Question 1

Economists at which administrative department help design tax policy?

Accepted Answer

Department

Question 2

Figure 2-3  
-Refer to Figure 2-3. What is flowing from rectangle 1 to oval A?

Accepted Answer

A)  revenue 
B)  goods and services sold 
C)  factors of production 
D)  labor, land, and capital 
A)  revenue 
B)  goods and services sold 
C)  factors of production 
D)  labor, land, and capital

Question 3

The production possibilities frontier illustrates

Accepted Answer

A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct. 
A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct.

Question 4

Figure 2-17  
-Refer to Figure 2-17. The movement from point A to point B is a(n)

Accepted Answer

A)  shift of the demand curve. 
B)  indication of a change in preferences for grapes. 
C)  movement along the demand curve. 
D)  indication of an increase in income. 
A)  shift of the demand curve. 
B)  indication of a change in preferences for grapes. 
C)  movement along the demand curve. 
D)  indication of an increase in income.

Question 5

Figure 2-1  
-Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

Accepted Answer

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

Question 6

In the circular-flow diagram, factors of production include land, labor, and capital.

Accepted Answer

A) True 
 B)False

Question 7

Figure 2-22  
-Refer to Figure 2-22. Is a move from point A to point B considered a shift of the curve or a movement along the curve?

Accepted Answer

movement a

Question 8

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

Accepted Answer

A)  When the minimum wage is increased, unemployment is a predictable consequence. 
B)  The income tax rate should be increased to offset the budget deficit. 
C)  Increasing government spending is the best way to help the economy move out of a recession. 
D)  More than one of the above are positive statements. 
A)  When the minimum wage is increased, unemployment is a predictable consequence. 
B)  The income tax rate should be increased to offset the budget deficit. 
C)  Increasing government spending is the best way to help the economy move out of a recession. 
D)  More than one of the above are positive statements.

Question 9

Figure 2-15  
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of one sofa is

Accepted Answer

The answer of Figure 2-15  
-Refer to Figure 2-15....

Question 10

For economists, substitutes for laboratory experiments often come in the form of

Accepted Answer

A)  natural experiments offered by history. 
B)  untested theories. 
C)  "rules of thumb" and other such conveniences. 
D)  reliance upon the wisdom of elders in the economics profession. 
A)  natural experiments offered by history. 
B)  untested theories. 
C)  "rules of thumb" and other such conveniences. 
D)  reliance upon the wisdom of elders in the economics profession.

Question 11

A circular-flow diagram is a model that

Accepted Answer

A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both (a) and (b) are correct. 
A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both (a) and (b) are correct.

Question 12

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Accepted Answer

A)  in the markets for factors of production exchanging labor for income. 
B)  in the markets for factors of production exchanging flowers for revenue. 
C)  in the markets for goods and services exchanging flowers for wages, rent, and profit. 
D)  in the markets for goods and services exchanging labor for income. 
A)  in the markets for factors of production exchanging labor for income. 
B)  in the markets for factors of production exchanging flowers for revenue. 
C)  in the markets for goods and services exchanging flowers for wages, rent, and profit. 
D)  in the markets for goods and services exchanging labor for income.

Question 13

The nation's antitrust laws are enforced by economists at the Department of

Accepted Answer

A)  Labor. 
B)  Health and Human Services. 
C)  Justice. 
D)  Treasury. 
A)  Labor. 
B)  Health and Human Services. 
C)  Justice. 
D)  Treasury.

Question 14

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Accepted Answer

A)  have no questions but hundreds of answers. 
B)  have 100 questions and 3,000 answers. 
C)  have 1,000 questions but no answers. 
D)  never produce a winner. 
A)  have no questions but hundreds of answers. 
B)  have 100 questions and 3,000 answers. 
C)  have 1,000 questions but no answers. 
D)  never produce a winner.

Question 15

Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred

Accepted Answer

A)  disagree about the validity of a positive theory. 
B)  have different normative views about tax policy. 
C)  must both be incorrect because tax policy is never that simple. 
D)  None of the above is correct. 
A)  disagree about the validity of a positive theory. 
B)  have different normative views about tax policy. 
C)  must both be incorrect because tax policy is never that simple. 
D)  None of the above is correct.

Question 16

"Society would be better off if the welfare system were abolished" is a normative statement, not a positive statement.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2-14   Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two.
-Refer to Figure 2-14. If this society is producing at point T,

Accepted Answer

A)  there is unemployment. 
B)  production is efficient. 
C)  growth can only be achieved through an advancement in technology. 
D)  the opportunity cost of producing one more sweater is approximately 40 bushels of apples. 
A)  there is unemployment. 
B)  production is efficient. 
C)  growth can only be achieved through an advancement in technology. 
D)  the opportunity cost of producing one more sweater is approximately 40 bushels of apples.

Question 18

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?

Accepted Answer

A)  Dylan receives a salary for his work as a financial analyst for an investment firm. 
B)  Kristin buys two business suits to wear to her job as a Chief Information Officer. 
C)  Jim receives clean water in his home in exchange for paying his water bill. 
D)  Caroline owns a nail salon and receives payments from her clients for her services. 
A)  Dylan receives a salary for his work as a financial analyst for an investment firm. 
B)  Kristin buys two business suits to wear to her job as a Chief Information Officer. 
C)  Jim receives clean water in his home in exchange for paying his water bill. 
D)  Caroline owns a nail salon and receives payments from her clients for her services.

Question 19

Which of the following is an example of a capital input?

Accepted Answer

A)  a computer 
B)  a share of stock 
C)  an hour of a worker's time 
D)  $50,000 
A)  a computer 
B)  a share of stock 
C)  an hour of a worker's time 
D)  $50,000

Question 20

Figure 2-5  
-Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point B is

Accepted Answer

A)  20 dryers. 
B)  20 washers. 
C)  20 dryers and 20 washers. 
D)  60 dryers. 
A)  20 dryers. 
B)  20 washers. 
C)  20 dryers and 20 washers. 
D)  60 dryers.

Exam 2: Thinking Like an Economist

Economists at which administrative department help design tax policy?

Figure 2-3 -Refer to Figure 2-3. What is flowing from rectangle 1 to oval A?

The production possibilities frontier illustrates

Figure 2-17 -Refer to Figure 2-17. The movement from point A to point B is a(n)

Figure 2-1 -Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

In the circular-flow diagram, factors of production include land, labor, and capital.

Figure 2-22 -Refer to Figure 2-22. Is a move from point A to point B considered a shift of the curve or a movement along the curve?

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

Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of one sofa is

For economists, substitutes for laboratory experiments often come in the form of

A circular-flow diagram is a model that

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

The nation's antitrust laws are enforced by economists at the Department of

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

"Society would be better off if the welfare system were abolished" is a normative statement, not a positive statement.

Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two. -Refer to Figure 2-14. If this society is producing at point T,

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?

Which of the following is an example of a capital input?

Figure 2-5 -Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point B is

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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