Question 1

Which of the following statements about models is correct?

Accepted Answer

A) The more details a model includes,the better the model. 
B) Models assume away irrelevant details. 
C) Models cannot be used to explain how the economy functions. 
D) Models cannot be used to make predictions. 
A) The more details a model includes,the better the model. 
B) Models assume away irrelevant details. 
C) Models cannot be used to explain how the economy functions. 
D) Models cannot be used to make predictions.

Question 2

Figure 2-16​  
-Refer to Figure 2-16.Suppose this economy is producing at point B.Which of the following statements would best explain this situation?

Accepted Answer

A) The economy does not have enough resources to produce more of either product. 
B) The economy's available technology prevents it from producing more of either product. 
C) There is widespread unemployment in the economy. 
D) The economy is getting all it can from the scarce resources available. 
A) The economy does not have enough resources to produce more of either product. 
B) The economy's available technology prevents it from producing more of either product. 
C) There is widespread unemployment in the economy. 
D) The economy is getting all it can from the scarce resources available.

Question 3

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 4

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?

Accepted Answer

A) Because the technological advance occurred in the machine-making industry,it will not be possible to increase food production without reducing machine production below 47. 
B) Because the technological advance occurred in the machine-making industry,increases in output can only occur in the machine industry. 
C) In order to increase food production in these circumstances without reducing machine production,the economy must reduce inefficiencies. 
D) The technological advance reduced the amount of resources needed to produce 47 machines,so these resources could be used to produce more food. 
A) Because the technological advance occurred in the machine-making industry,it will not be possible to increase food production without reducing machine production below 47. 
B) Because the technological advance occurred in the machine-making industry,increases in output can only occur in the machine industry. 
C) In order to increase food production in these circumstances without reducing machine production,the economy must reduce inefficiencies. 
D) The technological advance reduced the amount of resources needed to produce 47 machines,so these resources could be used to produce more food.

Question 5

Which of the following statements is correct?

Accepted Answer

A) Economists almost always find it easy to conduct experiments in order to test their theories. 
B) Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C) Economics is a social science rather than a true science because it cannot employ the scientific method. 
D) Economists are usually not able to conduct experiments,so they must rely on natural experiments offered by history. 
A) Economists almost always find it easy to conduct experiments in order to test their theories. 
B) Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C) Economics is a social science rather than a true science because it cannot employ the scientific method. 
D) Economists are usually not able to conduct experiments,so they must rely on natural experiments offered by history.

Question 6

Figure 2-7  
-Refer to Figure 2-7.This economy has the ability to produce at which point(s)?

Accepted Answer

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

Question 7

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 8

The art in scientific thinking is

Accepted Answer

A) finding the right problem to study. 
B) deciding which assumptions to make. 
C) the ability to make an abstract subject easy to understand. 
D) not something in which economists have to be skilled. 
A) finding the right problem to study. 
B) deciding which assumptions to make. 
C) the ability to make an abstract subject easy to understand. 
D) not something in which economists have to be skilled.

Question 9

The essence of science is

Accepted Answer

A) the laboratory experiment. 
B) the scientific method. 
C) the study of nature,but not the study of society. 
D) All of the above are correct. 
A) the laboratory experiment. 
B) the scientific method. 
C) the study of nature,but not the study of society. 
D) All of the above are correct.

Question 10

An example of a price that changes only infrequently is the price of

Accepted Answer

A) stocks on the New York Stock Exchange. 
B) crude oil. 
C) residential real estate. 
D) magazines sold at newsstands. 
A) stocks on the New York Stock Exchange. 
B) crude oil. 
C) residential real estate. 
D) magazines sold at newsstands.

Question 11

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 12

Economists regard events from the past as

Accepted Answer

A) irrelevant,since history is unlikely to repeat itself. 
B) of limited interest,since those events seldom provide any useful economic data. 
C) interesting but not particularly valuable,since those events cannot be used to evaluate present-day economic theories. 
D) interesting and valuable,since those events are capable of helping us to understand the past,the present,and the future. 
A) irrelevant,since history is unlikely to repeat itself. 
B) of limited interest,since those events seldom provide any useful economic data. 
C) interesting but not particularly valuable,since those events cannot be used to evaluate present-day economic theories. 
D) interesting and valuable,since those events are capable of helping us to understand the past,the present,and the future.

Question 13

Figure 2-16​  
-Refer to Figure 2-16.Efficient production is represented by which point(s)?

Accepted Answer

A) B,D,E 
B) D 
C) C,B 
D) A,C 
A) B,D,E 
B) D 
C) C,B 
D) A,C

Question 14

Figure 2-9
 
-Refer to Figure 2-9,Panel (a).Production is

Accepted Answer

A) possible at points J,K,L,and M,but efficient only at points J,L,and M. 
B) possible at points J,K,L,and M,but efficient only at point K. 
C) possible at points J,L,M,and N,but efficient only at points J,L,and M. 
D) possible at points J,L,M,and N,but efficient only at point N. 
A) possible at points J,K,L,and M,but efficient only at points J,L,and M. 
B) possible at points J,K,L,and M,but efficient only at point K. 
C) possible at points J,L,M,and N,but efficient only at points J,L,and M. 
D) possible at points J,L,M,and N,but efficient only at point N.

Question 15

Economists face an obstacle that many other scientists do not face.What is that obstacle?

Accepted Answer

A) It is often difficult to formulate theories in economics. 
B) It is often impractical to perform experiments in economics. 
C) Economics cannot be addressed objectively;it must be addressed subjectively. 
D) The scientific method cannot be applied to the study of economics. 
A) It is often difficult to formulate theories in economics. 
B) It is often impractical to perform experiments in economics. 
C) Economics cannot be addressed objectively;it must be addressed subjectively. 
D) The scientific method cannot be applied to the study of economics.

Question 16

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

Accepted Answer

A) national economics and international economics. 
B) consumer economics and producer economics. 
C) private sector economics and public sector economics. 
D) microeconomics and macroeconomics. 
A) national economics and international economics. 
B) consumer economics and producer economics. 
C) private sector economics and public sector economics. 
D) microeconomics and macroeconomics.

Question 17

Production possibilities frontiers are usually bowed outward.This is because

Accepted Answer

A) the more resources a society uses to produce one good,the fewer resources it has available to produce another good. 
B) the opportunity cost of producing a good decreases as more and more of that good is produced. 
C) of the effects of technological change. 
D) resources are specialized;that is,some are better at producing particular goods rather than other goods. 
A) the more resources a society uses to produce one good,the fewer resources it has available to produce another good. 
B) the opportunity cost of producing a good decreases as more and more of that good is produced. 
C) of the effects of technological change. 
D) resources are specialized;that is,some are better at producing particular goods rather than other goods.

Question 18

Figure 2-5  
-Refer to Figure 2-5.If this economy devotes all of its resources to the production of dryers,then it will produce

Accepted Answer

A) 0 dryers and 100 washers. 
B) 60 dryers and 50 washers. 
C) 80 dryers and 0 washers. 
D) 80 dryers and 50 washers. 
A) 0 dryers and 100 washers. 
B) 60 dryers and 50 washers. 
C) 80 dryers and 0 washers. 
D) 80 dryers and 50 washers.

Question 19

Figure 2-16​  
-Refer to Figure 2-16.It is not possible for this economy to produce at point

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 20

The scientific method is

Accepted Answer

A) the use of modern technology to understand the way the world works. 
B) the use of controlled laboratory experiments to understand the way the world works. 
C) the dispassionate development and testing of theories about how the world works. 
D) the search for evidence to support preconceived theories about how the world works. 
A) the use of modern technology to understand the way the world works. 
B) the use of controlled laboratory experiments to understand the way the world works. 
C) the dispassionate development and testing of theories about how the world works. 
D) the search for evidence to support preconceived theories about how the world works.

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

Which of the following statements about models is correct?

Figure 2-16​ -Refer to Figure 2-16.Suppose this economy is producing at point B.Which of the following statements would best explain this situation?

Microeconomics is the study of

Which of the following statements is correct?

Figure 2-7 -Refer to Figure 2-7.This economy has the ability to produce at which point(s)?

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

The art in scientific thinking is

The essence of science is

An example of a price that changes only infrequently is the price of

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

Economists regard events from the past as

Figure 2-16​ -Refer to Figure 2-16.Efficient production is represented by which point(s)?

Figure 2-9 -Refer to Figure 2-9,Panel (a).Production is

Economists face an obstacle that many other scientists do not face.What is that obstacle?

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

Production possibilities frontiers are usually bowed outward.This is because

Figure 2-5 -Refer to Figure 2-5.If this economy devotes all of its resources to the production of dryers,then it will produce

Figure 2-16​ -Refer to Figure 2-16.It is not possible for this economy to produce at point

The scientific method is

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

Figure 2-16 -Refer to Figure 2-16.Suppose this economy is producing at point B.Which of the following statements would best explain this situation?

Figure 2-16 -Refer to Figure 2-16.Efficient production is represented by which point(s)?

Figure 2-16 -Refer to Figure 2-16.It is not possible for this economy to produce at point