A) (i) 
B) (ii) 
C) (i) and (ii) 
D) (i), (ii) and (iii) 
A) (i) 
B) (ii) 
C) (i) and (ii) 
D) (i), (ii) and (iii)

Question 11

Scientific models are designed to simplify reality because they are built with simplifying assumptions.

Accepted Answer

A) True 
 B)False

Question 12

Graph 2-2  
-Refer to Graph 2-2.In the circular-flow diagram shown, which arrow shows the flow of goods and services?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 13

In a simple circular-flow diagram, firms have to hire or purchase factors of production from households in order to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 14

Graph 2-2  
-Refer to Graph 2-2.In the circular-flow diagram shown, which arrow shows the flow of spending by households?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 15

Inflation is a microeconomic issue because it affects what households decide to buy.

Accepted Answer

A) True 
 B)False

Question 16

Graph 2-3  
-Refer to Graph 2-3.On the production possibilities frontier shown, at which point or points is it possible for this economy to produce?

Accepted Answer

A) A, B, C, D 
B) A, B, C, F 
C) A, B, C, D, E, F 
D) D 
A) A, B, C, D 
B) A, B, C, F 
C) A, B, C, D, E, F 
D) D

Question 17

Which of the following statements is correct?

Accepted Answer

A) the x-coordinate tells us the horizontal location of a point on a graph, and the y-coordinate tells us the vertical location of the point 
B) the origin of a graph is the point with both a maximum x-coordinate and a maximum y-coordinate 
C) the x-coordinate tells us the vertical location of a point on a graph, and the y-coordinate tells us the horizontal location of the point 
D) the origin of a graph is represented by an x-coordinate equal to 1 and a y-coordinate equal to 1 
A) the x-coordinate tells us the horizontal location of a point on a graph, and the y-coordinate tells us the vertical location of the point 
B) the origin of a graph is the point with both a maximum x-coordinate and a maximum y-coordinate 
C) the x-coordinate tells us the vertical location of a point on a graph, and the y-coordinate tells us the horizontal location of the point 
D) the origin of a graph is represented by an x-coordinate equal to 1 and a y-coordinate equal to 1

Question 18

The scientific method can best be defined as:

Accepted Answer

A) the use of modern laboratory equipment to discover scientific laws 
B) the careful design of controlled experiments to test theories about how the world works 
C) the unbiased development of and testing of theories about how the world works 
D) the selective and deliberate search for evidence that supports preconceived theories of how the world works 
A) the use of modern laboratory equipment to discover scientific laws 
B) the careful design of controlled experiments to test theories about how the world works 
C) the unbiased development of and testing of theories about how the world works 
D) the selective and deliberate search for evidence that supports preconceived theories of how the world works

Question 19

Making the argument that because empty alcohol containers are found at many accidents, containers therefore cause accidents, is an example of:

Accepted Answer

A) reverse causality 
B) omitted variables 
C) sound logic 
D) slope 
A) reverse causality 
B) omitted variables 
C) sound logic 
D) slope

Question 20

Normative statements are:

Accepted Answer

A) descriptive, making a claim about how the world is 
B) statements about the normal condition of the world 
C) prescriptive, making a claim about how the world ought to be 
D) statements which establish production goals for the economy 
A) descriptive, making a claim about how the world is 
B) statements about the normal condition of the world 
C) prescriptive, making a claim about how the world ought to be 
D) statements which establish production goals for the economy

Exam 2: Thinking Like an Economist

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the:

Microeconomics is the study of decision making at the level of the individual household and firm, while macroeconomics is the study of the economy as a whole.

Australia harvests five to seven million kangaroos a year.Consider the statement 'Australia would be better off if the harvest of kangaroos was banned'.This is an example of a normative statement.

Which of the following is an example of a normative statement?

The rationale for using assumptions in economics is:

The policy results from economic modelling:

Economists use models in order to:

Given a two-good production possibilities frontier, an increase in the economy's productivity will cause the frontier to shift outward.

Economists might disagree on a question of policy because: (i) They have made different assumptions (ii) They have different normative views on policies (iii) They disagree about the role economics should play in society

Scientific models are designed to simplify reality because they are built with simplifying assumptions.

Graph 2-2 -Refer to Graph 2-2.In the circular-flow diagram shown, which arrow shows the flow of goods and services?

In a simple circular-flow diagram, firms have to hire or purchase factors of production from households in order to produce goods and services.

Graph 2-2 -Refer to Graph 2-2.In the circular-flow diagram shown, which arrow shows the flow of spending by households?

Inflation is a microeconomic issue because it affects what households decide to buy.

Graph 2-3 -Refer to Graph 2-3.On the production possibilities frontier shown, at which point or points is it possible for this economy to produce?

Which of the following statements is correct?

The scientific method can best be defined as:

Making the argument that because empty alcohol containers are found at many accidents, containers therefore cause accidents, is an example of:

Normative statements are:

Ten Lessons From 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

Filters