Question 1

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Accepted Answer

A) efficiency 
B) opportunity cost 
C) equality 
D) trade-offs 
A) efficiency 
B) opportunity cost 
C) equality 
D) trade-offs

Question 2

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

Accepted Answer

A) the effect of foreign direct investment on economic growth 
B) the effect of a sales tax on the cigarette industry 
C) the effect of an investment tax credit on the economy's capital stock 
D) the effect of a war on government spending 
A) the effect of foreign direct investment on economic growth 
B) the effect of a sales tax on the cigarette industry 
C) the effect of an investment tax credit on the economy's capital stock 
D) the effect of a war on government spending

Question 3

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 4

It is possible for an economy to increase its production of both goods if the economy

Accepted Answer

A) moves downward and to the right along its production possibilities frontier and the frontier is bowed outward. 
B) moves upward and to the left along its production possibilities frontier and the frontier is bowed outward. 
C) moves in either direction along its production possibilities frontier and the frontier is a straight line. 
D) moves from a situation of inefficient production to a situation of efficient production. 
A) moves downward and to the right along its production possibilities frontier and the frontier is bowed outward. 
B) moves upward and to the left along its production possibilities frontier and the frontier is bowed outward. 
C) moves in either direction along its production possibilities frontier and the frontier is a straight line. 
D) moves from a situation of inefficient production to a situation of efficient production.

Question 5

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

Accepted Answer

A) K,M 
B) L 
C) L,M 
D) M 
A) K,M 
B) L 
C) L,M 
D) M

Question 6

Figure 2-5  
-Refer to Figure 2-5.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 7

Economists make use of assumptions,some of which are unrealistic,for the purpose of

Accepted Answer

A) teaching economics to people who have never before studied economics. 
B) advancing their political agendas. 
C) developing models when the scientific method cannot be used. 
D) focusing their thinking. 
A) teaching economics to people who have never before studied economics. 
B) advancing their political agendas. 
C) developing models when the scientific method cannot be used. 
D) focusing their thinking.

Question 8

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 each car is

Accepted Answer

A) the slope of the production possibilities frontier. 
B) 3/2 sofas. 
C) 2/3 of a sofa. 
D) Both a and b are correct. 
A) the slope of the production possibilities frontier. 
B) 3/2 sofas. 
C) 2/3 of a sofa. 
D) Both a and b are correct.

Question 9

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 10

Which of the following steps does an economist take when studying the economy?

Accepted Answer

A) devise theories 
B) collect data 
C) analyze data 
D) All of the above are correct. 
A) devise theories 
B) collect data 
C) analyze data 
D) All of the above are correct.

Question 11

Figure 2-15  
-Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.When society moves from point A to point B,

Accepted Answer

A) the opportunity cost is the same as when society moves from point B to point C. 
B) it is giving up cars to get sofas. 
C) the opportunity cost is increasing. 
D) it moves from an inefficient point to an efficient point. 
A) the opportunity cost is the same as when society moves from point B to point C. 
B) it is giving up cars to get sofas. 
C) the opportunity cost is increasing. 
D) it moves from an inefficient point to an efficient point.

Question 12

The outer loop of the circular-flow diagram represents the flows of dollars in the economy.Which of the following does not appear on the outer loop?

Accepted Answer

A) wages 
B) income 
C) capital 
D) rent 
A) wages 
B) income 
C) capital 
D) rent

Question 13

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Accepted Answer

A) is useless,since the real world has many countries trading many goods. 
B) can be useful only in situations involving two countries and two goods. 
C) can be useful in the classroom,but is useless in the real world. 
D) can be useful in helping economists understand the complex world of international trade involving many countries and many goods. 
A) is useless,since the real world has many countries trading many goods. 
B) can be useful only in situations involving two countries and two goods. 
C) can be useful in the classroom,but is useless in the real world. 
D) can be useful in helping economists understand the complex world of international trade involving many countries and many goods.

Question 14

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 15

Economists,like mathematicians,physicists,and biologists,

Accepted Answer

A) make use of the scientific method. 
B) try to address their subject with a scientist's objectivity. 
C) devise theories,collect data,and then analyze these data in an attempt to verify or refute their theories. 
D) All of the above are correct. 
A) make use of the scientific method. 
B) try to address their subject with a scientist's objectivity. 
C) devise theories,collect data,and then analyze these data in an attempt to verify or refute their theories. 
D) All of the above are correct.

Question 16

In the circular-flow diagram,

Accepted Answer

A) profit flows from households to firms. 
B) labor flows from households to firms. 
C) services flow from households to firms. 
D) All of the above are correct. 
A) profit flows from households to firms. 
B) labor flows from households to firms. 
C) services flow from households to firms. 
D) All of the above are correct.

Question 17

In a certain economy,toys and greeting cards are produced,and the economy currently operates on its production possibilities frontier.Which of the following events would allow the economy to produce more toys and more greeting cards,relative to the quantities of those goods that are being produced now?

Accepted Answer

A) The economy experiences economic growth. 
B) There is a technological advance in the toy industry,but the greeting card industry experiences no such advance. 
C) There is a technological advance in the greeting card industry,but the toy industry experiences no such advance. 
D) All of the above are correct. 
A) The economy experiences economic growth. 
B) There is a technological advance in the toy industry,but the greeting card industry experiences no such advance. 
C) There is a technological advance in the greeting card industry,but the toy industry experiences no such advance. 
D) All of the above are correct.

Question 18

In the circular-flow diagram,in the markets for

Accepted Answer

A) goods and services,households and firms are both sellers. 
B) goods and services,households are buyers and firms are sellers. 
C) the factors of production,households are buyers and firms are sellers. 
D) the factors of production,households and firms are both buyers. 
A) goods and services,households and firms are both sellers. 
B) goods and services,households are buyers and firms are sellers. 
C) the factors of production,households are buyers and firms are sellers. 
D) the factors of production,households and firms are both buyers.

Question 19

When constructing a production possibilities frontier,which of the following assumptions is not made?

Accepted Answer

A) The economy produces only two goods or two types of goods. 
B) Firms produce goods using factors of production. 
C) The technology available to firms is given. 
D) The quantities of the factors of production that are available are increasing over the relevant time period. 
A) The economy produces only two goods or two types of goods. 
B) Firms produce goods using factors of production. 
C) The technology available to firms is given. 
D) The quantities of the factors of production that are available are increasing over the relevant time period.

Question 20

Figure 2-9
 
-Refer to Figure 2-9,Panel (a)and Panel (b).Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a)to Panel (b)?

Accepted Answer

A) the tradeoff between the production of donuts and coffee changes 
B) the opportunity cost of a cup of coffee is higher at all levels of coffee production 
C) production of 4 donuts and 2 cups of coffee becomes possible 
D) production of 1 donut and 4 cups of coffee becomes efficient 
A) the tradeoff between the production of donuts and coffee changes 
B) the opportunity cost of a cup of coffee is higher at all levels of coffee production 
C) production of 4 donuts and 2 cups of coffee becomes possible 
D) production of 1 donut and 4 cups of coffee becomes efficient

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

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

A circular-flow diagram is a model that

It is possible for an economy to increase its production of both goods if the economy

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

Figure 2-5 -Refer to Figure 2-5.It is not possible for this economy to produce at point

Economists make use of assumptions,some of which are unrealistic,for the purpose of

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 each car is

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?

Which of the following steps does an economist take when studying the economy?

Figure 2-15 -Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.When society moves from point A to point B,

The outer loop of the circular-flow diagram represents the flows of dollars in the economy.Which of the following does not appear on the outer loop?

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

The production possibilities frontier illustrates

Economists,like mathematicians,physicists,and biologists,

In the circular-flow diagram,

In the circular-flow diagram,in the markets for

When constructing a production possibilities frontier,which of the following assumptions is not made?

Figure 2-9 -Refer to Figure 2-9,Panel (a)and Panel (b).Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a)to Panel (b)?

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