Question 1

Assumptions can simplify the complex world and make it easier to understand.

Accepted Answer

A) True 
 B)False

Question 2

Figure 2-9
Panel a) Panel b)
    
-Refer to Figure 2-9, Panel a). The opportunity cost of one cup of coffee is highest when the economy produces

Accepted Answer

A)  0 cups of coffee. 
B)  2 cups of coffee. 
C)  4 cups of coffee. 
D)  6 cups of coffee. 
A)  0 cups of coffee. 
B)  2 cups of coffee. 
C)  4 cups of coffee. 
D)  6 cups of coffee.

Question 3

When a relevant variable that is not named on either axis changes,

Accepted Answer

A)  there will be a movement along the curve. 
B)  the curve will rotate clockwise. 
C)  the curve will be unaffected since only the variables on the axis affect the curve. 
D)  the curve will shift. 
A)  there will be a movement along the curve. 
B)  the curve will rotate clockwise. 
C)  the curve will be unaffected since only the variables on the axis affect the curve. 
D)  the curve will shift.

Question 4

The scientific method is applicable to studying

Accepted Answer

A)  natural sciences, but not social sciences. 
B)  social sciences, but not natural sciences. 
C)  both natural sciences and social sciences. 
D)  None of the above is correct. 
A)  natural sciences, but not social sciences. 
B)  social sciences, but not natural sciences. 
C)  both natural sciences and social sciences. 
D)  None of the above is correct.

Question 5

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

Accepted Answer

A) True 
 B)False

Question 6

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

Accepted Answer

A)  wages 
B)  land 
C)  capital 
D)  goods and services sold 
A)  wages 
B)  land 
C)  capital 
D)  goods and services sold

Question 7

Figure 2-7  
-Refer to Figure 2-7. Inefficient production is represented by which points)?

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 8

Production is efficient if the economy is producing at a point

Accepted Answer

A)  on the production possibilities frontier. 
B)  outside the production possibilities frontier. 
C)  on or inside the production possibilities frontier. 
D)  inside the production possibilities frontier. 
A)  on the production possibilities frontier. 
B)  outside the production possibilities frontier. 
C)  on or inside the production possibilities frontier. 
D)  inside the production possibilities frontier.

Question 9

The language of economics is

Accepted Answer

A)  needlessly arcane. 
B)  valuable because it provides a new and useful way of learning about the world. 
C)  easy to learn within a day. 
D)  unnecessary to learn for a thorough understanding of economics. 
A)  needlessly arcane. 
B)  valuable because it provides a new and useful way of learning about the world. 
C)  easy to learn within a day. 
D)  unnecessary to learn for a thorough understanding of economics.

Question 10

A statement describing how the world should be

Accepted Answer

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

Question 11

Which of the following is not held constant when looking at an individual's demand curve?

Accepted Answer

A)  income 
B)  price 
C)  preferences 
D)  the availability of alternative goods 
A)  income 
B)  price 
C)  preferences 
D)  the availability of alternative goods

Question 12

Economic growth causes a production possibilities frontier to shift outward.

Accepted Answer

A) True 
 B)False

Question 13

Figure 2-23  
-Refer to Figure 2-23. It is possible for this economy to produce 45 doghouses and 30 dishwashers.

Accepted Answer

A) True 
 B)False

Question 14

A normative economic statement such as "The minimum wage should be abolished"

Accepted Answer

A)  would likely be made by an economist acting as a scientist. 
B)  would require values and data to be evaluated. 
C)  would require data but not values to be evaluated. 
D)  could not be evaluated by economists acting as policy advisers. 
A)  would likely be made by an economist acting as a scientist. 
B)  would require values and data to be evaluated. 
C)  would require data but not values to be evaluated. 
D)  could not be evaluated by economists acting as policy advisers.

Question 15

Figure 2-10
Panel a) Panel b)
    
-Refer to Figure 2-10, Panel a). The movement from point W to point Y could be caused by

Accepted Answer

A)  economic growth. 
B)  unemployment. 
C)  an improvement in efficiency. 
D)  an advance in production technology. 
A)  economic growth. 
B)  unemployment. 
C)  an improvement in efficiency. 
D)  an advance in production technology.

Question 16

The nation's antitrust laws are enforced by economists at the Department of

Accepted Answer

A)  Labor. 
B)  Health and Human Services. 
C)  Justice. 
D)  Treasury. 
A)  Labor. 
B)  Health and Human Services. 
C)  Justice. 
D)  Treasury.

Question 17

Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1050 units of food and 47 machines. Which of the following statements is correct?

Accepted Answer

A)  Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. 
B)  Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C)  In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D)  The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food. 
A)  Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. 
B)  Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C)  In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D)  The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food.

Question 18

Where can an economy not produce?

Accepted Answer

A)  inside its production possibilities frontier 
B)  on its production possibilities frontier 
C)  outside its production possibilities frontier 
D)  at the endpoints of its production possibilities frontier 
A)  inside its production possibilities frontier 
B)  on its production possibilities frontier 
C)  outside its production possibilities frontier 
D)  at the endpoints of its production possibilities frontier

Question 19

Figure 2-23  
-Refer to Figure 2-23. It is possible for this economy to produce 30 doghouses and 20 dishwashers.

Accepted Answer

A) True 
 B)False

Question 20

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Assumptions can simplify the complex world and make it easier to understand.

Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a). The opportunity cost of one cup of coffee is highest when the economy produces

When a relevant variable that is not named on either axis changes,

The scientific method is applicable to studying

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

Figure 2-7 -Refer to Figure 2-7. Inefficient production is represented by which points)?

Production is efficient if the economy is producing at a point

The language of economics is

A statement describing how the world should be

Which of the following is not held constant when looking at an individual's demand curve?

Economic growth causes a production possibilities frontier to shift outward.

Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 45 doghouses and 30 dishwashers.

A normative economic statement such as "The minimum wage should be abolished"

Figure 2-10 Panel a) Panel b) -Refer to Figure 2-10, Panel a). The movement from point W to point Y could be caused by

The nation's antitrust laws are enforced by economists at the Department of

Where can an economy not produce?

Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 30 doghouses and 20 dishwashers.

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

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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