Question 1

Figure 2-9
Panel (a)  Panel (b) 
  
-Refer to Figure 2-9, Panel (a)  and Panel (b) . A shift of the economy's production possibilities frontier from Panel (a)  to Panel (b)  could be caused by

Accepted Answer

A)   unemployment.
B)   an improvement in donut production technology.
C)   an improvement in coffee production technology.
D)   an improvement in both donut and coffee production technology.E) A) and C)
F) B) and C)

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 pizzas from 4,000 to 6,000?

Accepted Answer

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

Question 3

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.E) All of the above
F) B) and D)

Question 4

Economic models

Accepted Answer

A)   are people who act out the behavior of firms and households so that economists can study this behavior.
B)   are usually detailed replications of reality.
C)   incorporate simplifying assumptions that often contradict reality, but also help economists better understand reality.
D)   are useful to researchers but not to teachers because economic models omit many details of the real-world economy.E) All of the above
F) A) and B)

Question 5

Figure 2-9
Panel (a)  Panel (b) 
  
-Refer to Figure 2-9, Panel (a) . To gain 2 donuts by moving from point L to point M, society must sacrifice

Accepted Answer

A)   efficiency.
B)   employment.
C)   4 cups of coffee.
D)   More than one of the above is correct.E) A) and D)
F) C) and D)

Question 6

Figure 2-3 
-Refer to Figure 2-3. Which shape refers to the markets for goods and services?

Accepted Answer

A)   oval A
B)   oval B
C)   rectangle 1
D)   rectangle 2E) B) and C)
F) A) and D)

Question 7

When a variable that is named on an axis of a graph changes, the curve shifts.

Accepted Answer

A) True 
 B)False

Question 8

Table 2-5
 
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?

Accepted Answer

A)   1600 bushels of corn and 300 bushels of wheat
B)   1400 bushels of corn and 800 bushels of wheat
C)   1000 bushels of corn and 2000 bushels of wheat
D)   600 bushels of corn and 1800 bushels of wheatE) A) and B)
F) B) and D)

Question 9

Production possibilities frontiers are usually bowed outward. This is because

Accepted Answer

A)   the more resources a society uses to produce one good, the fewer resources it has available to produce another good.
B)   the opportunity cost of producing a good decreases as more and more of that good is produced.
C)   of the effects of technological change.
D)   resources are specialized; that is, some are better at producing particular goods rather than other goods.E) A) and B)
F) C) and D)

Question 10

The effects of foreign competition on the U.S. textile industry would be studied by a microeconomist rather than a macroeconomist.

Accepted Answer

A) True 
 B)False

Question 11

The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

Accepted Answer

A)   wages
B)   income
C)   capital
D)   rentE) All of the above
F) C) and D)

Question 12

Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)   Inflation is more harmful to the economy than unemployment is.
B)   If welfare payments increase, the world will be a better place.
C)   Prices rise when the government prints too much money.
D)   When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.E) A) and B)
F) B) and C)

Question 14

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Accepted Answer

A)   Indiadesh decreased unemployment.
B)   Indiadesh experienced an improvement in textile-making technology.
C)   Indiadesh experienced an improvement in computer-making technology.
D)   Indiadesh experienced a reduction in resources.E) B) and C)
F) A) and D)

Question 15

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Accepted Answer

A)   Most people who study economics are not very bright.
B)   Good economists must possess a rare combination of gifts.
C)   Economics is quite boring; hence, people tend to lose interest in it before mastering it.
D)   Good thinkers become frustrated with economics because it does not make use of the scientific method.E) B) and D)
F) B) and C)

Question 16

Figure 2-10
Panel (a)  Panel (b) 
  
-Refer to Figure 2-10, Panel (a) . The opportunity cost of one sofa is highest when the economy produces

Accepted Answer

A)   0 sofas.
B)   12 sofas.
C)   20 sofas.
D)   24 sofas.E) A) and C)
F) All of the above

Question 17

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 growthE) All of the above
F) C) and D)

Question 18

Positive statements are not

Accepted Answer

A)   descriptive.
B)   prescriptive.
C)   claims about how the world is.
D)   made by economists speaking as scientists.E) A) and D)
F) A) and C)

Question 19

Who would be more likely to study the effects of rent control on housing in New York City, a macroeconomist or a microeconomist?

Accepted Answer

The answer of Who would be more likely to study...

Question 20

Is the following a positive or normative statement? The federal minimum wage is lower than many state minimum wages.

Accepted Answer

The answer of Is the following a positive or normative...

Exam 2: Thinking Like an Economist

When a variable that is named on an axis of a graph changes, the curve shifts.

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

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Is the following a positive or normative statement? The federal minimum wage is lower than many state minimum wages.

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Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?

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Production possibilities frontiers are usually bowed outward. This is because

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Who would be more likely to study the effects of rent control on housing in New York City, a macroeconomist or a microeconomist?

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Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

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

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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 pizzas from 4,000 to 6,000?

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Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) . To gain 2 donuts by moving from point L to point M, society must sacrifice

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

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Economic models

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Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a) . The opportunity cost of one sofa is highest when the economy produces

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The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

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Figure 2-3 -Refer to Figure 2-3. Which shape refers to the markets for goods and services?

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Positive statements are not

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The effects of foreign competition on the U.S. textile industry would be studied by a microeconomist rather than a macroeconomist.

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Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) and Panel (b) . A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

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How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

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Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

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