Question 1

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram?

Accepted Answer

A) a landowner leases land to a farmer 
B) a farmer hires a teenager to help with harvest 
C) a construction company rents trucks for its business 
D) a woman buys corn for dinner 
A) a landowner leases land to a farmer 
B) a farmer hires a teenager to help with harvest 
C) a construction company rents trucks for its business 
D) a woman buys corn for dinner

Question 2

A circular-flow model and production possibilities frontier are similar in that

Accepted Answer

A) neither allows economic analysis to occur. 
B) neither can be represented visually on a graph. 
C) both make use of assumptions. 
D) both make use of complex equations to arrive at solutions. 
A) neither allows economic analysis to occur. 
B) neither can be represented visually on a graph. 
C) both make use of assumptions. 
D) both make use of complex equations to arrive at solutions.

Question 3

The most common data for testing economic theories come from

Accepted Answer

A) carefully controlled and conducted laboratory experiments. 
B) computer models of economies. 
C) historical episodes of economic change. 
D) centrally planned economies. 
A) carefully controlled and conducted laboratory experiments. 
B) computer models of economies. 
C) historical episodes of economic change. 
D) centrally planned economies.

Question 4

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

Which markets are represented in the simple circular-flow diagram?

Accepted Answer

A) markets for goods and services and markets for financial assets 
B) markets for factors of production and markets for financial assets 
C) markets for goods and services and markets for factors of production 
D) markets for goods and services and markets for imports and exports 
A) markets for goods and services and markets for financial assets 
B) markets for factors of production and markets for financial assets 
C) markets for goods and services and markets for factors of production 
D) markets for goods and services and markets for imports and exports

Question 6

Figure 2-9
 
-Refer to Figure 2-9,Panel (a).The opportunity cost of one cup of coffee is highest when the economy produces

Accepted Answer

A) 0 cups of coffee. 
B) 2 cups of coffee. 
C) 4 cups of coffee. 
D) 6 cups of coffee. 
A) 0 cups of coffee. 
B) 2 cups of coffee. 
C) 4 cups of coffee. 
D) 6 cups of coffee.

Question 7

In the circular-flow diagram,which of the following items represents a payment for a factor of production?

Accepted Answer

A) interest 
B) capital 
C) spending by households on goods 
D) spending by households on services 
A) interest 
B) capital 
C) spending by households on goods 
D) spending by households on services

Question 8

In the circular-flow diagram,

Accepted Answer

A) taxes flow from households to firms,and transfer payments flow from firms to households. 
B) income payments flow from firms to households,and sales revenue flows from households to firms. 
C) resources flow from firms to households,and goods and services flow from households to firms. 
D) inputs and outputs flow in the same direction as the flow of dollars,from firms to households. 
A) taxes flow from households to firms,and transfer payments flow from firms to households. 
B) income payments flow from firms to households,and sales revenue flows from households to firms. 
C) resources flow from firms to households,and goods and services flow from households to firms. 
D) inputs and outputs flow in the same direction as the flow of dollars,from firms to households.

Question 9

Figure 2-2  
-Refer to Figure 2-2.If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram,then

Accepted Answer

A) the flow of factors of production is also part of what is represented by the inner loop. 
B) the flow of income paid to households is also part of what is represented by the inner loop. 
C) the flow of revenue to firms is also part of what is represented by the inner loop. 
D) households must be sellers of output. 
A) the flow of factors of production is also part of what is represented by the inner loop. 
B) the flow of income paid to households is also part of what is represented by the inner loop. 
C) the flow of revenue to firms is also part of what is represented by the inner loop. 
D) households must be sellers of output.

Question 10

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 is producing 1050 units of food and 52 machines.Which of the following events could not explain the increase in output?

Accepted Answer

A) a reduction in unemployment 
B) an increase in available labor 
C) an improvement in technology 
D) Any of these events could explain the increase in output. 
A) a reduction in unemployment 
B) an increase in available labor 
C) an improvement in technology 
D) Any of these events could explain the increase in output.

Question 11

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

Question 12

In the circular-flow diagram,another name for goods and services produced by firms is

Accepted Answer

A) factors of production. 
B) output. 
C) inputs. 
D) resources. 
A) factors of production. 
B) output. 
C) inputs. 
D) resources.

Question 13

Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

Accepted Answer

A) Transit ridership increased in Atlanta following an increase in gas prices. 
B) Federal tax revenue increased following a decrease in the tax rate. 
C) Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances. 
D) Following the imposition of austerity measures,the growth rate of the economy in Greece slowed. 
A) Transit ridership increased in Atlanta following an increase in gas prices. 
B) Federal tax revenue increased following a decrease in the tax rate. 
C) Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances. 
D) Following the imposition of austerity measures,the growth rate of the economy in Greece slowed.

Question 14

Figure 2-8  
-Refer to Figure 2-8.For this economy,as more and more hammers are produced,the opportunity cost of an additional hammer produced,in terms of nails,

Accepted Answer

A) remains constant. 
B) increases. 
C) decreases. 
D) This answer cannot be determined from the graph. 
A) remains constant. 
B) increases. 
C) decreases. 
D) This answer cannot be determined from the graph.

Question 15

Figure 2-8  
-Refer to Figure 2-8.To reach point L,the economy would have to

Accepted Answer

A) acquire more resources or experience a technological advance. 
B) begin using its available resources more efficiently than it is currently using them. 
C) shift resources away from the production of nails and toward the production of hammers. 
D) None of the above are correct;the economy will never be able to reach point L. 
A) acquire more resources or experience a technological advance. 
B) begin using its available resources more efficiently than it is currently using them. 
C) shift resources away from the production of nails and toward the production of hammers. 
D) None of the above are correct;the economy will never be able to reach point L.

Question 16

Figure 2-2  
-Refer to Figure 2-2.If the outer loop of this circular-flow diagram represents flows of dollars,then the inner loop includes

Accepted Answer

A) flows of goods and services from households to firms. 
B) flows of inputs from households to firms. 
C) flows of rent payments paid to owners of land. 
D) flows of wages and salaries paid to workers. 
A) flows of goods and services from households to firms. 
B) flows of inputs from households to firms. 
C) flows of rent payments paid to owners of land. 
D) flows of wages and salaries paid to workers.

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

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram?

A circular-flow model and production possibilities frontier are similar in that

The most common data for testing economic theories come from

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

Which markets are represented in the simple circular-flow diagram?

Figure 2-9 -Refer to Figure 2-9,Panel (a).The opportunity cost of one cup of coffee is highest when the economy produces

In the circular-flow diagram,which of the following items represents a payment for a factor of production?

In the circular-flow diagram,

Figure 2-2 -Refer to Figure 2-2.If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram,then

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

In the circular-flow diagram,another name for goods and services produced by firms is

Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

Figure 2-8 -Refer to Figure 2-8.For this economy,as more and more hammers are produced,the opportunity cost of an additional hammer produced,in terms of nails,

Figure 2-8 -Refer to Figure 2-8.To reach point L,the economy would have to

Figure 2-2 -Refer to Figure 2-2.If the outer loop of this circular-flow diagram represents flows of dollars,then the inner loop includes

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

Measuring a Nations Income

Measuring a Nations Income: The Economy's Income and Expenditure

Measuring a Nations Income: The Measurement of GDP

Measuring a Nations Income: The Components of GDP