Question 1

Figure 2-3  
-Refer to Figure 2-3. What do the ovals represent in the figure?

Accepted Answer

Market for Goods and

Question 2

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Accepted Answer

A)  This month, the economy reduced the unemployment of its resources. 
B)  This month, the economy experienced an improvement in technology. 
C)  This month, the economy experienced an increase in resources 
D)  All of the above are correct. 
A)  This month, the economy reduced the unemployment of its resources. 
B)  This month, the economy experienced an improvement in technology. 
C)  This month, the economy experienced an increase in resources 
D)  All of the above are correct.

Question 3

Figure 2-3  
-Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Accepted Answer

government

Question 4

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 5

In the circular-flow diagram, firms consume all the goods and services that they produce.

Accepted Answer

A) True 
 B)False

Question 6

In the ordered pair 10,30), 10 is the y-coordinate and 30 is the z-coordinate.

Accepted Answer

A) True 
 B)False

Question 7

Economists believe that production possibilities frontiers are often bowed because

Accepted Answer

A)  trade-offs inevitably create unemployment. 
B)  resources are not completely adaptable. 
C)  opportunity costs are constant. 
D)  of improvements in technology. 
A)  trade-offs inevitably create unemployment. 
B)  resources are not completely adaptable. 
C)  opportunity costs are constant. 
D)  of improvements in technology.

Question 8

Table 2-1
The following table contains some production possibilities for an economy for a given month.
  
-Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)  400. 
B)  450. 
C)  600. 
D)  750. 
A)  400. 
B)  450. 
C)  600. 
D)  750.

Question 9

According to economist John Maynard Keynes, a great economist must also be an)

Accepted Answer

A)  mathematician. 
B)  historian. 
C)  philosopher. 
D)  All of the above are correct. 
A)  mathematician. 
B)  historian. 
C)  philosopher. 
D)  All of the above are correct.

Question 10

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

Accepted Answer

A) True 
 B)False

Question 11

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Accepted Answer

A) True 
 B)False

Question 12

Normative conclusions

Accepted Answer

A)  come from positive analysis alone. 
B)  are based on ignorance of positive analysis. 
C)  involve value judgments. 
D)  reflect the economist's role as scientist. 
A)  come from positive analysis alone. 
B)  are based on ignorance of positive analysis. 
C)  involve value judgments. 
D)  reflect the economist's role as scientist.

Question 13

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Accepted Answer

A) True 
 B)False

Question 14

Suppose an economist advises a city's mayor to begin charging drivers a fee to drive on a busy highway during congested times. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario?

Accepted Answer

A)  This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons. 
B)  This is a common occurrence. The policymaker usually disregards an economist's advice because they do not believe it is the most efficient policy. 
C)  This is an unlikely occurrence. Most of the time, policymakers follow the advice of economists and institute the most efficient policies. 
D)  This would never happen. Policymakers always follow the advice of economists. 
A)  This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons. 
B)  This is a common occurrence. The policymaker usually disregards an economist's advice because they do not believe it is the most efficient policy. 
C)  This is an unlikely occurrence. Most of the time, policymakers follow the advice of economists and institute the most efficient policies. 
D)  This would never happen. Policymakers always follow the advice of economists.

Question 15

In the markets for factors of production in the circular-flow diagram,

Accepted Answer

A)  households provide firms with labor, land, and capital. 
B)  households provide firms with savings for investment. 
C)  firms provide households with goods and services. 
D)  firms provide households with revenue. 
A)  households provide firms with labor, land, and capital. 
B)  households provide firms with savings for investment. 
C)  firms provide households with goods and services. 
D)  firms provide households with revenue.

Question 16

When studying the effects of public policy changes, economists

Accepted Answer

A)  always refrain from making assumptions. 
B)  sometimes make different assumptions about the short run and the long run. 
C)  consider only the direct effects of those policy changes and not the indirect effects. 
D)  consider only the short-run effects of those policy changes and not the long-run effects. 
A)  always refrain from making assumptions. 
B)  sometimes make different assumptions about the short run and the long run. 
C)  consider only the direct effects of those policy changes and not the indirect effects. 
D)  consider only the short-run effects of those policy changes and not the long-run effects.

Question 17

Figure 2-4  
-Refer to Figure 2-4. Efficient production is represented by which points)?

Accepted Answer

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

Question 18

Which of the following trade-offs does the production possibilities frontier illustrate?

Accepted Answer

A)  If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption. 
B)  Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other. 
C)  For an economy to consume more of one good, it must stop consuming the other good entirely. 
D)  For an economy to produce and consume goods, it must sacrifice environmental quality. 
A)  If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption. 
B)  Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other. 
C)  For an economy to consume more of one good, it must stop consuming the other good entirely. 
D)  For an economy to produce and consume goods, it must sacrifice environmental quality.

Question 19

Economic models omit many details to allow us to see what is truly important.

Accepted Answer

A) True 
 B)False

Question 20

Figure 2-23  
-Refer to Figure 2-23. Points A, B, and D represent efficient outcomes for this economy.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Figure 2-3 -Refer to Figure 2-3. What do the ovals represent in the figure?

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Figure 2-3 -Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Unemployment would cause an economy to

In the circular-flow diagram, firms consume all the goods and services that they produce.

In the ordered pair 10,30), 10 is the y-coordinate and 30 is the z-coordinate.

Economists believe that production possibilities frontiers are often bowed because

Table 2-1 The following table contains some production possibilities for an economy for a given month. -Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

According to economist John Maynard Keynes, a great economist must also be an)

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Normative conclusions

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Suppose an economist advises a city's mayor to begin charging drivers a fee to drive on a busy highway during congested times. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario?

In the markets for factors of production in the circular-flow diagram,

When studying the effects of public policy changes, economists

Figure 2-4 -Refer to Figure 2-4. Efficient production is represented by which points)?

Which of the following trade-offs does the production possibilities frontier illustrate?

Economic models omit many details to allow us to see what is truly important.

Figure 2-23 -Refer to Figure 2-23. Points A, B, and D represent efficient outcomes for this economy.

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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