Question 1

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 D)

Question 2

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) None of the above
F) A) and B)

Question 3

Economic models

Accepted Answer

A)  cannot be useful if they are based on false assumptions.
B)  were once thought to be useful,but that is no longer true.
C)  must incorporate all aspects of the economy if they are to be useful.
D)  can be useful,even if they are not particularly realistic.E) B) and C)
F) A) and C)

Question 4

The inner loop of the circular-flow diagram represents the flows of inputs and outputs.Which of the following does not appear on the inner loop?

Accepted Answer

A)  wages
B)  land
C)  capital
D)  goods and services soldE) B) and C)
F) B) and D)

Question 5

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) None of the above
F) A) and B)

Question 6

The goal of an economist who formulates new theories is to

Accepted Answer

A)  provide an interesting framework of analysis,whether or not the framework turns out to be of much use in understanding how the world works.
B)  provoke stimulating debate in scientific journals.
C)  contribute to an understanding of how the world works.
D)  demonstrate that economists,like other scientists,can formulate testable theories.E) A) and D)
F) A) and C)

Question 7

When an economy is operating inside its production possibilities frontier,we know that

Accepted Answer

A)  there are unused resources or inefficiencies in the economy.
B)  all of the economy's resources are fully employed.
C)  economic growth would have to occur in order for the economy to move to a point on the frontier.
D)  in order to produce more of one good,the economy would have to give up some of the other good.E) B) and D)
F) B) and C)

Question 8

Figure 2-16​ 
-Refer to Figure 2-16.Which of the following statements is true about the opportunity cost of obtaining approximately 20 additional gadgets by moving from point B to point C?

Accepted Answer

A)  The opportunity cost is the 70 gadgets that are no longer produced.
B)  The opportunity cost is zero because the economy does not give up producing widgets to go from producing at point B to point C.
C)  The opportunity cost is greater than zero widgets but less than 70 gadgets.
D)  The opportunity cost is greater than 70 gadgets.E) B) and C)
F) B) and D)

Question 9

Which of the following is not an assumption of the productions possibilities frontier?

Accepted Answer

A)  A country produces only two goods or types of goods.
B)  Technology does not change.
C)  The amount of available resources does not change.
D)  There is a fixed quantity of money.E) A) and B)
F) None of the above

Question 10

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 B)
F) B) and C)

Question 11

Albert Einstein once made the following observation about science:

Accepted Answer

A)  "The whole of science is nothing more than the refinement of everyday thinking."
B)  "The whole of science is nothing more than an interesting intellectual exercise."
C)  "In order to understand science,one must rely solely on abstraction."
D)  "In order to understand science,one must transcend everyday thinking."E) C) and D)
F) B) and D)

Question 12

Economic models

Accepted Answer

A)  are not useful because they omit many real-world details.
B)  are usually composed of diagrams and equations.
C)  are useful because they do not omit any real-world details.
D)  are usually plastic representations of the economy.E) All of the above
F) A) and B)

Question 13

When a production possibilities frontier is bowed outward,the opportunity cost of producing an additional unit of a good

Accepted Answer

A)  increases as more of the good is produced.
B)  decreases as more of the good is produced.
C)  does not change as more of the good is produced.
D)  may increase,decrease,or not change as more of the good is produced.E) None of the above
F) C) and D)

Question 14

Suppose an economist develops a theory that higher food prices arise from higher gas prices.According to the scientific method,which of the following is the economist's next step?

Accepted Answer

A)  Collect and analyze data.
B)  Go to a laboratory and generate data to test the theory.
C)  Publish the theory without testing it.
D)  Consult with other economists to see they agree with the theory.E) B) and D)
F) All of the above

Question 15

Figure 2-5 
-Refer to Figure 2-5.The opportunity cost of this economy moving from point A to point B is

Accepted Answer

A)  20 dryers.
B)  20 washers.
C)  20 dryers and 20 washers.
D)  60 dryers.E) B) and C)
F) All of the above

Question 16

When an economy is operating at a point on its production possibilities frontier,then

Accepted Answer

A)  consumers are content with the mix of goods and services that is being produced.
B)  there is no way to produce more of one good without producing less of the other.
C)  equal amounts of the two goods are being produced.
D)  All of the above are correct.E) All of the above
F) None of the above

Question 17

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A)  the impact of minimum-wage laws on employment in the fast food industry
B)  the effect of changes in household saving rates on the growth rate of national income
C)  the impact of faster money growth on the rate of inflation
D)  a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growthE) A) and B)
F) A) and C)

Question 18

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) All of the above
F) None of the above

Question 19

The scientific method is applicable to studying

Accepted Answer

A)  natural sciences,but not social sciences.
B)  social sciences,but not natural sciences.
C)  both natural sciences and social sciences.
D)  None of the above is correct.E) A) and B)
F) A) and C)

Question 20

Which of these statements about economic models is correct?

Accepted Answer

A)  For economists,economic models provide insights about the world.
B)  Economic models are built with assumptions.
C)  Economic models are often composed of equations and diagrams.
D)  All of the above are correct.E) None of the above
F) A) and B)

Exam 2: Thinking Like an Economist: The Economist As Scientist

Albert Einstein once made the following observation about science:

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Economists believe that production possibilities frontiers are often bowed because

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The scientific method is applicable to studying

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The goal of an economist who formulates new theories is to

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Economic models

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When an economy is operating inside its production possibilities frontier,we know that

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

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When a production possibilities frontier is bowed outward,the opportunity cost of producing an additional unit of a good

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Figure 2-16​ -Refer to Figure 2-16.Which of the following statements is true about the opportunity cost of obtaining approximately 20 additional gadgets by moving from point B to point C?

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Suppose an economist develops a theory that higher food prices arise from higher gas prices.According to the scientific method,which of the following is the economist's next step?

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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 areas of study typifies microeconomics as opposed to macroeconomics?

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Figure 2-5 -Refer to Figure 2-5.The opportunity cost of this economy moving from point A to point B is

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

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Which of these statements about economic models is correct?

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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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Economic models

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When an economy is operating at a point on its production possibilities frontier,then

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The inner loop of the circular-flow diagram represents the flows of inputs and outputs.Which of the following does not appear on the inner loop?

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Which of the following is not an assumption of the productions possibilities frontier?

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Figure 2-16 -Refer to Figure 2-16.Which of the following statements is true about the opportunity cost of obtaining approximately 20 additional gadgets by moving from point B to point C?

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