Question 1

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 one car is

Accepted Answer

The answer of Figure 2-15  
-Refer to Figure 2-15....

Question 2

Figure 2-10
Panel a) Panel b)
    
-Refer to Figure 2-10, 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 tractors and sofas changes. 
B)  Production of 2 tractors and 10 sofas becomes efficient. 
C)  Production of 6 tractors and 14 sofas becomes possible. 
D)  The opportunity cost of a sofa is higher at all levels of sofa production. 
A)  The tradeoff between the production of tractors and sofas changes. 
B)  Production of 2 tractors and 10 sofas becomes efficient. 
C)  Production of 6 tractors and 14 sofas becomes possible. 
D)  The opportunity cost of a sofa is higher at all levels of sofa production.

Question 3

Duties of the Council of Economic Advisers include

Accepted Answer

A)  advising the president and writing the annual Economic Report of the President. 
B)  implementing the president's tax policies. 
C)  tracking the behavior of the nation's money supply. 
D)  All of the above are correct. 
A)  advising the president and writing the annual Economic Report of the President. 
B)  implementing the president's tax policies. 
C)  tracking the behavior of the nation's money supply. 
D)  All of the above are correct.

Question 4

Figure 2-22  
-Refer to Figure 2-22. Is a move from point A to point B considered a shift of the curve or a movement along the curve?

Accepted Answer

movement a

Question 5

A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?

Accepted Answer

A)  the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing 
B)  the tradeoff between production of jewelry and production of clothing 
C)  the opportunity cost of clothing in terms of jewelry 
D)  the effect of economic growth on production possibilities involving jewelry and clothing 
A)  the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing 
B)  the tradeoff between production of jewelry and production of clothing 
C)  the opportunity cost of clothing in terms of jewelry 
D)  the effect of economic growth on production possibilities involving jewelry and clothing

Question 6

A statement describing how the world is

Accepted Answer

A)  is a normative statement. 
B)  is a positive statement. 
C)  would only be made by an economist speaking as a policy adviser. 
D)  would only be made by an economist employed by the government. 
A)  is a normative statement. 
B)  is a positive statement. 
C)  would only be made by an economist speaking as a policy adviser. 
D)  would only be made by an economist employed by the government.

Question 7

Positive statements are

Accepted Answer

A)  prescriptive. 
B)  claims about how the world should be. 
C)  claims about how the world is. 
D)  made by economists speaking as policy advisers. 
A)  prescriptive. 
B)  claims about how the world should be. 
C)  claims about how the world is. 
D)  made by economists speaking as policy advisers.

Question 8

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A)  the impact of minimum-wage laws on employment in the fast food industry 
B)  the effect of changes in household saving rates on the growth rate of national income 
C)  the impact of faster money growth on the rate of inflation 
D)  a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth 
A)  the impact of minimum-wage laws on employment in the fast food industry 
B)  the effect of changes in household saving rates on the growth rate of national income 
C)  the impact of faster money growth on the rate of inflation 
D)  a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth

Question 10

Unemployment causes production levels to be inefficient.

Accepted Answer

A) True 
 B)False

Question 11

Table 2-2
The following table contains some production possibilities for an economy for a given year:
  
-Refer to Table 2-2. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)  6000. 
B)  5500. 
C)  5000. 
D)  4500. 
A)  6000. 
B)  5500. 
C)  5000. 
D)  4500.

Question 12

In the simple circular-flow diagram, households

Accepted Answer

A)  are the only decision makers. 
B)  own the factors of production. 
C)  are buyers of inputs. 
D)  consume only some of the goods and services that firms produce. 
A)  are the only decision makers. 
B)  own the factors of production. 
C)  are buyers of inputs. 
D)  consume only some of the goods and services that firms produce.

Question 13

In the circular-flow diagram, factors of production include land, labor, and capital.

Accepted Answer

A) True 
 B)False

Question 14

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

Accepted Answer

A) True 
 B)False

Question 15

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. Which combination of points show production possibilities only achievable with improvements in technology or increases in resources?

Accepted Answer

A)  Q, R, U, and V 
B)  S and X 
C)  T and W 
D)  None of the above is correct. 
A)  Q, R, U, and V 
B)  S and X 
C)  T and W 
D)  None of the above is correct.

Question 16

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 17

Just like models constructed in other areas of science, economic models

Accepted Answer

A)  incorporate assumptions that contradict reality. 
B)  incorporate all details of the real world. 
C)  complicate reality. 
D)  avoid the use of diagrams and equations. 
A)  incorporate assumptions that contradict reality. 
B)  incorporate all details of the real world. 
C)  complicate reality. 
D)  avoid the use of diagrams and equations.

Question 18

In the circular-flow diagram, firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 19

When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 2: Thinking Like an Economist

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 one car is

Figure 2-10 Panel a) Panel b) -Refer to Figure 2-10, 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)?

Duties of the Council of Economic Advisers include

Figure 2-22 -Refer to Figure 2-22. Is a move from point A to point B considered a shift of the curve or a movement along the curve?

A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?

A statement describing how the world is

Positive statements are

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Unemployment causes production levels to be inefficient.

Table 2-2 The following table contains some production possibilities for an economy for a given year: -Refer to Table 2-2. If the production possibilities frontier is bowed outward, then "?" could be

In the simple circular-flow diagram, households

In the circular-flow diagram, factors of production include land, labor, and capital.

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

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

Just like models constructed in other areas of science, economic models

In the circular-flow diagram, firms produce goods and services using the factors of production.

When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

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

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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