Question 1

Figure 2-10
Panel (a) Panel (b)    
-Refer to Figure 2-10, Panel (a). To gain 2 tractors by moving from point W to point V, society must sacrifice

Accepted Answer

A)  12 sofas. 
B)  employment. 
C)  efficiency. 
D)  More than one of the above is correct. 
A)  12 sofas. 
B)  employment. 
C)  efficiency. 
D)  More than one of the above is correct.

Question 2

Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a(n)

Accepted Answer

A)  pie chart. 
B)  bar graph. 
C)  time-series graph 
D)  coordinate system. 
A)  pie chart. 
B)  bar graph. 
C)  time-series graph 
D)  coordinate system.

Question 3

Figure 2-7  
-Refer to Figure 2-7. This economy cannot produce at which point(s)?

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 4

In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production?

Accepted Answer

A)  goods and services 
B)  land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit 
A)  goods and services 
B)  land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit

Question 5

When an economist evaluates a positive statement, he or she is primarily

Accepted Answer

A)  examining evidence. 
B)  acting as a scientist. 
C)  concerned with verifying how the world is. 
D)  All of the above are correct. 
A)  examining evidence. 
B)  acting as a scientist. 
C)  concerned with verifying how the world is. 
D)  All of the above are correct.

Question 6

The goal of an economist who formulates new theories is to

Accepted Answer

A)  provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. 
B)  provoke stimulating debate in scientific journals. 
C)  contribute to an understanding of how the world works. 
D)  demonstrate that economists, like other scientists, can formulate testable theories. 
A)  provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. 
B)  provoke stimulating debate in scientific journals. 
C)  contribute to an understanding of how the world works. 
D)  demonstrate that economists, like other scientists, can formulate testable theories.

Question 7

A demand curve shows the relationship

Accepted Answer

A)  between income and quantity demanded. 
B)  between price and income. 
C)  between price and quantity demanded. 
D)  among income, price, and quantity demanded. 
A)  between income and quantity demanded. 
B)  between price and income. 
C)  between price and quantity demanded. 
D)  among income, price, and quantity demanded.

Question 8

Figure 2-17  
-Refer to Figure 2-17. The curves shown are

Accepted Answer

A)  supply curves. 
B)  demand curves. 
C)  preference curves. 
D)  income-consumption curves. 
A)  supply curves. 
B)  demand curves. 
C)  preference curves. 
D)  income-consumption curves.

Question 9

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False

Question 10

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 11

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

Accepted Answer

A) True 
 B)False

Question 12

Figure 2-22  
-Refer to Figure 2-22. How are price and quantity related in this graph?

Accepted Answer

negatively

Question 13

The second number in any ordered pair is

Accepted Answer

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

Question 14

Figure 2-21  
-Refer to Figure 2-21. Which of the following could be an omitted variable in the graph?

Accepted Answer

A)  the price of snowblowers 
B)  a change in consumers' incomes 
C)  a change in the seasons 
D)  All of the above are correct. 
A)  the price of snowblowers 
B)  a change in consumers' incomes 
C)  a change in the seasons 
D)  All of the above are correct.

Question 15

Figure 2-9
Panel (a) Panel (b)    
-Refer to Figure 2-9, Panel (a). Production at point K is

Accepted Answer

A)  possible and efficient. 
B)  possible but inefficient. 
C)  impossible but efficient. 
D)  impossible and inefficient. 
A)  possible and efficient. 
B)  possible but inefficient. 
C)  impossible but efficient. 
D)  impossible and inefficient.

Question 16

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Accepted Answer

A) True 
 B)False

Question 17

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Accepted Answer

A)  households 
B)  firms 
C)  government 
D)  markets for factors of production 
A)  households 
B)  firms 
C)  government 
D)  markets for factors of production

Question 18

In the early 19th century, the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic. The villagers noticed that wherever doctors appeared, people died. Therefore, many doctors were chased away from villages, and some were even killed. This reaction to the correlation between doctors and deaths is most likely a problem of

Accepted Answer

A)  omitted variables. 
B)  reverse causality. 
C)  government propaganda. 
D)  medical incompetence. 
A)  omitted variables. 
B)  reverse causality. 
C)  government propaganda. 
D)  medical incompetence.

Question 19

One way to characterize the difference between positive statements and normative statements is as follows:

Accepted Answer

A)  Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. 
B)  Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. 
C)  Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. 
D)  Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements. 
A)  Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. 
B)  Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. 
C)  Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. 
D)  Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements.

Question 20

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

Exam 2: Thinking Like an Economist

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a). To gain 2 tractors by moving from point W to point V, society must sacrifice

Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a(n)

Figure 2-7 -Refer to Figure 2-7. This economy cannot produce at which point(s)?

In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production?

When an economist evaluates a positive statement, he or she is primarily

The goal of an economist who formulates new theories is to

A demand curve shows the relationship

Figure 2-17 -Refer to Figure 2-17. The curves shown are

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

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

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

Figure 2-22 -Refer to Figure 2-22. How are price and quantity related in this graph?

The second number in any ordered pair is

Figure 2-21 -Refer to Figure 2-21. Which of the following could be an omitted variable in the graph?

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a). Production at point K is

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

One way to characterize the difference between positive statements and normative statements is as follows:

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

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

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