Exam 2: Thinking Like an Economist

Table 2-5 Cooki=s (in dazens) Caffe (inguund) 1000 0 800 350 600 650 400 800 200 1000 0 1150 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is

Economists use one standard set of assumptions to answer all economic questions.

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

When an economy is operating inside its production possibilities frontier, we know that

In the circular-flow diagram, which of the following is not a factor of production?

The scientific method can be applied to the study of economics.

Table 2-1 The following table contains some production possibilities for an economy for a given month. Tables Chairs 5 300 10 ? 15 100 -Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Production possibilities frontiers are usually bowed outward. This is because

Albert Einstein once made the following observation about science:

Figure 2-15 Relationship between Price and Cups of Coffee -Refer to Figure 2-15. The slope of the line containing points A and B is

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of goods and services?

Normative conclusions

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Figure 2-3 -Refer to Figure 2-3. Unemployment could cause this economy to produce at which point(s)?

The scientific method is applicable to studying

Historical episodes allow economists to illustrate and evaluate current economic theories.

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

Identify each of the following topics as being part of microeconomics or macroeconomics: a.the impact of a change in consumer income on the purchase of luxury automobiles b.the effect of a change in the price of Coke on the purchase of Pepsi c.the impact of a war in the Middle East on the rate of inflation in the United States d.factors influencing the rate of economic growth e.factors influencing the demand for tractors f. the impact of tax policy on national saving g. the effect of pollution taxes on the U.S. copper industry h. the degree of competition in the cable television industry i. the effect of a balanced-budget amendment on economic stability j. the impact of deregulation on the savings and loan industry

A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is