Question 1

When constructing a production possibilities frontier, which of the following assumptions is not made?

Accepted Answer

A)  The economy produces only two goods or two types of goods. 
B)  Firms produce goods using factors of production. 
C)  The technology available to firms is given. 
D)  The quantities of the factors of production that are available are increasing over the relevant time period. 
A)  The economy produces only two goods or two types of goods. 
B)  Firms produce goods using factors of production. 
C)  The technology available to firms is given. 
D)  The quantities of the factors of production that are available are increasing over the relevant time period.

Question 2

Table 2-6  
-Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

Accepted Answer

The answer of Table 2-6  
-Refer to Table 2-6....

Question 3

Policies such as rent control and trade barriers persist

Accepted Answer

A)  because economists are about evenly divided as to the merits of those policies. 
B)  because almost all economists agree that those policies have no discernible economic effects. 
C)  because almost all economists agree that those policies are desirable. 
D)  despite the fact that almost all economists agree that those policies are undesirable. 
A)  because economists are about evenly divided as to the merits of those policies. 
B)  because almost all economists agree that those policies have no discernible economic effects. 
C)  because almost all economists agree that those policies are desirable. 
D)  despite the fact that almost all economists agree that those policies are undesirable.

Question 4

Economists usually have to make do with whatever data the world happens to give them.

Accepted Answer

A) True 
 B)False

Question 5

Microeconomics and macroeconomics are closely intertwined.

Accepted Answer

A) True 
 B)False

Question 6

Figure 2-22  
-Refer to Figure 2-22. What are the coordinates of point C?

Accepted Answer

The answer of Figure 2-22  
-Refer to Figure 2-22....

Question 7

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 8

Which two groups of decision makers are included in the simple circular-flow diagram?

Accepted Answer

A)  markets and government 
B)  households and government 
C)  firms and government 
D)  households and firms 
A)  markets and government 
B)  households and government 
C)  firms and government 
D)  households and firms

Question 9

Figure 2-8  
-Refer to Figure 2-8. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails,

Accepted Answer

A)  remains constant. 
B)  increases. 
C)  decreases. 
D)  This answer cannot be determined from the graph. 
A)  remains constant. 
B)  increases. 
C)  decreases. 
D)  This answer cannot be determined from the graph.

Question 10

Microeconomics is the study of

Accepted Answer

A)  how money affects the economy. 
B)  how individual households and firms make decisions. 
C)  how government affects the economy. 
D)  how the economy as a whole works. 
A)  how money affects the economy. 
B)  how individual households and firms make decisions. 
C)  how government affects the economy. 
D)  how the economy as a whole works.

Question 11

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 12

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 is producing 1050 units of food and 52 machines. Which of the following events could not explain the increase in output?

Accepted Answer

A)  a reduction in unemployment 
B)  an increase in available labor 
C)  an improvement in technology 
D)  Any of these events could explain the increase in output. 
A)  a reduction in unemployment 
B)  an increase in available labor 
C)  an improvement in technology 
D)  Any of these events could explain the increase in output.

Question 13

In addition to advising the president, one duty of the Council of Economic Advisers is to

Accepted Answer

A)  prepare the federal budget. 
B)  write government regulations. 
C)  advise Congress on economic matters. 
D)  write the annual Economic Report of the President. 
A)  prepare the federal budget. 
B)  write government regulations. 
C)  advise Congress on economic matters. 
D)  write the annual Economic Report of the President.

Question 14

In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now?

Accepted Answer

A)  The economy experiences economic growth. 
B)  There is a technological advance in the toy industry, but the greeting card industry experiences no such advance. 
C)  There is a technological advance in the greeting card industry, but the toy industry experiences no such advance. 
D)  All of the above are correct. 
A)  The economy experiences economic growth. 
B)  There is a technological advance in the toy industry, but the greeting card industry experiences no such advance. 
C)  There is a technological advance in the greeting card industry, but the toy industry experiences no such advance. 
D)  All of the above are correct.

Question 15

Suppose that someone makes the argument that because empty alcohol containers are found at many accidents, the containers cause accidents. This would be an example of

Accepted Answer

A)  sound logic. 
B)  reverse causality. 
C)  omitted variables. 
D)  bias. 
A)  sound logic. 
B)  reverse causality. 
C)  omitted variables. 
D)  bias.

Question 16

In the ordered pair (5, 3), 3 is the

Accepted Answer

A)  horizontal location of the point. 
B)  the slope. 
C)  the x-coordinate. 
D)  the y-coordinate. 
A)  horizontal location of the point. 
B)  the slope. 
C)  the x-coordinate. 
D)  the y-coordinate.

Question 17

For economists, historical episodes

Accepted Answer

A)  are not worthy of study because they offer few insights into current economic events and problems. 
B)  are not worthy of study because laboratory experiments provide more reliable data. 
C)  are worthy of study because economists rely entirely on observation, rather than on theory. 
D)  are worthy of study because they serve as valuable substitutes for laboratory experiments. 
A)  are not worthy of study because they offer few insights into current economic events and problems. 
B)  are not worthy of study because laboratory experiments provide more reliable data. 
C)  are worthy of study because economists rely entirely on observation, rather than on theory. 
D)  are worthy of study because they serve as valuable substitutes for laboratory experiments.

Question 18

Normative statements are

Accepted Answer

A)  not usually made by economists. 
B)  claims about how the world should be. 
C)  claims about how variables in the economy normally behave. 
D)  pessimistic interpretations of the economy. 
A)  not usually made by economists. 
B)  claims about how the world should be. 
C)  claims about how variables in the economy normally behave. 
D)  pessimistic interpretations of the economy.

Question 19

Figure 2-1  
-Refer to Figure 2-1. Which arrow represents the flow of income payments?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 20

According to the circular flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn,

Accepted Answer

A)  the $50 represents a cost of production for Denny's firm. 
B)  the $50 represents wages, rent, and profit to Denny's firm. 
C)  Denny acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton. 
D)  Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton. 
A)  the $50 represents a cost of production for Denny's firm. 
B)  the $50 represents wages, rent, and profit to Denny's firm. 
C)  Denny acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton. 
D)  Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton.

Exam 2: Thinking Like an Economist

When constructing a production possibilities frontier, which of the following assumptions is not made?

Table 2-6 -Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

Policies such as rent control and trade barriers persist

Economists usually have to make do with whatever data the world happens to give them.

Microeconomics and macroeconomics are closely intertwined.

Figure 2-22 -Refer to Figure 2-22. What are the coordinates of point C?

A statement describing how the world is

Which two groups of decision makers are included in the simple circular-flow diagram?

Figure 2-8 -Refer to Figure 2-8. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails,

Microeconomics is the study of

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

In addition to advising the president, one duty of the Council of Economic Advisers is to

Suppose that someone makes the argument that because empty alcohol containers are found at many accidents, the containers cause accidents. This would be an example of

In the ordered pair (5, 3), 3 is the

For economists, historical episodes

Normative statements are

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of income payments?

According to the circular flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn,

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters