Question 1

The circular-flow diagram

Accepted Answer

A)  is an economic model. 
B)  incorporates two types of decision makers: households and firms. 
C)  represents the flows of inputs, outputs, and dollars. 
D)  All of the above are correct. 
A)  is an economic model. 
B)  incorporates two types of decision makers: households and firms. 
C)  represents the flows of inputs, outputs, and dollars. 
D)  All of the above are correct.

Question 2

Figure 2-5
  
-Refer to Figure 2-5.The opportunity cost of this economy moving from point D to point B is

Accepted Answer

A)  zero. 
B)  50 soccer balls. 
C)  60 sweaters. 
D)  50 soccer balls and 60 sweaters. 
A)  zero. 
B)  50 soccer balls. 
C)  60 sweaters. 
D)  50 soccer balls and 60 sweaters.

Question 3

When economists make

Accepted Answer

A)  positive statements, they are speaking not as policy advisers but as scientists. 
B)  positive statements, they are speaking not as scientists but as forecasters. 
C)  normative statements, they are speaking not as policy advisers but as scientists. 
D)  normative statements, they are speaking not as policy advisers but as model-builders. 
A)  positive statements, they are speaking not as policy advisers but as scientists. 
B)  positive statements, they are speaking not as scientists but as forecasters. 
C)  normative statements, they are speaking not as policy advisers but as scientists. 
D)  normative statements, they are speaking not as policy advisers but as model-builders.

Question 4

Economists at the Department of the Treasury

Accepted Answer

A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President. 
A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President.

Question 5

Figure 2-6
  
-Refer to Figure 2-6.Efficient production is represented by which point(s)?

Accepted Answer

A)  A, B 
B)  A, B, C, F, G 
C)  C, F, G 
D)  D 
A)  A, B 
B)  A, B, C, F, G 
C)  C, F, G 
D)  D

Question 6

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Accepted Answer

A) True 
 B)False

Question 7

In constructing models,economists

Accepted Answer

A)  leave out equations, since equations and models tend to contradict one another. 
B)  ignore the long run, since models are useful only for short-run analysis. 
C)  sometimes make assumptions that are contrary to features of the real world. 
D)  try to include every feature of the economy. 
A)  leave out equations, since equations and models tend to contradict one another. 
B)  ignore the long run, since models are useful only for short-run analysis. 
C)  sometimes make assumptions that are contrary to features of the real world. 
D)  try to include every feature of the economy.

Question 8

Normative statements are

Accepted Answer

A)  prescriptive, whereas positive statements are descriptive. 
B)  descriptive, whereas positive statements are prescriptive. 
C)  backward-looking, whereas positive statements are forward-looking. 
D)  forward-looking, whereas positive statements are backward-looking. 
A)  prescriptive, whereas positive statements are descriptive. 
B)  descriptive, whereas positive statements are prescriptive. 
C)  backward-looking, whereas positive statements are forward-looking. 
D)  forward-looking, whereas positive statements are backward-looking.

Question 9

Normative conclusions

Accepted Answer

A)  come from positive analysis alone. 
B)  are based on ignorance of positive analysis. 
C)  involve value judgments. 
D)  reflect the economist's role as scientist. 
A)  come from positive analysis alone. 
B)  are based on ignorance of positive analysis. 
C)  involve value judgments. 
D)  reflect the economist's role as scientist.

Question 10

Economist Joseph Schumpeter coined the phrase "creative destruction" to describe the process by which

Accepted Answer

A)  the government destroys the failing markets that caused an economic crisis. 
B)  innovation and enterpreneurial initiative have great power to drive economic growth. 
C)  economists destroy long-held beliefs about how markets function. 
D)  free markets need government intervention to create economic growth. 
A)  the government destroys the failing markets that caused an economic crisis. 
B)  innovation and enterpreneurial initiative have great power to drive economic growth. 
C)  economists destroy long-held beliefs about how markets function. 
D)  free markets need government intervention to create economic growth.

Question 11

Points inside the production possibilities frontier represent feasible levels of production.

Accepted Answer

A) True 
 B)False

Question 12

Figure 2-3
  
-Refer to Figure 2-3.This economy has the ability to produce at which point(s)?

Accepted Answer

A)  J, K, M, N 
B)  K, M, N 
C)  K, N 
D)  M 
A)  J, K, M, N 
B)  K, M, N 
C)  K, N 
D)  M

Question 13

Table 2-1
The following table contains some production possibilities for an economy for a given month.
  
-Refer to Table 2-1.If the production possibilities frontier is bowed outward,then "?" could be

Accepted Answer

A)  100. 
B)  150. 
C)  200. 
D)  250. 
A)  100. 
B)  150. 
C)  200. 
D)  250.

Question 14

Examples of graphs of a single variable include pie charts,bar graphs,and time-series graphs.

Accepted Answer

A) True 
 B)False

Question 15

A statement describing how the world is

Accepted Answer

A)  is a normative statement. 
B)  is a positive statement. 
C)  would only be made by an economist speaking as a policy adviser. 
D)  would only be made by an economist employed by the government. 
A)  is a normative statement. 
B)  is a positive statement. 
C)  would only be made by an economist speaking as a policy adviser. 
D)  would only be made by an economist employed by the government.

Question 16

Which of the following is not correct about most economic models?

Accepted Answer

A)  They are composed of equations and diagrams. 
B)  They contribute very little to economists' understanding of the real world. 
C)  They omit many features of the real-world economy. 
D)  In constructing models, economists make assumptions. 
A)  They are composed of equations and diagrams. 
B)  They contribute very little to economists' understanding of the real world. 
C)  They omit many features of the real-world economy. 
D)  In constructing models, economists make assumptions.

Question 17

Figure 2-8

-Refer to Figure 2-8,Panel (a).The opportunity cost of moving from point K to point L is

Accepted Answer

A)  0 cups of coffee. 
B)  1 donut. 
C)  2 donuts. 
D)  4 cups of coffee. 
A)  0 cups of coffee. 
B)  1 donut. 
C)  2 donuts. 
D)  4 cups of coffee.

Question 18

When a production possibilities frontier is bowed outward,the opportunity cost of the second good in terms of the first good increases as more of the second good is produced.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Just like models constructed in other areas of science,economic models

Accepted Answer

A)  incorporate assumptions that contradict reality. 
B)  incorporate all details of the real world. 
C)  complicate reality. 
D)  avoid the use of diagrams and equations. 
A)  incorporate assumptions that contradict reality. 
B)  incorporate all details of the real world. 
C)  complicate reality. 
D)  avoid the use of diagrams and equations.

Exam 2: Thinking Like an Economist.

The circular-flow diagram

Figure 2-5 -Refer to Figure 2-5.The opportunity cost of this economy moving from point D to point B is

When economists make

Economists at the Department of the Treasury

Figure 2-6 -Refer to Figure 2-6.Efficient production is represented by which point(s)?

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

In constructing models,economists

Normative statements are

Normative conclusions

Economist Joseph Schumpeter coined the phrase "creative destruction" to describe the process by which

Points inside the production possibilities frontier represent feasible levels of production.

Figure 2-3 -Refer to Figure 2-3.This economy has the ability to produce at which point(s)?

Table 2-1 The following table contains some production possibilities for an economy for a given month. -Refer to Table 2-1.If the production possibilities frontier is bowed outward,then "?" could be

Examples of graphs of a single variable include pie charts,bar graphs,and time-series graphs.

A statement describing how the world is

Which of the following is not correct about most economic models?

Figure 2-8 -Refer to Figure 2-8,Panel (a).The opportunity cost of moving from point K to point L is

When a production possibilities frontier is bowed outward,the opportunity cost of the second good in terms of the first good increases as more of the second good is produced.

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

Just like models constructed in other areas of science,economic models

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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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