Question 1

Describe two problems that economists should consider when dealing with graphs.

Accepted Answer

1. Omitted variables: It is difficult to

Question 2

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 3

Draw a production possibilities frontier for the production of hamburgers and pizzas. On the graph, identify the area of feasible outcomes and the area of infeasible outcomes. Now locate and label an efficient point A and an inefficient point
B.

Accepted Answer

This graph should duplicate the essentia

Question 4

The effect of a pollution tax is an economic issue most likely to be analysed by a microeconomist.

Accepted Answer

A) True 
 B)False

Question 5

Identify each of the following topics as being part of microeconomics or macroeconomics.
a. the impact of a decrease in consumer income on the purchase of lobster
b. the effect of a change in the price of digital cameras on the purchase of film cameras
c. the impact of the budget deficit on the rate of inflation in Australia
d. factors influencing the rate of economic growth
e. factors influencing the demand for digital cameras
f. the impact of tax policy on the trade deficit
g. the effect of carbon taxes on the Australian forestry sector
h. the degree of competition in the retail banking sector
i. the effect of exchange rate policies on economic stability
j. the impact of minimum wages laws on the labour market

Accepted Answer

a, b, e, g, h, and j

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

Table 2-1
  
-Refer to Table 2-1. What is the opportunity cost to Erehwon of increasing the production of computers from 150 to 200?

Accepted Answer

A)  300 kg cheese 
B)  500 kg cheese 
C)  400 kg cheese 
D)  as the productions costs for computers and cheese are unknown, it is not possible to tell 
A)  300 kg cheese 
B)  500 kg cheese 
C)  400 kg cheese 
D)  as the productions costs for computers and cheese are unknown, it is not possible to tell

Question 8

If an economist develops a theory about international trade based on the assumption that there are only two countries and two goods:

Accepted Answer

A)  the theory can be useful only in situations involving two countries and two goods 
B)  it is a total waste of time, since the actual world has many countries trading many goods 
C)  the theory can be useful in helping economists understand the complex world of international trade involving many countries and many goods 
D)  the theory can be useful in the classroom, but has no use in the real world 
A)  the theory can be useful only in situations involving two countries and two goods 
B)  it is a total waste of time, since the actual world has many countries trading many goods 
C)  the theory can be useful in helping economists understand the complex world of international trade involving many countries and many goods 
D)  the theory can be useful in the classroom, but has no use in the real world

Question 9

The production possibilities frontier is a:

Accepted Answer

A)  graph that shows the various combinations of output the economy can possibly produce, given the available resources and technology 
B)  graph that shows the various combinations of resources the economy can possibly produce, given the available output 
C)  graph that shows the various combinations of concrete the economy can possibly produce, given the available agricultural land 
D)  graph that shows the various combinations of wheat the economy can possibly produce, given the available cement 
A)  graph that shows the various combinations of output the economy can possibly produce, given the available resources and technology 
B)  graph that shows the various combinations of resources the economy can possibly produce, given the available output 
C)  graph that shows the various combinations of concrete the economy can possibly produce, given the available agricultural land 
D)  graph that shows the various combinations of wheat the economy can possibly produce, given the available cement

Question 10

Graph 2-8
  
-Refer to Graph 2-8. Which of the graphs shown is a time series graph?

Accepted Answer

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

Question 11

The single most important purpose of an economics principles text and course is to help students learn the economist's way of thinking.

Accepted Answer

A) True 
 B)False

Question 12

If we know an assumption about an economic system is not true, what is the justification for keeping this assumption in a model?

Accepted Answer

The goal of a model is how to

Question 13

Graph 2-1
  
-Refer to Graph 2-1. In the graph shown, the opportunity cost of moving from point D to point B is 20 pieces of art.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following concepts is illustrated by the production possibilities frontier?

Accepted Answer

A)  equity 
B)  conservation 
C)  efficiency 
D)  liquidity 
A)  equity 
B)  conservation 
C)  efficiency 
D)  liquidity

Question 15

An economist who says that all policy decisions are easy is an economist not to be trusted.

Accepted Answer

A) True 
 B)False

Question 16

Economics differs from some of the natural sciences like physics because:

Accepted Answer

A)  experimentation is difficult to perform on an economic system where the researcher is unable to control for the influence of many of the variables 
B)  it is difficult to evaluate the results of an economic experiment 
C)  physicists get much larger research grants than economists 
D)  economists don't have economic laws to test 
A)  experimentation is difficult to perform on an economic system where the researcher is unable to control for the influence of many of the variables 
B)  it is difficult to evaluate the results of an economic experiment 
C)  physicists get much larger research grants than economists 
D)  economists don't have economic laws to test

Question 17

Select the statement below that is an example of a microeconomic issue?

Accepted Answer

A)  the effect of inflation on GDP growth rates 
B)  the effect of a reduction in the fishing harvest on the price of fish 
C)  the relation between inflation and money growth 
D)  the relation between unemployment and inflation 
A)  the effect of inflation on GDP growth rates 
B)  the effect of a reduction in the fishing harvest on the price of fish 
C)  the relation between inflation and money growth 
D)  the relation between unemployment and inflation

Question 18

The main objective of economic science is to develop policies for the government.

Accepted Answer

A) True 
 B)False

Question 19

The efficient production points for the production possibilities frontier, all lie on the actual frontier itself.

Accepted Answer

A) True 
 B)False

Question 20

A normative statement is one that:

Accepted Answer

A)  is based upon value judgements 
B)  pertains only to microeconomics 
C)  pertains only to macroeconomics 
D)  is based on the law of averages 
A)  is based upon value judgements 
B)  pertains only to microeconomics 
C)  pertains only to macroeconomics 
D)  is based on the law of averages

Exam 2: Thinking Like an Economist

Describe two problems that economists should consider when dealing with graphs.

The rationale for using assumptions in economics is:

Draw a production possibilities frontier for the production of hamburgers and pizzas. On the graph, identify the area of feasible outcomes and the area of infeasible outcomes. Now locate and label an efficient point A and an inefficient point B.

The effect of a pollution tax is an economic issue most likely to be analysed by a microeconomist.

The policy results from economic modelling:

Table 2-1 -Refer to Table 2-1. What is the opportunity cost to Erehwon of increasing the production of computers from 150 to 200?

If an economist develops a theory about international trade based on the assumption that there are only two countries and two goods:

The production possibilities frontier is a:

Graph 2-8 -Refer to Graph 2-8. Which of the graphs shown is a time series graph?

The single most important purpose of an economics principles text and course is to help students learn the economist's way of thinking.

If we know an assumption about an economic system is not true, what is the justification for keeping this assumption in a model?

Graph 2-1 -Refer to Graph 2-1. In the graph shown, the opportunity cost of moving from point D to point B is 20 pieces of art.

Which of the following concepts is illustrated by the production possibilities frontier?

An economist who says that all policy decisions are easy is an economist not to be trusted.

Economics differs from some of the natural sciences like physics because:

Select the statement below that is an example of a microeconomic issue?

The main objective of economic science is to develop policies for the government.

The efficient production points for the production possibilities frontier, all lie on the actual frontier itself.

A normative statement is one that:

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

Business Strategy

Competition Policy

Monopolistic Competition

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

Five Debates Over Macroeconomic Policy

Filters