Exam 2: Thinking Like an Economist

Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. 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?

A duty of economists at the Department of Labor is to

Draw a production possibilities frontier showing increasing opportunity cost of hammers in terms of horseshoes. a. On the graph, identify the area of feasible outcomes and the area of infeasible outcomes. b. On the graph, label a point that is efficient and a point that is inefficient. c. On the graph, illustrate the effect of the discovery of a new vein of iron ore, a resource needed to make both horseshoes and hammers, on this economy. d. On a second graph, illustrate the effect of a new computerized assembly line in the production of hammers on this economy.

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Economic models

The President counts among his economic advisors the Congressional Budget Office.

The point where both x and y are zero is known as the

Figure 2-21 -Refer to Figure 2-21. Which of the following could be an omitted variable in the graph?

Is the following a positive or normative statement? The United States government should mandate that every citizen purchases health insurance.

Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. According to the graph, the correlation between years of education and annual income is

What type of statement is a prescriptive statement about how the world ought to be?

The field of economics is traditionally divided into two broad subfields,

The first number in any ordered pair is

"The US should not restrict employers from outsourcing work to foreign countries" is a normative statement.

In the circular-flow diagram, the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1050 units of food and 47 machines. Which of the following statements is correct?

For economists, conducting experiments is often difficult and sometimes impossible.

Efficiency is illustrated by

Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given no other information, which of the following events could explain this change?