Question 1

In the simple circular flow diagram,the flow of money from the firms to the markets for factors of production is called

Accepted Answer

A) spending. 
B) revenue. 
C) income. 
D) wages,rent,and profit. 
A) spending. 
B) revenue. 
C) income. 
D) wages,rent,and profit.

Question 2

Figure 2-3  
-Refer to Figure 2-3.Which of the following is an activity undertaken by the actors in rectangle 2?

Accepted Answer

A) produce and sell goods and services 
B) hire and use factors of production 
C) own and sell factors of production 
D) exchange goods and services between firms and households 
A) produce and sell goods and services 
B) hire and use factors of production 
C) own and sell factors of production 
D) exchange goods and services between firms and households

Question 3

Figure 2-7  
-Refer to Figure 2-7.Unemployment could cause this economy to produce at 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

Question 4

A model can be accurately described as a

Accepted Answer

A) theoretical abstraction with very little value. 
B) device that is useful only to the people who created it. 
C) realistic and carefully constructed theory. 
D) simplification of reality. 
A) theoretical abstraction with very little value. 
B) device that is useful only to the people who created it. 
C) realistic and carefully constructed theory. 
D) simplification of reality.

Question 5

The circular-flow diagram

Accepted Answer

A) is an economic model. 
B) incorporates two types of decision makers: households and firms. 
C) represents the flows of inputs,outputs,and dollars. 
D) All of the above are correct. 
A) is an economic model. 
B) incorporates two types of decision makers: households and firms. 
C) represents the flows of inputs,outputs,and dollars. 
D) All of the above are correct.

Question 6

In conducting their research,economists face an obstacle that not all scientists face;specifically,in economics,it is often impractical to

Accepted Answer

A) make use of theory and observation. 
B) rely upon the scientific method. 
C) conduct laboratory experiments. 
D) find articles or books that were written before 1900. 
A) make use of theory and observation. 
B) rely upon the scientific method. 
C) conduct laboratory experiments. 
D) find articles or books that were written before 1900.

Question 7

Figure 2-6  
-Refer to Figure 2-6.If this economy moves from point F to point G,then which of the following statements is correct?

Accepted Answer

A) This economy has moved from a point of inefficient production to a point of efficient production. 
B) This economy has experienced economic growth. 
C) This economy has experienced an increase in employment. 
D) None of the above is correct. 
A) This economy has moved from a point of inefficient production to a point of efficient production. 
B) This economy has experienced economic growth. 
C) This economy has experienced an increase in employment. 
D) None of the above is correct.

Question 8

According to the circular-flow diagram,if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs.Pendleton's lawn,

Accepted Answer

A) the $50 represents a cost of production for Denny's firm. 
B) the $50 represents wages,rent,and profit to Denny's firm. 
C) Denny acts as a firm who interacted in the markets for factors of production with Mrs.Pendleton. 
D) Denny acts as a firm who interacted in the markets for goods and services with Mrs.Pendleton. 
A) the $50 represents a cost of production for Denny's firm. 
B) the $50 represents wages,rent,and profit to Denny's firm. 
C) Denny acts as a firm who interacted in the markets for factors of production with Mrs.Pendleton. 
D) Denny acts as a firm who interacted in the markets for goods and services with Mrs.Pendleton.

Question 9

A model that shows how dollars flow through markets among households and firms is called the

Accepted Answer

A) production possibilities frontier. 
B) circular-flow diagram. 
C) demand and supply diagram. 
D) comparative advantage model. 
A) production possibilities frontier. 
B) circular-flow diagram. 
C) demand and supply diagram. 
D) comparative advantage model.

Question 10

Figure 2-5  
-Refer to Figure 2-5.The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is

Accepted Answer

A) 0 washers. 
B) 20 washers. 
C) 40 washers. 
D) None of the above;the economy cannot move from point D to point C. 
A) 0 washers. 
B) 20 washers. 
C) 40 washers. 
D) None of the above;the economy cannot move from point D to point C.

Question 11

Economic models

Accepted Answer

A) are people who act out the behavior of firms and households so that economists can study this behavior. 
B) are usually detailed replications of reality. 
C) incorporate simplifying assumptions that often contradict reality,but also help economists better understand reality. 
D) are useful to researchers but not to teachers because economic models omit many details of the real-world economy. 
A) are people who act out the behavior of firms and households so that economists can study this behavior. 
B) are usually detailed replications of reality. 
C) incorporate simplifying assumptions that often contradict reality,but also help economists better understand reality. 
D) are useful to researchers but not to teachers because economic models omit many details of the real-world economy.

Question 12

Another term for factors of production is

Accepted Answer

A) inputs. 
B) output. 
C) goods. 
D) services. 
A) inputs. 
B) output. 
C) goods. 
D) services.

Question 13

Figure 2-2  
-Refer to Figure 2-2.Carla regularly buys fruits and vegetables at a grocery store.Roberto regularly pays a lawn-care company to mow his lawn.If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram,then the money paid by Roberto to the lawn-care company is represented by an arrow

Accepted Answer

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

Question 14

In the circular-flow diagram,which of the following items does not flow from firms to households?

Accepted Answer

A) goods 
B) services 
C) capital 
D) profit 
A) goods 
B) services 
C) capital 
D) profit

Question 15

Refer to Figure 2-13.Which of the following statements is true about point G for this economy?

Accepted Answer

A) Point G is currently unattainable. 
B) Point G is efficient. 
C) At point G,more cakes are produced than cookies. 
D) There is unemployment at point G. 
A) Point G is currently unattainable. 
B) Point G is efficient. 
C) At point G,more cakes are produced than cookies. 
D) There is unemployment at point G.

Question 16

Among economic models,the circular-flow diagram is unusual in that it

Accepted Answer

A) drastically simplifies the real world. 
B) features more than one type of market. 
C) features flows of dollars. 
D) does not involve mathematics. 
A) drastically simplifies the real world. 
B) features more than one type of market. 
C) features flows of dollars. 
D) does not involve mathematics.

Question 17

Figure 2-10
 
-Refer to Figure 2-10,Panel (a).Production at point Y is

Accepted Answer

A) impossible and inefficient. 
B) impossible but efficient. 
C) possible but inefficient. 
D) possible and efficient. 
A) impossible and inefficient. 
B) impossible but efficient. 
C) possible but inefficient. 
D) possible and efficient.

Question 18

Unemployment would cause an economy to

Accepted Answer

A) produce inside its production possibilities frontier. 
B) produce on its production possibilities frontier. 
C) produce outside its production possibilities frontier. 
D) experience an inward shift of its production possibilities frontier. 
A) produce inside its production possibilities frontier. 
B) produce on its production possibilities frontier. 
C) produce outside its production possibilities frontier. 
D) experience an inward shift of its production possibilities frontier.

Question 19

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

Accepted Answer

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

Question 20

Figure 2-1  
-Refer to Figure 2-1.Which arrow represents the flow of income payments?

Accepted Answer

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

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

In the simple circular flow diagram,the flow of money from the firms to the markets for factors of production is called

Figure 2-3 -Refer to Figure 2-3.Which of the following is an activity undertaken by the actors in rectangle 2?

Figure 2-7 -Refer to Figure 2-7.Unemployment could cause this economy to produce at which point(s)?

A model can be accurately described as a

The circular-flow diagram

In conducting their research,economists face an obstacle that not all scientists face;specifically,in economics,it is often impractical to

Figure 2-6 -Refer to Figure 2-6.If this economy moves from point F to point G,then which of the following statements is correct?

According to the circular-flow diagram,if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs.Pendleton's lawn,

A model that shows how dollars flow through markets among households and firms is called the

Figure 2-5 -Refer to Figure 2-5.The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is

Economic models

Another term for factors of production is

In the circular-flow diagram,which of the following items does not flow from firms to households?

Refer to Figure 2-13.Which of the following statements is true about point G for this economy?

Among economic models,the circular-flow diagram is unusual in that it

Figure 2-10 -Refer to Figure 2-10,Panel (a).Production at point Y is

Unemployment would cause an economy to

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

Figure 2-1 -Refer to Figure 2-1.Which arrow represents the flow of income payments?

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