Question 1

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)  If the price of a product decreases, people's willingness to buy that product will increase. 
B)  Reducing tax rates on the wealthy would benefit the nation. 
C)  If the national saving rate were to increase, so would the rate of economic growth. 
D)  The elimination of trade restrictions would increase an economy's standard of living. 
A)  If the price of a product decreases, people's willingness to buy that product will increase. 
B)  Reducing tax rates on the wealthy would benefit the nation. 
C)  If the national saving rate were to increase, so would the rate of economic growth. 
D)  The elimination of trade restrictions would increase an economy's standard of living.

Question 2

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

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 3

In the ordered pair 10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

Accepted Answer

A) True 
 B)False

Question 4

The production possibilities frontier is used to illustrate some basic economic ideas, including

Accepted Answer

A)  scarcity. 
B)  opportunity cost. 
C)  economic growth. 
D)  All of the above are correct. 
A)  scarcity. 
B)  opportunity cost. 
C)  economic growth. 
D)  All of the above are correct.

Question 5

Figure 2-13  
-Refer to Figure 2-13. Which of the following combinations of points are both efficient and attainable for this economy?

Accepted Answer

A)  G, H 
B)  F, I, L 
C)  F, G, H, I, L 
D)  J, K 
A)  G, H 
B)  F, I, L 
C)  F, G, H, I, L 
D)  J, K

Question 6

The use of the coordinate system allows

Accepted Answer

A)  for the display of the flows of dollars, goods and services, and factors of production in an economic system. 
B)  for the display of how labor and other resources are organized in the production process. 
C)  for the display of two variables on a single graph. 
D)  for the creation of pie charts and bar graphs. 
A)  for the display of the flows of dollars, goods and services, and factors of production in an economic system. 
B)  for the display of how labor and other resources are organized in the production process. 
C)  for the display of two variables on a single graph. 
D)  for the creation of pie charts and bar graphs.

Question 7

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a positive, as opposed to a normative, statement?

Accepted Answer

A)  The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers. 
B)  Antitrust laws should be used to prevent further concentration in the wireless telephone service market. 
C)  The US Department of Justice sued AT&T to block its merger with T-Mobile. 
D)  The wireless telephone service market is too highly concentrated. 
A)  The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers. 
B)  Antitrust laws should be used to prevent further concentration in the wireless telephone service market. 
C)  The US Department of Justice sued AT&T to block its merger with T-Mobile. 
D)  The wireless telephone service market is too highly concentrated.

Question 9

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 moves from point U to point V,

Accepted Answer

A)  it gives up 40 bushels of apples to get 80 sweaters. 
B)  it gives up 140 bushels of apples to get 80 sweaters. 
C)  it gives up 80 sweaters to get 140 bushels of apples. 
D)  it gives up 80 sweaters to get 40 bushels of apples. 
A)  it gives up 40 bushels of apples to get 80 sweaters. 
B)  it gives up 140 bushels of apples to get 80 sweaters. 
C)  it gives up 80 sweaters to get 140 bushels of apples. 
D)  it gives up 80 sweaters to get 40 bushels of apples.

Question 10

Economists make assumptions to

Accepted Answer

A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand. 
A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand.

Question 11

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A)  One must imagine that the economy operates without money in order to make sense of the diagram. 
B)  The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C)  The government cannot be excluded as a decision maker in a circular-flow diagram. 
D)  All of the above are correct. 
A)  One must imagine that the economy operates without money in order to make sense of the diagram. 
B)  The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C)  The government cannot be excluded as a decision maker in a circular-flow diagram. 
D)  All of the above are correct.

Question 12

The slope of a line is equal to

Accepted Answer

A)  rise divided by run. 
B)  run divided by rise. 
C)  rise minus run. 
D)  rise plus run. 
A)  rise divided by run. 
B)  run divided by rise. 
C)  rise minus run. 
D)  rise plus run.

Question 13

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 14

Figure 2-20
Relationship Between Years of Education and Annual Income  
-Refer to Figure 2-20. The graph above is a

Accepted Answer

A)  bar graph 
B)  scatterplot 
C)  pie chart 
D)  time series analysis 
A)  bar graph 
B)  scatterplot 
C)  pie chart 
D)  time series analysis

Question 15

The three main factors of production, or categories of inputs, used by firms to produce goods and services are

Accepted Answer

land, labo

Question 16

Figure 2-17  
-Refer to Figure 2-17. The movement from point A to point B is an)

Accepted Answer

A)  shift of the demand curve. 
B)  indication of a change in preferences for grapes. 
C)  movement along the demand curve. 
D)  indication of an increase in income. 
A)  shift of the demand curve. 
B)  indication of a change in preferences for grapes. 
C)  movement along the demand curve. 
D)  indication of an increase in income.

Question 17

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 18

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. The opportunity cost of moving from point U to point R is

Accepted Answer

A)  60 bushels of apples. 
B)  80 bushels of apples. 
C)  80 sweaters. 
D)  160 sweaters. 
A)  60 bushels of apples. 
B)  80 bushels of apples. 
C)  80 sweaters. 
D)  160 sweaters.

Question 19

Points inside the production possibilities frontier represent inefficient levels of production.

Accepted Answer

A) True 
 B)False

Question 20

The art in scientific thinking -- whether in chemistry, economics, or biology -- is

Accepted Answer

A)  the design and implementation of laboratory experiments. 
B)  knowing when to stop collecting data and when to start analyzing the data. 
C)  deciding which assumptions to make. 
D)  being able to mathematically model natural phenomena. 
A)  the design and implementation of laboratory experiments. 
B)  knowing when to stop collecting data and when to start analyzing the data. 
C)  deciding which assumptions to make. 
D)  being able to mathematically model natural phenomena.

Exam 2: Thinking Like an Economist

Which of the following is an example of a normative, as opposed to positive, statement?

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

In the ordered pair 10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

The production possibilities frontier is used to illustrate some basic economic ideas, including

Figure 2-13 -Refer to Figure 2-13. Which of the following combinations of points are both efficient and attainable for this economy?

The use of the coordinate system allows

Evaluating normative statements involves values as well as facts.

Which of the following is a positive, as opposed to a normative, statement?

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 moves from point U to point V,

Economists make assumptions to

Which of the following statements about the circular-flow diagram is correct?

The slope of a line is equal to

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?

Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. The graph above is a

The three main factors of production, or categories of inputs, used by firms to produce goods and services are

Figure 2-17 -Refer to Figure 2-17. The movement from point A to point B is an)

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

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. The opportunity cost of moving from point U to point R is

Points inside the production possibilities frontier represent inefficient levels of production.

The art in scientific thinking -- whether in chemistry, economics, or biology -- 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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