Question 1

When two variables have a negative correlation,

Accepted Answer

A)   they tend to move in opposite directions.
B)   they tend to move in the same direction.
C)   one variable will move while the other remains constant.
D)   the variables' values are never positive.E) A) and B)
F) A) and C)

Question 2

Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik

Accepted Answer

A)   hold different normative views about the tax system.
B)   disagree about the validity of a positive theory.
C)   have a fundamental misunderstanding of the tax system.
D)   More than one of the above is correct.E) A) and C)
F) B) and D)

Question 3

Use the following Figure to answer the question : Figure 2-4 : 
-Refer to Figure 2-4. At which point is this economy producing its maximum possible quantity of doors?

Accepted Answer

A)   R
B)   S
C)   T
D)   UE) None of the above
F) B) and C)

Question 4

Use the following Figure to answer the question : Figure 2-23 : 
-Refer to Figure 2-23. This economy fully employs its resources when it produces 35 dishwashers and zero doghouses.

Accepted Answer

A) True 
 B)False

Question 5

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Accepted Answer

A)   A ceiling on rents reduces the quantity and quality of housing available.
B)   Fiscal policy has a significant stimulative impact on a less than fully employed economy.
C)   The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged.
D)   The United States should implement universal health care for its citizens.E) A) and B)
F) C) and D)

Question 6

Use the following Figure to answer the question : Figure 2-18
Relationship between Price and Restaurant Meals 
-Refer to Figure 2-18. The slope of the line containing points A and B is

Accepted Answer

A)   -1/2.
B)   -2.
C)   1/2.
D)   2.E) A) and D)
F) A) and C)

Question 7

Use the following Figure to answer the question : Figure 2-15 : 
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

Accepted Answer

The answer of Use the following Figure to answer the...

Question 8

Use the following Figure to answer the question : Figure 2-5:  
-Refer to Figure 2-5. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is

Accepted Answer

A)   0 washers.
B)   20 washers.
C)   40 washers.
D)   None of the above; the economy cannot move from point D to point C.E) A) and B)
F) A) and C)

Question 9

Use the following Table to answer the question : Table 2-4 : Production Possibilities for Picnicland

-Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

Accepted Answer

A)   150 burgers
B)   225 burgers
C)   300 burgers
D)   450 burgersE) A) and B)
F) B) and C)

Question 10

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A)   any misunderstandings in communicating the policy to the public.
B)   whether the policy will affect his standing among different groups in the electorate.
C)   what amendments will be suggested by members of Congress.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 11

The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars and 15,000 cases of wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no other information, which of the following events could not explain this change?

Accepted Answer

A)   Gerance experienced a reduction in unemployment.
B)   Gerance experienced an improvement in car-making technology.
C)   Gerance acquired more resources.
D)   Any of these events could explain the change.E) B) and D)
F) All of the above

Question 12

The point where both x and y are zero is known as the

Accepted Answer

A)   origin.
B)   null.
C)   zero coordinate.
D)   center.E) A) and D)
F) A) and B)

Question 13

Economists at which administrative department help formulate spending plans and regulatory policies?

Accepted Answer

Office of ...

Question 14

Use the following Figure to answer the question : Figure 2-7 
-Refer to Figure 2-7. What is the opportunity cost of moving from point M to point L?

Accepted Answer

A)   zero
B)   15 tvs
C)   20 engines and 15 tvs
D)   20 enginesE) A) and C)
F) A) and B)

Question 15

Use the following Figure to answer the question : Figure 2-23 : 
-Refer to Figure 2-23. Given the technology available for manufacturing doghouses and dishwashers, this economy does not have enough of the factors of production to support the level of output represented by point C.

Accepted Answer

A) True 
 B)False

Question 16

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) A) and B)
F) A) and D)

Question 17

In the circular-flow diagram,

Accepted Answer

A)   firms are buyers in the markets for goods and services.
B)   households are sellers in the markets for the factors of production.
C)   firms are sellers in the markets for factors of production and in the markets for goods and services.
D)   dollars that are spent on goods and services flow directly from firms to households.E) A) and B)
F) A) and C)

Question 18

Which of the following statements applies to economics, as well as to other sciences such as physics?

Accepted Answer

A)   Experiments are considered valid only when they are conducted in a laboratory.
B)   Good theories do not need to be tested.
C)   Real-world observations often lead to theories.
D)   Economics, as well as other sciences, is concerned primarily with abstract concepts.E) A) and B)
F) B) and C)

Question 19

Use the following Table  to answer the question : Table 2-5

-Table 2-5 shows one set of production possibilities. What is the opportunity cost of increasing the production of corn from 400 bushels to 800 bushels?

Accepted Answer

A)   200 bushels of wheat
B)   400 bushels of wheat
C)   600 bushels of wheat
D)   800 bushels of wheatE) B) and C)
F) A) and B)

Question 20

If Martina's income increases and, as a result, she chooses to buy more lattés 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, Martina will move along her demand curve downward and to the right.
D)   not shift; instead, Martina will move along her demand curve upward and to the left.E) A) and B)
F) C) and D)

Exam 2: Thinking Like an Economist

In the circular-flow diagram,

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Use the following Figure to answer the question : Figure 2-7 -Refer to Figure 2-7. What is the opportunity cost of moving from point M to point L?

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A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

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Use the following Figure to answer the question : Figure 2-4 : -Refer to Figure 2-4. At which point is this economy producing its maximum possible quantity of doors?

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When economists make

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Use the following Figure to answer the question : Figure 2-23 : -Refer to Figure 2-23. This economy fully employs its resources when it produces 35 dishwashers and zero doghouses.

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Use the following Figure to answer the question : Figure 2-15 : -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

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One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

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Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik

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Which of the following statements applies to economics, as well as to other sciences such as physics?

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Economists at which administrative department help formulate spending plans and regulatory policies?

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Use the following Figure to answer the question : Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. The slope of the line containing points A and B is

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Use the following Table to answer the question : Table 2-4 : Production Possibilities for Picnicland -Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

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Use the following Figure to answer the question : Figure 2-5: -Refer to Figure 2-5. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is

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Use the following Figure to answer the question : Figure 2-23 : -Refer to Figure 2-23. Given the technology available for manufacturing doghouses and dishwashers, this economy does not have enough of the factors of production to support the level of output represented by point C.

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The point where both x and y are zero is known as the

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Use the following Table to answer the question : Table 2-5 -Table 2-5 shows one set of production possibilities. What is the opportunity cost of increasing the production of corn from 400 bushels to 800 bushels?

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If Martina's income increases and, as a result, she chooses to buy more lattés per month at each price, then her demand curve will

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The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars and 15,000 cases of wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no other information, which of the following events could not explain this change?

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When two variables have a negative correlation,

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Office of ...
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