Question 1

Which of the following is an example of a normative,as opposed to positive,statement?

Accepted Answer

A)  Universal health care would be good for U.S. citizens. 
B)  An increase in the cigarette tax would cause a decrease in the number of smokers. 
C)  A decrease in the minimum wage would decrease unemployment. 
D)  A law requiring the federal government to balance its budget would increase economic growth. 
A)  Universal health care would be good for U.S. citizens. 
B)  An increase in the cigarette tax would cause a decrease in the number of smokers. 
C)  A decrease in the minimum wage would decrease unemployment. 
D)  A law requiring the federal government to balance its budget would increase economic growth.

Question 2

Economists view positive statements as

Accepted Answer

A)  affirmative, justifying existing economic policy. 
B)  optimistic, putting the best possible interpretation on things. 
C)  descriptive, making a claim about how the world is. 
D)  prescriptive, making a claim about how the world ought to be. 
A)  affirmative, justifying existing economic policy. 
B)  optimistic, putting the best possible interpretation on things. 
C)  descriptive, making a claim about how the world is. 
D)  prescriptive, making a claim about how the world ought to be.

Question 3

Production possibilities frontiers can be used to illustrate scarcity,trade-offs,opportunity cost,efficiency,unemployment,technological advances,and economic growth.

Accepted Answer

A) True 
 B)False

Question 4

Economists regard events from the past as

Accepted Answer

A)  irrelevant, since history is unlikely to repeat itself. 
B)  of limited interest, since those events seldom provide any useful economic data. 
C)  interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories. 
D)  interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future. 
A)  irrelevant, since history is unlikely to repeat itself. 
B)  of limited interest, since those events seldom provide any useful economic data. 
C)  interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories. 
D)  interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future.

Question 5

Efficiency is illustrated by

Accepted Answer

A)  both the production possibilities frontier and the circular-flow diagram. 
B)  neither the production possibilities frontier nor the circular-flow diagram. 
C)  the production possibilities frontier only. 
D)  the circular-flow diagram only. 
A)  both the production possibilities frontier and the circular-flow diagram. 
B)  neither the production possibilities frontier nor the circular-flow diagram. 
C)  the production possibilities frontier only. 
D)  the circular-flow diagram only.

Question 6

If a line passes through the points (20,5)and (10,10),then the slope of the line is -2.

Accepted Answer

A) True 
 B)False

Question 7

When economists make

Accepted Answer

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

Question 8

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A)  performing an experiment in an economic system. 
B)  applying mathematical methods to economic analysis. 
C)  analyzing available data. 
D)  formulating theories about economic events. 
A)  performing an experiment in an economic system. 
B)  applying mathematical methods to economic analysis. 
C)  analyzing available data. 
D)  formulating theories about economic events.

Question 9

Which of the following is not correct?

Accepted Answer

A)  Economists use some familiar words in specialized ways. 
B)  Economics has its own language and its own way of thinking, but few other fields of study do. 
C)  Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language. 
D)  The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live. 
A)  Economists use some familiar words in specialized ways. 
B)  Economics has its own language and its own way of thinking, but few other fields of study do. 
C)  Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language. 
D)  The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live.

Question 10

Figure 2-14
  
-Refer to Figure 2-14.Given the technology available for manufacturing doghouses and dishwashers,this economy does not have enough of the factors of production to support the level of output represented by point C.

Accepted Answer

A) True 
 B)False

Question 11

In the circular-flow diagram,which of the following items flows from firms to households through the markets for goods and services?

Accepted Answer

A)  goods and services 
B)  dollars paid to land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit 
A)  goods and services 
B)  dollars paid to land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit

Question 12

In the circular-flow diagram,firms consume all the goods and services that they produce.

Accepted Answer

A) True 
 B)False

Question 13

Economists believe that production possibilities frontiers

Accepted Answer

A)  never have a bowed shape. 
B)  rarely have a bowed shape. 
C)  often have a bowed shape. 
D)  always have a bowed shape. 
A)  never have a bowed shape. 
B)  rarely have a bowed shape. 
C)  often have a bowed shape. 
D)  always have a bowed shape.

Question 14

Figure 2-14
  
-Refer to Figure 2-14.Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 15

In the circular-flow diagram,firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 16

When economists are trying to help improve the world,they are

Accepted Answer

A)  in the realm of positive economics rather than normative economics. 
B)  in the realm of macroeconomics rather than microeconomics. 
C)  scientists. 
D)  policy advisers. 
A)  in the realm of positive economics rather than normative economics. 
B)  in the realm of macroeconomics rather than microeconomics. 
C)  scientists. 
D)  policy advisers.

Question 17

Economists believe that production possibilities frontiers rarely have a bowed shape.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A)  the impact of minimum-wage laws on employment in the fast food industry 
B)  the effect of changes in household saving rates on the growth rate of national income 
C)  the impact of faster money growth on the rate of inflation 
D)  a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth 
A)  the impact of minimum-wage laws on employment in the fast food industry 
B)  the effect of changes in household saving rates on the growth rate of national income 
C)  the impact of faster money growth on the rate of inflation 
D)  a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth

Question 20

In economics,capital refers to

Accepted Answer

A)  the finances necessary for firms to produce their products. 
B)  buildings and machines used in the production process. 
C)  the money households use to purchase firms' output. 
D)  stocks and bonds. 
A)  the finances necessary for firms to produce their products. 
B)  buildings and machines used in the production process. 
C)  the money households use to purchase firms' output. 
D)  stocks and bonds.

Exam 2: Thinking Like an Economist.

Which of the following is an example of a normative,as opposed to positive,statement?

Economists view positive statements as

Production possibilities frontiers can be used to illustrate scarcity,trade-offs,opportunity cost,efficiency,unemployment,technological advances,and economic growth.

Economists regard events from the past as

Efficiency is illustrated by

If a line passes through the points (20,5)and (10,10),then the slope of the line is -2.

When economists make

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Which of the following is not correct?

Figure 2-14 -Refer to Figure 2-14.Given the technology available for manufacturing doghouses and dishwashers,this economy does not have enough of the factors of production to support the level of output represented by point C.

In the circular-flow diagram,which of the following items flows from firms to households through the markets for goods and services?

In the circular-flow diagram,firms consume all the goods and services that they produce.

Economists believe that production possibilities frontiers

Figure 2-14 -Refer to Figure 2-14.Point B represents an inefficient outcome for this economy.

In the circular-flow diagram,firms produce goods and services using the factors of production.

When economists are trying to help improve the world,they are

Economists believe that production possibilities frontiers rarely have a bowed shape.

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

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

In economics,capital refers to

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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