Question 1

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 2

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 3

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) C) and D)
F) All of the above

Question 4

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) B) and C)
F) All of the above

Question 5

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) All of the above
F) A) and C)

Question 6

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 D)

Question 7

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) A) and D)
F) C) and D)

Question 8

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) A) and B)
F) All of the above

Question 9

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) B) and C)
F) C) and D)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

"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) All of the above
F) B) and C)

Question 12

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

Question 13

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 B)
F) A) and C)

Question 14

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 15

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...

Question 16

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 17

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

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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) A) and C)
F) All of the above

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

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

Correct AnswerverifiedShow Answer

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

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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

Correct Answerverifiedscientific...View AnswerShow Answer

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

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

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

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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,

Correct AnswerverifiedShow Answer

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

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

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Production is efficient if the economy is producing at a point

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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

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