Question 1

Figure 2-4 
-Refer to Figure 2-4. This economy has the ability to produce at which point(s) ?

Accepted Answer

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

Question 2

Table 2-5
 
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of wheat from 700 bushels to 1300 bushels?

Accepted Answer

A)   800 bushels of corn
B)   600 bushels of corn
C)   400 bushels of corn
D)   400 bushels of wheatE) A) and D)
F) A) and C)

Question 3

Where can an economy not produce?

Accepted Answer

A)   inside its production possibilities frontier
B)   on its production possibilities frontier
C)   outside its production possibilities frontier
D)   at the endpoints of its production possibilities frontierE) All of the above
F) B) and C)

Question 4

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

Accepted Answer

A) True 
 B)False

Question 5

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Accepted Answer

A)   Harry Truman
B)   George Bernard Shaw
C)   John Maynard Keynes
D)   Ronald ReaganE) A) and D)
F) B) and C)

Question 6

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

Accepted Answer

A)   6000.
B)   5500.
C)   5000.
D)   4500.E) None of the above
F) C) and D)

Question 7

When economists make

Accepted Answer

A)   positive statements, they are speaking not as policy advisers but as scientists.
B)   positive statements, they are speaking not as scientists but as forecasters.
C)   normative statements, they are speaking not as policy advisers but as scientists.
D)   normative statements, they are speaking not as policy advisers but as model-builders.E) None of the above
F) All of the above

Question 8

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)   households provide firms with savings for investment.
B)   households provide firms with labor, land, and capital.
C)   firms provide households with output.
D)   firms provide households with profit.E) B) and C)
F) B) and D)

Question 9

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

Accepted Answer

A) True 
 B)False

Question 10

A statement describing how the world should be

Accepted Answer

A)   is a normative statement.
B)   is a positive statement.
C)   would only be made by an economist speaking as a scientist.
D)   would only be made by an economist employed by the government.E) A) and B)
F) B) and C)

Question 11

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) A) and B)
F) A) and C)

Question 12

Figure 2-10
Panel (a)  Panel (b) 
  
-Refer to Figure 2-10, Panel (a) . The movement from point W to point Y could be caused by

Accepted Answer

A)   economic growth.
B)   unemployment.
C)   an improvement in efficiency.
D)   an advance in production technology.E) B) and C)
F) C) and D)

Question 13

In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called

Accepted Answer

A)   spending.
B)   revenue.
C)   income.
D)   wages, rent, and profit.E) B) and C)
F) A) and D)

Question 14

Figure 2-5 
-Refer to Figure 2-5. Inefficient production is represented by which point(s) ?

Accepted Answer

A)   A, B
B)   C
C)   C, D
D)   DE) B) and C)
F) A) and C)

Question 15

Figure 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and D)
F) C) and D)

Question 16

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

Question 17

The art in scientific thinking is

Accepted Answer

A)   finding the right problem to study.
B)   deciding which assumptions to make.
C)   the ability to make an abstract subject easy to understand.
D)   not something in which economists have to be skilled.E) A) and B)
F) A) and C)

Question 18

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) C) and D)
F) None of the above

Question 19

Figure 2-11 
-Refer to Figure 2-11. 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) A) and C)
F) B) and C)

Question 20

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called

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

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Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a) . The movement from point W to point Y could be caused by

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Economists, like mathematicians, physicists, and biologists,

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"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

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Where can an economy not produce?

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In the markets for goods and services in the circular-flow diagram,

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Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

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The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

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An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

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Figure 2-5 -Refer to Figure 2-5. Inefficient production is represented by which point(s) ?

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

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The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

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The art in scientific thinking is

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Figure 2-4 -Refer to Figure 2-4. This economy has the ability to produce at which point(s) ?

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Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of wheat from 700 bushels to 1300 bushels?

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Figure 2-11 -Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

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A statement describing how the world should be

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When economists make

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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?

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