Question 1

Figure 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of income payments?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and B)
F) None of the above

Question 2

In the simple circular-flow diagram, the participants in the economy are

Accepted Answer

A)   firms and government.
B)   households and firms.
C)   households and government.
D)   households, firms, and government.E) A) and B)
F) A) and C)

Question 3

Which two groups of decision makers are included in the simple circular-flow diagram?

Accepted Answer

A)   markets and government
B)   households and government
C)   firms and government
D)   households and firmsE) B) and C)
F) A) and D)

Question 4

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

Accepted Answer

A)   interest
B)   capital
C)   spending by households on goods
D)   spending by households on servicesE) All of the above
F) B) and C)

Question 5

When economists disagree about whether the government should tax a household's income or its consumption, they are expressing a difference in

Accepted Answer

scientific...

Question 6

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.E) A) and B)
F) B) and D)

Question 7

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

Accepted Answer

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

Question 8

"Prices rise when the quantity of money rises rapidly" is an example of a

Accepted Answer

A)   negative economic statement.
B)   positive economic statement.
C)   normative economic statement.
D)   statement that contradicts one of the basic principles of economics.E) B) and D)
F) B) and C)

Question 9

Assumptions can simplify the complex world and make it easier to understand.

Accepted Answer

A) True 
 B)False

Question 10

Points on the production possibilities frontier represent efficient levels of production.

Accepted Answer

A) True 
 B)False

Question 11

The art in scientific thinking -- whether in chemistry, economics, or biology -- is

Accepted Answer

A)   the design and implementation of laboratory experiments.
B)   knowing when to stop collecting data and when to start analyzing the datb.
C)   deciding which assumptions to make.
D)   being able to mathematically model natural phenomena.E) A) and D)
F) A) and C)

Question 12

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.E) B) and D)
F) B) and C)

Question 13

Figure 2-11 
-Refer to Figure 2-11. Which of the following events would explain the shift of the production possibilities frontier from A to B?

Accepted Answer

A)   The economy's citizens developed an enhanced taste for books.
B)   The economy experienced a technological advance in the production of books.
C)   More capital became available in the economy.
D)   More labor became available in the economy.E) A) and D)
F) A) and C)

Question 14

Figure 2-8 
-Refer to Figure 2-8. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails,

Accepted Answer

A)   remains constant.
B)   increases.
C)   decreases.
D)   This answer cannot be determined from the graph.E) All of the above
F) A) and D)

Question 15

Figure 2-23 
-Refer to Figure 2-23. Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 16

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)   The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers.
B)   Antitrust laws should be used to prevent further concentration in the wireless telephone service market.
C)   The US Department of Justice sued AT&T to block its merger with T-Mobile.
D)   The wireless telephone service market is too highly concentrated.E) A) and C)
F) A) and D)

Question 18

Production is efficient if the economy is producing at a point

Accepted Answer

A)   on the production possibilities frontier.
B)   outside the production possibilities frontier.
C)   on or inside the production possibilities frontier.
D)   inside the production possibilities frontier.E) All of the above
F) A) and C)

Question 19

Which type of statement - positive or negative - can be evaluated by analyzing data alone?

Accepted Answer

The answer of Which type of statement - positive or...

Question 20

When economists disagree about whether a policy is fair, they are expressing a difference in

Accepted Answer

The answer of When economists disagree about whether a policy...

Exam 2: Thinking Like an Economist

Production is efficient if the economy is producing at a point

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Which type of statement - positive or negative - can be evaluated by analyzing data alone?

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When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

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Points on the production possibilities frontier represent efficient levels of production.

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"Prices rise when the quantity of money rises rapidly" is an example of a

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In the circular-flow diagram, which of the following items represents a payment for a factor of production?

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Which two groups of decision makers are included in the simple circular-flow diagram?

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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

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Figure 2-23 -Refer to Figure 2-23. Point B represents an inefficient outcome for this economy.

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Figure 2-11 -Refer to Figure 2-11. Which of the following events would explain the shift of the production possibilities frontier from A to B?

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

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The art in scientific thinking -- whether in chemistry, economics, or biology -- is

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Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of income payments?

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When economists disagree about whether the government should tax a household's income or its consumption, they are expressing a difference in

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Assumptions can simplify the complex world and make it easier to understand.

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

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

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In the simple circular-flow diagram, the participants in the economy are

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Figure 2-8 -Refer to Figure 2-8. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails,

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When economists disagree about whether a policy is fair, they are expressing a difference in

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