Question 1

The ordered pair that represents the origin on a graph is

Accepted Answer

A)  (1, 1). 
B)  (0, 0). 
C)  (-1, -1). 
D)  (∞, ∞). 
A)  (1, 1). 
B)  (0, 0). 
C)  (-1, -1). 
D)  (∞, ∞).

Question 2

The trade-off between the production of one good and the production of another good can change over time because of technological advances.

Accepted Answer

A) True 
 B)False

Question 3

When studying the effects of public policy changes, economists

Accepted Answer

A)  always refrain from making assumptions. 
B)  sometimes make different assumptions about the short run and the long run. 
C)  consider only the direct effects of those policy changes and not the indirect effects. 
D)  consider only the short-run effects of those policy changes and not the long-run effects. 
A)  always refrain from making assumptions. 
B)  sometimes make different assumptions about the short run and the long run. 
C)  consider only the direct effects of those policy changes and not the indirect effects. 
D)  consider only the short-run effects of those policy changes and not the long-run effects.

Question 4

In the circular-flow diagram, which of the following items flows from households to firms 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 5

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False

Question 6

The production possibilities frontier provides an illustration of the principle that

Accepted Answer

A)  trade can make everyone better off. 
B)  governments can sometimes improve market outcomes. 
C)  people face trade-offs. 
D)  people respond to incentives. 
A)  trade can make everyone better off. 
B)  governments can sometimes improve market outcomes. 
C)  people face trade-offs. 
D)  people respond to incentives.

Question 7

Figure 2-23  
-Refer to Figure 2-23. If this economy uses all its resources in the dishwasher industry, it produces 35 dishwashers and no doghouses.

Accepted Answer

A) True 
 B)False

Question 8

Microeconomics is the study of

Accepted Answer

A)  how money affects the economy. 
B)  how individual households and firms make decisions. 
C)  how government affects the economy. 
D)  how the economy as a whole works. 
A)  how money affects the economy. 
B)  how individual households and firms make decisions. 
C)  how government affects the economy. 
D)  how the economy as a whole works.

Question 9

The argument that purchases of minivans cause large families is an example of

Accepted Answer

A)  omitted variables. 
B)  normative statements. 
C)  reverse causality. 
D)  bias. 
A)  omitted variables. 
B)  normative statements. 
C)  reverse causality. 
D)  bias.

Question 10

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)  the effect of an increase in the alcohol tax on the market for beer 
B)  the effect of foreign competition on the domestic auto industry 
C)  the effect of a price war in the airline industry 
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemployment 
A)  the effect of an increase in the alcohol tax on the market for beer 
B)  the effect of foreign competition on the domestic auto industry 
C)  the effect of a price war in the airline industry 
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemployment

Question 11

Figure 2-2  
-Refer to Figure 2-2. Boxes A and B of this circular-flow diagram represent

Accepted Answer

A)  firms and households. 
B)  households and government. 
C)  the markets for goods and services and the markets for financial assets. 
D)  the markets for goods and the markets for services. 
A)  firms and households. 
B)  households and government. 
C)  the markets for goods and services and the markets for financial assets. 
D)  the markets for goods and the markets for services.

Question 12

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data.

Accepted Answer

A) True 
 B)False

Question 13

Figure 2-7  
-Refer to Figure 2-7. What is the opportunity cost of moving from point M to point L?

Accepted Answer

A)  zero 
B)  15 tvs 
C)  20 engines and 15 tvs 
D)  20 engines 
A)  zero 
B)  15 tvs 
C)  20 engines and 15 tvs 
D)  20 engines

Question 14

Which of the following is not an example of a positive, as opposed to normative, statement?

Accepted Answer

A)  Higher gasoline prices will reduce gasoline consumption. 
B)  Equality is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money. 
A)  Higher gasoline prices will reduce gasoline consumption. 
B)  Equality is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.

Question 15

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

Accepted Answer

A) True 
 B)False

Question 16

The scientific method is the dispassionate development and testing of theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2-23  
-Refer to Figure 2-23. It is possible for this economy to produce 75 doghouses.

Accepted Answer

A) True 
 B)False

Question 18

Table 2-3
Production Possibilities for Footville
  
-Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

Accepted Answer

A)  400 socks 
B)  300 socks 
C)  200 socks 
D)  100 socks 
A)  400 socks 
B)  300 socks 
C)  200 socks 
D)  100 socks

Question 19

Congress relies on economists at the Congressional Budget Office to

Accepted Answer

A)  enforce the nation's antitrust laws. 
B)  set the nation's monetary policy. 
C)  provide evidence that incumbent members of Congress are performing well in their jobs. 
D)  provide independent evaluations of policy proposals. 
A)  enforce the nation's antitrust laws. 
B)  set the nation's monetary policy. 
C)  provide evidence that incumbent members of Congress are performing well in their jobs. 
D)  provide independent evaluations of policy proposals.

Question 20

Figure 2-8  
-Refer to Figure 2-8. Efficient production is represented by which point(s)?

Accepted Answer

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

Exam 2: Thinking Like an Economist

The ordered pair that represents the origin on a graph is

The trade-off between the production of one good and the production of another good can change over time because of technological advances.

When studying the effects of public policy changes, economists

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

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

The production possibilities frontier provides an illustration of the principle that

Figure 2-23 -Refer to Figure 2-23. If this economy uses all its resources in the dishwasher industry, it produces 35 dishwashers and no doghouses.

Microeconomics is the study of

The argument that purchases of minivans cause large families is an example of

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Figure 2-2 -Refer to Figure 2-2. Boxes A and B of this circular-flow diagram represent

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data.

Figure 2-7 -Refer to Figure 2-7. What is the opportunity cost of moving from point M to point L?

Which of the following is not an example of a positive, as opposed to normative, statement?

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

The scientific method is the dispassionate development and testing of theories about how the world works.

Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 75 doghouses.

Table 2-3 Production Possibilities for Footville -Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

Congress relies on economists at the Congressional Budget Office to

Figure 2-8 -Refer to Figure 2-8. Efficient production is represented by which point(s)?

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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