Question 1

Figure 2-2  
-Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

Accepted Answer

A) households are represented by Box A. 
B) firms are represented by Box C. 
C) firms are represented by Box A. 
D) firms are sellers in Box B. 
A) households are represented by Box A. 
B) firms are represented by Box C. 
C) firms are represented by Box A. 
D) firms are sellers in Box B.

Question 2

In the circular-flow diagram,firms produce

Accepted Answer

A) goods and services using factors of production. 
B) output using inputs. 
C) factors of production using goods and services. 
D) Both (a)and (b)are correct. 
A) goods and services using factors of production. 
B) output using inputs. 
C) factors of production using goods and services. 
D) Both (a)and (b)are correct.

Question 3

Figure 2-7  
-Refer to Figure 2-7.What is the opportunity cost of moving from point M to point L?

Accepted Answer

A) zero 
B) 15 tvs 
C) 20 engines and 15 tvs 
D) 20 engines 
A) zero 
B) 15 tvs 
C) 20 engines and 15 tvs 
D) 20 engines

Question 4

Who said,"The whole of science is nothing more than the refinement of everyday thinking"?

Accepted Answer

A) Isaac Newton 
B) Albert Einstein 
C) Adam Smith 
D) Benjamin Franklin 
A) Isaac Newton 
B) Albert Einstein 
C) Adam Smith 
D) Benjamin Franklin

Question 5

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A) performing an experiment in an economic system. 
B) applying mathematical methods to economic analysis. 
C) analyzing available data. 
D) formulating theories about economic events. 
A) performing an experiment in an economic system. 
B) applying mathematical methods to economic analysis. 
C) analyzing available data. 
D) formulating theories about economic events.

Question 6

Figure 2-14   Consider the production possibilities curve for a country that can produce sweaters,apples (in bushels),or a combination of the two
-Refer to Figure 2-14.If this society is producing at point T,

Accepted Answer

A) there is unemployment. 
B) production is efficient. 
C) growth can only be achieved through an advancement in technology. 
D) the opportunity cost of producing one more sweater is approximately 40 bushels of apples. 
A) there is unemployment. 
B) production is efficient. 
C) growth can only be achieved through an advancement in technology. 
D) the opportunity cost of producing one more sweater is approximately 40 bushels of apples.

Question 7

In building economic models,economists often omit

Accepted Answer

A) assumptions. 
B) theories. 
C) details. 
D) equations. 
A) assumptions. 
B) theories. 
C) details. 
D) equations.

Question 8

Figure 2-8  
-Refer to Figure 2-8.Point K represents an outcome in which

Accepted Answer

A) production is inefficient. 
B) some of the economy's resources are unemployed. 
C) the economy is using all of its resources to produce hammers. 
D) the economy is using all of its nails to produce hammers. 
A) production is inefficient. 
B) some of the economy's resources are unemployed. 
C) the economy is using all of its resources to produce hammers. 
D) the economy is using all of its nails to produce hammers.

Question 9

Which of the following is an example of using the scientific method with a natural experiment?

Accepted Answer

A) measuring how long it takes a marble to fall from a ten story building 
B) comparing plant growth with and without a soil additive 
C) tracking the price of oil when a war in the Middle East interrupts the flow of crude oil 
D) observing the reaction when two chemicals are mixed together 
A) measuring how long it takes a marble to fall from a ten story building 
B) comparing plant growth with and without a soil additive 
C) tracking the price of oil when a war in the Middle East interrupts the flow of crude oil 
D) observing the reaction when two chemicals are mixed together

Question 10

Indiadesh is a country that produces two goods,textiles and computers.Last year,Indiadesh produced 50,000 textiles and 1300 computers.This year it produced 45,000 textiles and 1100 computers.Given no further information,which of the following events could explain this change?

Accepted Answer

A) Indiadesh decreased unemployment. 
B) Indiadesh experienced an improvement in textile-making technology. 
C) Indiadesh experienced an improvement in computer-making technology. 
D) Indiadesh experienced a reduction in resources. 
A) Indiadesh decreased unemployment. 
B) Indiadesh experienced an improvement in textile-making technology. 
C) Indiadesh experienced an improvement in computer-making technology. 
D) Indiadesh experienced a reduction in resources.

Question 11

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A) a controlled experiment that lead to the formulation of a scientific theory. 
B) being in the right place at the right time. 
C) an idea whose time had come. 
D) the interplay between observation and theory in science. 
A) a controlled experiment that lead to the formulation of a scientific theory. 
B) being in the right place at the right time. 
C) an idea whose time had come. 
D) the interplay between observation and theory in science.

Question 12

Historical episodes are

Accepted Answer

A) valuable to economists because they allow economists to see how the science of economics has evolved. 
B) valuable to economists because they allow economists to evaluate economic theories. 
C) not of concern to economists because economics is about predicting the future,not dwelling on the past. 
D) not of concern to economists because the exact circumstances of historical episodes are unlikely to be observed again. 
A) valuable to economists because they allow economists to see how the science of economics has evolved. 
B) valuable to economists because they allow economists to evaluate economic theories. 
C) not of concern to economists because economics is about predicting the future,not dwelling on the past. 
D) not of concern to economists because the exact circumstances of historical episodes are unlikely to be observed again.

Question 13

Figure 2-3  
-Refer to Figure 2-3.What is flowing from rectangle 1 to oval A?

Accepted Answer

A) revenue 
B) goods and services sold 
C) factors of production 
D) labor,land,and capital 
A) revenue 
B) goods and services sold 
C) factors of production 
D) labor,land,and capital

Question 14

Figure 2-3  
-Refer to Figure 2-3.Which shape refers to the markets for goods and services?

Accepted Answer

A) oval A 
B) oval B 
C) rectangle 1 
D) rectangle 2 
A) oval A 
B) oval B 
C) rectangle 1 
D) rectangle 2

Question 15

Which of the following statements about economic models is correct?

Accepted Answer

A) Economic models are built to mirror reality exactly. 
B) Economic models are useful,but they should not be used for the purpose of improving public policies. 
C) Because economic models omit many details,they allow us to see what is truly important. 
D) Economic models seldom incorporate equations or diagrams. 
A) Economic models are built to mirror reality exactly. 
B) Economic models are useful,but they should not be used for the purpose of improving public policies. 
C) Because economic models omit many details,they allow us to see what is truly important. 
D) Economic models seldom incorporate equations or diagrams.

Question 16

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

Accepted Answer

A) the effect of an increase in the alcohol tax on the market for beer 
B) the effect of foreign competition on the domestic auto industry 
C) the effect of a price war in the airline industry 
D) the effect of an increase in the minimum wage on an economy's overall rate of unemployment 
A) the effect of an increase in the alcohol tax on the market for beer 
B) the effect of foreign competition on the domestic auto industry 
C) the effect of a price war in the airline industry 
D) the effect of an increase in the minimum wage on an economy's overall rate of unemployment

Question 17

In constructing models,economists

Accepted Answer

A) leave out equations,since equations and models tend to contradict one another. 
B) ignore the long run,since models are useful only for short-run analysis. 
C) sometimes make assumptions that are contrary to features of the real world. 
D) try to include every feature of the economy. 
A) leave out equations,since equations and models tend to contradict one another. 
B) ignore the long run,since models are useful only for short-run analysis. 
C) sometimes make assumptions that are contrary to features of the real world. 
D) try to include every feature of the economy.

Question 18

Figure 2-8  
-Refer to Figure 2-8.Which point on the graph best represents the fact that,because resources are scarce,not every conceivable outcome is feasible?

Accepted Answer

A) point J 
B) point K 
C) point L 
D) point M 
A) point J 
B) point K 
C) point L 
D) point M

Question 19

Figure 2-9
 
-Refer to Figure 2-9,Panel (a).The opportunity cost of moving from point M to point L is

Accepted Answer

A) 2 donuts. 
B) 2 donuts and 4 cups of coffee. 
C) 4 donuts. 
D) 4 cups of coffee. 
A) 2 donuts. 
B) 2 donuts and 4 cups of coffee. 
C) 4 donuts. 
D) 4 cups of coffee.

Question 20

Figure 2-4  
-Refer to Figure 2-4.This economy has the ability to produce at which point(s)?

Accepted Answer

A) Q,R,T,U 
B) R,T,U 
C) R,U 
D) T 
A) Q,R,T,U 
B) R,T,U 
C) R,U 
D) T

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

Figure 2-2 -Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

In the circular-flow diagram,firms produce

Figure 2-7 -Refer to Figure 2-7.What is the opportunity cost of moving from point M to point L?

Who said,"The whole of science is nothing more than the refinement of everyday thinking"?

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters,apples (in bushels),or a combination of the two -Refer to Figure 2-14.If this society is producing at point T,

In building economic models,economists often omit

Figure 2-8 -Refer to Figure 2-8.Point K represents an outcome in which

Which of the following is an example of using the scientific method with a natural experiment?

Indiadesh is a country that produces two goods,textiles and computers.Last year,Indiadesh produced 50,000 textiles and 1300 computers.This year it produced 45,000 textiles and 1100 computers.Given no further information,which of the following events could explain this change?

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Historical episodes are

Figure 2-3 -Refer to Figure 2-3.What is flowing from rectangle 1 to oval A?

Figure 2-3 -Refer to Figure 2-3.Which shape refers to the markets for goods and services?

Which of the following statements about economic models is correct?

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

In constructing models,economists

Figure 2-8 -Refer to Figure 2-8.Which point on the graph best represents the fact that,because resources are scarce,not every conceivable outcome is feasible?

Figure 2-9 -Refer to Figure 2-9,Panel (a).The opportunity cost of moving from point M to point L is

Figure 2-4 -Refer to Figure 2-4.This economy has the ability to produce at 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