Question 1

It is difficult for economists to make observations and develop theories,but it is easy for economists to run experiments to generate data to test their theories.

Accepted Answer

A) True 
 B)False

Question 2

While the production possibilities frontier is a useful model,it cannot be used to illustrate economic growth.

Accepted Answer

A) True 
 B)False

Question 3

Economists use some familiar terms in specialized ways

Accepted Answer

A)  to make the subject sound more complex than it is. 
B)  because every respectable field of study has its own language. 
C)  to provide a new and useful way of thinking about the world. 
D)  because it was too difficult to come up with new terms. 
A)  to make the subject sound more complex than it is. 
B)  because every respectable field of study has its own language. 
C)  to provide a new and useful way of thinking about the world. 
D)  because it was too difficult to come up with new terms.

Question 4

The president of the United States receives tax policy advice from economists in the

Accepted Answer

A)  Federal Reserve. 
B)  Department of Justice. 
C)  Department of the Treasury. 
D)  Congressional Budget Office. 
A)  Federal Reserve. 
B)  Department of Justice. 
C)  Department of the Treasury. 
D)  Congressional Budget Office.

Question 5

A production possibilities frontier can shift outward if

Accepted Answer

A)  government increases the amount of money in the economy. 
B)  there is a technological improvement. 
C)  resources are shifted from the production of one good to the production of the other good. 
D)  the economy abandons inefficient production methods in favor of efficient production methods. 
A)  government increases the amount of money in the economy. 
B)  there is a technological improvement. 
C)  resources are shifted from the production of one good to the production of the other good. 
D)  the economy abandons inefficient production methods in favor of efficient production methods.

Question 6

In the simple circular-flow diagram,

Accepted Answer

A)  households own the factors of production. 
B)  households buy all the goods and services that firms produce. 
C)  land, labor, and capital flow from households to firms. 
D)  All of the above are correct. 
A)  households own the factors of production. 
B)  households buy all the goods and services that firms produce. 
C)  land, labor, and capital flow from households to firms. 
D)  All of the above are correct.

Question 7

Figure 2-3
  
-Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

Accepted Answer

A)  J 
B)  L 
C)  M 
D)  N 
A)  J 
B)  L 
C)  M 
D)  N

Question 8

In the circular-flow diagram,firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 9

In the circular-flow diagram,another name for goods and services produced by firms is

Accepted Answer

A)  factors of production. 
B)  output. 
C)  inputs. 
D)  resources. 
A)  factors of production. 
B)  output. 
C)  inputs. 
D)  resources.

Question 10

Figure 2-13
  
-Refer to Figure 2-13.The graph shown is known as a

Accepted Answer

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

Question 11

Using the outline below,draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

Accepted Answer

@#IMG-DLM& This diagram should duplicate the essen

Question 12

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science,it is a subject at which few excel?

Accepted Answer

A)  Most people who study economics are not very bright. 
B)  Good economists must possess a rare combination of gifts. 
C)  Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D)  Good thinkers become frustrated with economics because it does not make use of the scientific method. 
A)  Most people who study economics are not very bright. 
B)  Good economists must possess a rare combination of gifts. 
C)  Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D)  Good thinkers become frustrated with economics because it does not make use of the scientific method.

Question 13

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 14

Which types of models are built with assumptions?

Accepted Answer

A)  economic models, but not models in other disciplines such as physics and biology 
B)  economic models as well as models in other disciplines such as physics and biology 
C)  models that are built for teaching purposes but not for research purposes 
D)  bad models 
A)  economic models, but not models in other disciplines such as physics and biology 
B)  economic models as well as models in other disciplines such as physics and biology 
C)  models that are built for teaching purposes but not for research purposes 
D)  bad models

Question 15

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Accepted Answer

A)  is useless, since the real world has many countries trading many goods. 
B)  can be useful only in situations involving two countries and two goods. 
C)  can be useful in the classroom, but is useless in the real world. 
D)  can be useful in helping economists understand the complex world of international trade involving many countries and many goods. 
A)  is useless, since the real world has many countries trading many goods. 
B)  can be useful only in situations involving two countries and two goods. 
C)  can be useful in the classroom, but is useless in the real world. 
D)  can be useful in helping economists understand the complex world of international trade involving many countries and many goods.

Question 16

Figure 2-6
  
-Refer to Figure 2-6.If this economy moved from point C to point F,then

Accepted Answer

A)  it still would not be producing efficiently. 
B)  there would be no gain in either candles or clocks. 
C)  it would be producing more candles and more clocks than at point C. 
D)  It is not possible for this economy to move from point C to point F without additional resources. 
A)  it still would not be producing efficiently. 
B)  there would be no gain in either candles or clocks. 
C)  it would be producing more candles and more clocks than at point C. 
D)  It is not possible for this economy to move from point C to point F without additional resources.

Question 17

Normative statements are

Accepted Answer

A)  descriptive. 
B)  claims about how the world should be. 
C)  claims about how the world is. 
D)  made by economists speaking as scientists. 
A)  descriptive. 
B)  claims about how the world should be. 
C)  claims about how the world is. 
D)  made by economists speaking as scientists.

Question 18

Figure 2-1
  
-Refer to Figure 2-1.Which arrow represents the flow of income payments?

Accepted Answer

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

Question 19

Figure 2-1
  
-Refer to Figure 2-1.Sonia completes her first week of employment working as a hairdresser at a salon.On Friday of that week,she receives her first paycheck.To which of the arrows does this transaction directly contribute?

Accepted Answer

A)  B only 
B)  A and B 
C)  C only 
D)  C and D 
A)  B only 
B)  A and B 
C)  C only 
D)  C and D

Question 20

Figure 2-8

-Refer to Figure 2-8,Panel (a).Production at point K is

Accepted Answer

A)  possible and efficient. 
B)  possible but inefficient. 
C)  impossible but efficient. 
D)  impossible and inefficient. 
A)  possible and efficient. 
B)  possible but inefficient. 
C)  impossible but efficient. 
D)  impossible and inefficient.

Exam 2: Thinking Like an Economist.

It is difficult for economists to make observations and develop theories,but it is easy for economists to run experiments to generate data to test their theories.

While the production possibilities frontier is a useful model,it cannot be used to illustrate economic growth.

Economists use some familiar terms in specialized ways

The president of the United States receives tax policy advice from economists in the

A production possibilities frontier can shift outward if

In the simple circular-flow diagram,

Figure 2-3 -Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

In the circular-flow diagram,firms own the factors of production and use them to produce goods and services.

In the circular-flow diagram,another name for goods and services produced by firms is

Figure 2-13 -Refer to Figure 2-13.The graph shown is known as a

Using the outline below,draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science,it is a subject at which few excel?

Evaluating normative statements involves values as well as facts.

Which types of models are built with assumptions?

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Figure 2-6 -Refer to Figure 2-6.If this economy moved from point C to point F,then

Normative statements are

Figure 2-1 -Refer to Figure 2-1.Which arrow represents the flow of income payments?

Figure 2-1 -Refer to Figure 2-1.Sonia completes her first week of employment working as a hairdresser at a salon.On Friday of that week,she receives her first paycheck.To which of the arrows does this transaction directly contribute?

Figure 2-8 -Refer to Figure 2-8,Panel (a).Production at point K is

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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