Question 1

Economic models

Accepted Answer

A) are constructed to mirror reality as closely as possible,and in this respect economic models are no different from other scientific models. 
B) are constructed to mirror reality as closely as possible,and in this respect economic models are very different from other scientific models. 
C) are simplifications of reality,and in this respect economic models are no different from other scientific models. 
D) are simplifications of reality,and in this respect economic models are very different from other scientific models. 
A) are constructed to mirror reality as closely as possible,and in this respect economic models are no different from other scientific models. 
B) are constructed to mirror reality as closely as possible,and in this respect economic models are very different from other scientific models. 
C) are simplifications of reality,and in this respect economic models are no different from other scientific models. 
D) are simplifications of reality,and in this respect economic models are very different from other scientific models.

Question 2

Economists build economic models by

Accepted Answer

A) generating data. 
B) conducting controlled experiments in a lab. 
C) making assumptions. 
D) reviewing statistical forecasts. 
A) generating data. 
B) conducting controlled experiments in a lab. 
C) making assumptions. 
D) reviewing statistical forecasts.

Question 3

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A) households provide firms with savings for investment. 
B) households provide firms with labor,land,and capital. 
C) firms provide households with output. 
D) firms provide households with profit. 
A) households provide firms with savings for investment. 
B) households provide firms with labor,land,and capital. 
C) firms provide households with output. 
D) firms provide households with profit.

Question 4

In the simple circular-flow diagram,

Accepted Answer

A) households own the factors of production. 
B) households buy all the goods and services that firms produce. 
C) land,labor,and capital flow from households to firms. 
D) All of the above are correct. 
A) households own the factors of production. 
B) households buy all the goods and services that firms produce. 
C) land,labor,and capital flow from households to firms. 
D) All of the above are correct.

Question 5

The country of Gerance produces two goods,cars and wine.Last year,it produced 1,000 cars and 15,000 cases of wine.This year,it produced 1,300 cars and 20,000 cases of wine.Given no other information,which of the following events could not explain this change?

Accepted Answer

A) Gerance experienced a reduction in unemployment. 
B) Gerance experienced an improvement in car-making technology. 
C) Gerance acquired more resources. 
D) Any of these events could explain the change. 
A) Gerance experienced a reduction in unemployment. 
B) Gerance experienced an improvement in car-making technology. 
C) Gerance acquired more resources. 
D) Any of these events could explain the change.

Question 6

Which of the following statements applies to economics,as well as to other sciences such as physics?

Accepted Answer

A) Experiments are considered valid only when they are conducted in a laboratory. 
B) Good theories do not need to be tested. 
C) Real-world observations often lead to theories. 
D) Economics,as well as other sciences,is concerned primarily with abstract concepts. 
A) Experiments are considered valid only when they are conducted in a laboratory. 
B) Good theories do not need to be tested. 
C) Real-world observations often lead to theories. 
D) Economics,as well as other sciences,is concerned primarily with abstract concepts.

Question 7

The simple circular-flow diagram is a model that includes only some key players in the real economy.Which of the following key players are omitted from the simple circular-flow model?

Accepted Answer

A) households 
B) firms 
C) government 
D) markets for factors of production 
A) households 
B) firms 
C) government 
D) markets for factors of production

Question 8

An assumption an economist might make while studying international trade is

Accepted Answer

A) there are only two countries. 
B) countries only produce two goods. 
C) technology does not change. 
D) All of the above are possible assumptions. 
A) there are only two countries. 
B) countries only produce two goods. 
C) technology does not change. 
D) All of the above are possible assumptions.

Question 9

Figure 2-10
 
-Refer to Figure 2-10,Panel (a).The opportunity cost of one sofa is highest when the economy produces

Accepted Answer

A) 0 sofas. 
B) 12 sofas. 
C) 20 sofas. 
D) 24 sofas. 
A) 0 sofas. 
B) 12 sofas. 
C) 20 sofas. 
D) 24 sofas.

Question 10

Figure 2-2  
-Refer to Figure 2-2.Devin works as an attorney for a corporation and is paid a salary in exchange for the legal services he performs.Juan owns office buildings and rents his buildings to companies in exchange for rent payments.If Devin's income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram,then Juan's income is represented by a flow of dollars

Accepted Answer

A) from Box A to Box C. 
B) from Box C to Box A. 
C) from Box B to Box D. 
D) from Box D to Box B. 
A) from Box A to Box C. 
B) from Box C to Box A. 
C) from Box B to Box D. 
D) from Box D to Box B.

Question 11

A macroeconomist - as opposed to a microeconomist - would study

Accepted Answer

A) the effects of rent control on housing in New York City. 
B) the effects of foreign competition on the US auto industry. 
C) the effects of borrowing by the federal government. 
D) the effects of raising the gasoline tax on transit ridership. 
A) the effects of rent control on housing in New York City. 
B) the effects of foreign competition on the US auto industry. 
C) the effects of borrowing by the federal government. 
D) the effects of raising the gasoline tax on transit ridership.

Question 12

In the circular-flow diagram,

Accepted Answer

A) firms are buyers in the markets for goods and services. 
B) households are sellers in the markets for the factors of production. 
C) firms are sellers in the markets for factors of production and in the markets for goods and services. 
D) dollars that are spent on goods and services flow directly from firms to households. 
A) firms are buyers in the markets for goods and services. 
B) households are sellers in the markets for the factors of production. 
C) firms are sellers in the markets for factors of production and in the markets for goods and services. 
D) dollars that are spent on goods and services flow directly from firms to households.

Question 13

The circular-flow diagram is a

Accepted Answer

A) visual model of the economy. 
B) visual model of the relationships among money,prices,and businesses. 
C) model that shows the effects of government on the economy. 
D) mathematical model of how the economy works. 
A) visual model of the economy. 
B) visual model of the relationships among money,prices,and businesses. 
C) model that shows the effects of government on the economy. 
D) mathematical model of how the economy works.

Question 14

Factors of production are

Accepted Answer

A) used to produce goods and services. 
B) also called output. 
C) abundant in most economies. 
D) assumed to be owned by firms in the circular-flow diagram. 
A) used to produce goods and services. 
B) also called output. 
C) abundant in most economies. 
D) assumed to be owned by firms in the circular-flow diagram.

Question 15

Figure 2-6  
-Refer to Figure 2-6.The opportunity cost of this economy moving from point I to point H is

Accepted Answer

A) 120 pillows. 
B) 120 blankets. 
C) 120 blankets and 120 pillows. 
D) 200 blankets. 
A) 120 pillows. 
B) 120 blankets. 
C) 120 blankets and 120 pillows. 
D) 200 blankets.

Question 16

Suppose an economy only produces two goods,robots and ice cream.Last month,the economy produced 10 robots and 200 gallons of ice cream.This month,the same economy produced 15 robots and 240 gallons of ice cream.Which of the following statements could explain this change?

Accepted Answer

A) This month,the economy reduced the unemployment of its resources. 
B) This month,the economy experienced an improvement in technology. 
C) This month,the economy experienced an increase in resources 
D) All of the above are correct. 
A) This month,the economy reduced the unemployment of its resources. 
B) This month,the economy experienced an improvement in technology. 
C) This month,the economy experienced an increase in resources 
D) All of the above are correct.

Question 17

Figure 2-12  
-Refer to Figure 2-12.The shift of the production possibilities frontier from A to B can best be described as

Accepted Answer

A) a downturn in the economy. 
B) economic growth. 
C) an enhancement of equality. 
D) an improvement in the allocation of resources. 
A) a downturn in the economy. 
B) economic growth. 
C) an enhancement of equality. 
D) an improvement in the allocation of resources.

Question 18

A production possibilities frontier can shift outward if

Accepted Answer

A) government increases the amount of money in the economy. 
B) there is a technological improvement. 
C) resources are shifted from the production of one good to the production of the other good. 
D) the economy abandons inefficient production methods in favor of efficient production methods. 
A) government increases the amount of money in the economy. 
B) there is a technological improvement. 
C) resources are shifted from the production of one good to the production of the other good. 
D) the economy abandons inefficient production methods in favor of efficient production methods.

Question 19

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

Accepted Answer

A) goods and services 
B) land,labor,and capital 
C) dollars spent on goods and services 
D) wages,rent,and profit 
A) goods and services 
B) land,labor,and capital 
C) dollars spent on goods and services 
D) wages,rent,and profit

Question 20

Figure 2-7  
-Refer to Figure 2-7.Inefficient production is represented by which point(s)?

Accepted Answer

A) L,M 
B) N,O,P,Q 
C) N,O,P 
D) Q 
A) L,M 
B) N,O,P,Q 
C) N,O,P 
D) Q

Exam 2: Thinking Like an Economist: The Economist As Scientist

Economic models

Economists build economic models by

In the markets for goods and services in the circular-flow diagram,

In the simple circular-flow diagram,

The country of Gerance produces two goods,cars and wine.Last year,it produced 1,000 cars and 15,000 cases of wine.This year,it produced 1,300 cars and 20,000 cases of wine.Given no other information,which of the following events could not explain this change?

Which of the following statements applies to economics,as well as to other sciences such as physics?

The simple circular-flow diagram is a model that includes only some key players in the real economy.Which of the following key players are omitted from the simple circular-flow model?

An assumption an economist might make while studying international trade is

Figure 2-10 -Refer to Figure 2-10,Panel (a).The opportunity cost of one sofa is highest when the economy produces

A macroeconomist - as opposed to a microeconomist - would study

In the circular-flow diagram,

The circular-flow diagram is a

Factors of production are

Figure 2-6 -Refer to Figure 2-6.The opportunity cost of this economy moving from point I to point H is

Suppose an economy only produces two goods,robots and ice cream.Last month,the economy produced 10 robots and 200 gallons of ice cream.This month,the same economy produced 15 robots and 240 gallons of ice cream.Which of the following statements could explain this change?

Figure 2-12 -Refer to Figure 2-12.The shift of the production possibilities frontier from A to B can best be described as

A production possibilities frontier can shift outward if

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

Figure 2-7 -Refer to Figure 2-7.Inefficient production is represented by which point(s)?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B