Question 1

Which of the following trade-offs does the production possibilities frontier illustrate?

Accepted Answer

A)   If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption.
B)   Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other.
C)   For an economy to consume more of one good, it must stop consuming the other good entirely.
D)   For an economy to produce and consume goods, it must sacrifice environmental quality.E) A) and B)
F) A) and D)

Question 2

When studying the effects of public policy changes, economists

Accepted Answer

A)   always refrain from making assumptions.
B)   sometimes make different assumptions about the short run and the long run.
C)   consider only the direct effects of those policy changes and not the indirect effects.
D)   consider only the short-run effects of those policy changes and not the long-run effects.E) A) and B)
F) B) and C)

Question 3

In the circular-flow diagram, firms consume all the goods and services that they produce.

Accepted Answer

A) True 
 B)False

Question 4

Table 2-1
The following table contains some production possibilities for an economy for a given month.
 
-Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)   400.
B)   450.
C)   600.
D)   750.E) B) and C)
F) All of the above

Question 5

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Accepted Answer

A) True 
 B)False

Question 6

According to economist John Maynard Keynes, a great economist must also be an)

Accepted Answer

A)   mathematician.
B)   historian.
C)   philosopher.
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 7

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) A) and C)

Question 8

Economic models omit many details to allow us to see what is truly important.

Accepted Answer

A) True 
 B)False

Question 9

Figure 2-23 
-Refer to Figure 2-23. Points A, B, and D represent efficient outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 10

Figure 2-3 
-Refer to Figure 2-3. What do the ovals represent in the figure?

Accepted Answer

Market for Goods and...

Question 11

Figure 2-3 
-Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Accepted Answer

government...

Question 12

Suppose an economist advises a city's mayor to begin charging drivers a fee to drive on a busy highway during congested times. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario?

Accepted Answer

A)   This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons.
B)   This is a common occurrence. The policymaker usually disregards an economist's advice because they do not believe it is the most efficient policy.
C)   This is an unlikely occurrence. Most of the time, policymakers follow the advice of economists and institute the most efficient policies.
D)   This would never happen. Policymakers always follow the advice of economists.E) B) and C)
F) C) and D)

Question 13

In the ordered pair 10,30), 10 is the y-coordinate and 30 is the z-coordinate.

Accepted Answer

A) True 
 B)False

Question 14

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Accepted Answer

A)   This month, the economy reduced the unemployment of its resources.
B)   This month, the economy experienced an improvement in technology.
C)   This month, the economy experienced an increase in resources
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 15

Unemployment would cause an economy to

Accepted Answer

A)   produce inside its production possibilities frontier.
B)   produce on its production possibilities frontier.
C)   produce outside its production possibilities frontier.
D)   experience an inward shift of its production possibilities frontier.E) B) and C)
F) A) and D)

Question 16

Figure 2-4 
-Refer to Figure 2-4. Efficient production is represented by which points) ?

Accepted Answer

A)   Q, R, U
B)   R, T, U
C)   R, U
D)   S, TE) A) and D)
F) A) and C)

Question 17

Economists believe that production possibilities frontiers are often bowed because

Accepted Answer

A)   trade-offs inevitably create unemployment.
B)   resources are not completely adaptable.
C)   opportunity costs are constant.
D)   of improvements in technology.E) None of the above
F) C) and D)

Question 18

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

Accepted Answer

A) True 
 B)False

Question 19

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Accepted Answer

A) True 
 B)False

Question 20

Normative conclusions

Accepted Answer

A)   come from positive analysis alone.
B)   are based on ignorance of positive analysis.
C)   involve value judgments.
D)   reflect the economist's role as scientist.E) A) and D)
F) C) and D)

Exam 2: Thinking Like an Economist

Which of the following trade-offs does the production possibilities frontier illustrate?

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Figure 2-23 -Refer to Figure 2-23. Points A, B, and D represent efficient outcomes for this economy.

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

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According to economist John Maynard Keynes, a great economist must also be an)

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The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

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Normative conclusions

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Economists believe that production possibilities frontiers are often bowed because

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In the ordered pair 10,30), 10 is the y-coordinate and 30 is the z-coordinate.

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Figure 2-3 -Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Correct Answerverifiedgovernment...View AnswerShow Answer

Table 2-1 The following table contains some production possibilities for an economy for a given month. -Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Correct AnswerverifiedShow Answer

When studying the effects of public policy changes, economists

Correct AnswerverifiedShow Answer

Unemployment would cause an economy to

Correct AnswerverifiedShow Answer

Suppose an economist advises a city's mayor to begin charging drivers a fee to drive on a busy highway during congested times. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario?

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4. Efficient production is represented by which points) ?

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Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

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Economic models omit many details to allow us to see what is truly important.

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Figure 2-3 -Refer to Figure 2-3. What do the ovals represent in the figure?

Correct AnswerverifiedMarket for Goods and...View AnswerShow Answer

In the circular-flow diagram, firms consume all the goods and services that they produce.

Correct AnswerverifiedShow Answer

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Correct AnswerverifiedShow Answer

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

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government...
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Market for Goods and...
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