Question 1

Economists face an obstacle that many other scientists do not face.What is that obstacle?

Accepted Answer

A)   It is often difficult to formulate theories in economics.
B)   It is often difficult and sometimes impossible to perform experiments in economics.
C)   Economics cannot be addressed objectively;it must be addressed subjectively.
D)   The scientific method cannot be applied to the study of economics.E) A) and B)
F) C) and D)

Question 2

Figure 2-3 
-Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

Accepted Answer

A)   J
B)   L
C)   M
D)   NE) A) and D)
F) None of the above

Question 3

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Accepted Answer

A)   will never be able to produce.
B)   can produce using all available resources and technology.
C)   can produce using some portion,but not all,of its resources and technology.
D)   may be able to produce in the future with more resources and/or superior technology.E) All of the above
F) B) and C)

Question 4

Figure 2-15
Relationship between Price and Cups of Coffee 
-Refer to Figure 2-15.Which of the following could result in a movement from point A to point B?

Accepted Answer

A)   a change in income
B)   a change in preferences
C)   a change in the price of coffee
D)   a change in the price of teaE) A) and C)
F) A) and D)

Question 5

Figure 2-10 
-Refer to Figure 2-10.The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A)   simultaneous technological advances in the book and DVD industries.
B)   a reallocation of resources away from the production of DVDs and toward the production of books.
C)   economic growth.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 6

Just like models constructed in other areas of science,economic models

Accepted Answer

A)   incorporate assumptions that contradict reality.
B)   incorporate all details of the real world.
C)   complicate reality.
D)   avoid the use of diagrams and equations.E) B) and C)
F) C) and D)

Question 7

If Erin's income decreases and,as a result,she chooses to buy fewer milkshakes per month at each price,then her demand curve will

Accepted Answer

A)   shift to the right.
B)   shift to the left.
C)   not shift;instead,Erin will move along her demand curve downward and to the right.
D)   not shift;instead,Erin will move along her demand curve upward and to the left.E) A) and B)
F) A) and C)

Question 8

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 profit.E) A) and B)
F) A) and C)

Question 9

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)   the effect of an increase in the alcohol tax on the market for beer
B)   the effect of foreign competition on the domestic auto industry
C)   the effect of a price war in the airline industry
D)   the effect of an increase in the minimum wage on an economy's overall rate of unemploymentE) None of the above
F) All of the above

Question 10

Economists,like mathematicians,physicists,and biologists,

Accepted Answer

A)   make use of the scientific method.
B)   try to address their subject with a scientist's objectivity.
C)   devise theories,collect data,and then analyze these data in an attempt to verify or refute their theories.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 11

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A)   One must imagine that the economy operates without money in order to make sense of the diagram.
B)   The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms.
C)   The government cannot be excluded as a decision maker in a circular-flow diagram.
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 12

Almost all economists agree that rent control

Accepted Answer

A)   has no effect on the rental income of landlords.
B)   allows the market for housing to work more efficiently.
C)   adversely affects the availability and quality of housing.
D)   is a very inexpensive way to help the most needy members of society.E) B) and D)
F) All of the above

Question 13

John Maynard Keynes observed that during rare times of deep financial and economic crisis,when the "invisible hand" has temporarily ceased to function,

Accepted Answer

A)   there is a more urgent need for government to play an active role in restoring markets to their healthy function.
B)   government should avoid intervening in the market and wait patiently for proper market function to return.
C)   economists need to re-evaluate all of their basic principles.
D)   the economy can rely on entrepreneurs to take creative actions to end the crisis.E) All of the above
F) C) and D)

Question 14

In the simple circular-flow diagram,

Accepted Answer

A)   households own the factors of production.
B)   households buy all the goods and services that firms produce.
C)   land,labor,and capital flow from households to firms.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 15

Figure 2-4 
-Refer to Figure 2-4.It is not possible for this economy to produce at point

Accepted Answer

A)   V.
B)   W.
C)   Y.
D)   Z.E) None of the above
F) B) and C)

Question 16

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 17

An economic outcome is said to be efficient if the economy is

Accepted Answer

A)   using all of the scarce resources it has available.
B)   conserving on resources,rather than using all available resources.
C)   getting all it can get from the scarce resources it has available.
D)   able to produce more than what is currently being produced without additional resources.E) None of the above
F) A) and D)

Question 18

Figure 2-8

-Refer to Figure 2-8,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.E) None of the above
F) C) and D)

Question 19

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Accepted Answer

A)   is useless,since the real world has many countries trading many goods.
B)   can be useful only in situations involving two countries and two goods.
C)   can be useful in the classroom,but is useless in the real world.
D)   can be useful in helping economists understand the complex world of international trade involving many countries and many goods.E) C) and D)
F) A) and B)

Question 20

Which of the following is not correct?

Accepted Answer

A)   Evaluating statements about how the world should be involves values as well as facts.
B)   Positive statements can,in principle,be confirmed or refuted by examining evidence.
C)   Normative statements can be judged using data alone.
D)   Deciding what is good or bad policy is not just a matter of science.E) C) and D)
F) A) and B)

Exam 2: Thinking Like an Economist

Figure 2-8 -Refer to Figure 2-8,Panel (a) .Production at point K is

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Figure 2-3 -Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

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An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

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Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

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In the simple circular-flow diagram,

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If Erin's income decreases and,as a result,she chooses to buy fewer milkshakes per month at each price,then her demand curve will

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Just like models constructed in other areas of science,economic models

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Figure 2-15 Relationship between Price and Cups of Coffee -Refer to Figure 2-15.Which of the following could result in a movement from point A to point B?

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John Maynard Keynes observed that during rare times of deep financial and economic crisis,when the "invisible hand" has temporarily ceased to function,

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Figure 2-10 -Refer to Figure 2-10.The shift of the production possibilities frontier from A to B illustrates

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Which of the following is not correct?

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Any point on a country's production possibilities frontier represents a combination of two goods that an economy

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Almost all economists agree that rent control

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

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Which of the following statements about the circular-flow diagram is correct?

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An economic outcome is said to be efficient if the economy is

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Economists,like mathematicians,physicists,and biologists,

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Figure 2-4 -Refer to Figure 2-4.It is not possible for this economy to produce at point

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Economists face an obstacle that many other scientists do not face.What is that obstacle?

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