Question 1

Which of the following is a correct statement about production possibilities frontiers?

Accepted Answer

A)  An economy can produce only on the production possibilities frontier.
B)  An economy can produce at any point inside or outside a production possibilities frontier.
C)  An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
D)  An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.E) B) and C)
F) A) and D)

Question 2

To display information on two variables, an economist must use

Accepted Answer

A)  a bar graph.
B)  a pie chart.
C)  the coordinate system.
D)  a time-series graph.E) B) and D)
F) B) and C)

Question 3

For economists, substitutes for laboratory experiments often come in the form of

Accepted Answer

A)  natural experiments offered by history.
B)  untested theories.
C)  "rules of thumb" and other such conveniences.
D)  reliance upon the wisdom of elders in the economics profession.E) C) and D)
F) B) and D)

Question 4

Positive statements are not

Accepted Answer

A)  descriptive.
B)  prescriptive.
C)  claims about how the world is.
D)  made by economists speaking as scientists.E) B) and D)
F) C) and D)

Question 5

When a variable that is named on an axis of a graph changes, the curve shifts.

Accepted Answer

A) True 
 B)False

Question 6

If an economy can produce more of one good without giving up any of another good, then the economy's current production point is inefficient.

Accepted Answer

A) True 
 B)False

Question 7

Table 2-4
Production Possibilities for Picnicland 
-Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of burgers from 450 to 750?

Accepted Answer

A)  150 hotdogs
B)  225 hotdogs
C)  300 hotdogs
D)  450 hotdogsE) A) and D)
F) None of the above

Question 8

Figure 2-15 
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of each car is

Accepted Answer

A)  the slope of the production possibilities frontier.
B)  3/2 sofas.
C)  2/3 of a sofa.
D)  Both a and b are correct.E) B) and C)
F) A) and B)

Question 9

Figure 2-14 
-Refer to Figure 2-14. 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 10

Figure 2-10
Panel (a) 
Panel (b)   
-Refer to Figure 2-10, Panel (a) . Production is

Accepted Answer

A)  possible at points V, W, Y, and Z, but efficient only at points V, W, and Z.
B)  possible at points V, W, Y, and Z, but efficient only at point Y.
C)  possible at points U, V, W, and Z, but efficient only at points V, W, and Z.
D)  possible at points U, V, W, and Z, but efficient only at point U.E) A) and C)
F) A) and B)

Question 11

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)  the effect of an increase in the alcohol tax on the market for beer
B)  the effect of foreign competition on the domestic auto industry
C)  the effect of a price war in the airline industry
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemploymentE) All of the above
F) C) and D)

Question 12

An economy's production of two goods is efficient if

Accepted Answer

A)  all members of society consume equal portions of the goods.
B)  the goods are produced using only some of society's available resources.
C)  it is impossible to produce more of one good without producing less of the other.
D)  the opportunity cost of producing more of one good is zero.E) A) and B)
F) None of the above

Question 13

Figure 2-14 
-Refer to Figure 2-14. The opportunity cost of an additional doghouse increases as more doghouses are produced.

Accepted Answer

A) True 
 B)False

Question 14

Suppose a war in the Middle East interrupts the flow of crude oil and oil prices skyrocket around the world. For economists, this historical episode serves as a

Accepted Answer

The answer of Suppose a war in the Middle East...

Question 15

Figure 2-12 
-Refer to Figure 2-12. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

Accepted Answer

A)  a decrease in unemployment
B)  a technological advance in the consumer goods industries
C)  a general technological advance
D)  an increase in the availability of capital-producing resourcesE) A) and B)
F) All of the above

Question 16

In the circular-flow diagram, one loop represents the flow of goods and services, and the other loop represents the flow of factors of production.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2-16​ 
-Refer to Figure 2-16. The opportunity cost of obtaining approximately 20 additional gadgets by moving from point B to point C is

Accepted Answer

A)  0 widgets.
B)  10 widgets.
C)  20 widgets.
D)  none of the above; the economy cannot move from point B to point C.E) B) and C)
F) A) and D)

Question 18

Figure 2-7 
-Refer to Figure 2-7. If this economy moved from point P to point N, then

Accepted Answer

A)  it still would not be producing efficiently.
B)  there would be no gain in either engines or tvs.
C)  it would be producing more engines and more tvs than at point P.
D)  It is not possible for this economy to move from point P to point N without additional resources.E) None of the above
F) All of the above

Question 19

A normative economic statement such as "The minimum wage should be abolished"

Accepted Answer

A)  would likely be made by an economist acting as a scientist.
B)  would require values and data to be evaluated.
C)  would require data but not values to be evaluated.
D)  could not be evaluated by economists acting as policy advisers.E) A) and D)
F) A) and C)

Question 20

The language of economics is

Accepted Answer

A)  needlessly arcane.
B)  valuable because it provides a new and useful way of learning about the world.
C)  easy to learn within a day.
D)  unnecessary to learn for a thorough understanding of economics.E) All of the above
F) A) and D)

Exam 2: Thinking Like an Economist

Which of the following is a correct statement about production possibilities frontiers?

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To display information on two variables, an economist must use

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When a variable that is named on an axis of a graph changes, the curve shifts.

Correct AnswerverifiedShow Answer

Suppose a war in the Middle East interrupts the flow of crude oil and oil prices skyrocket around the world. For economists, this historical episode serves as a

Correct AnswerverifiedShow Answer

Positive statements are not

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A normative economic statement such as "The minimum wage should be abolished"

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Table 2-4 Production Possibilities for Picnicland -Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of burgers from 450 to 750?

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Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of each car is

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Figure 2-16​ -Refer to Figure 2-16. The opportunity cost of obtaining approximately 20 additional gadgets by moving from point B to point C is

Correct AnswerverifiedShow Answer

In the circular-flow diagram, one loop represents the flow of goods and services, and the other loop represents the flow of factors of production.

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Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

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Figure 2-7 -Refer to Figure 2-7. If this economy moved from point P to point N, then

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The language of economics is

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If an economy can produce more of one good without giving up any of another good, then the economy's current production point is inefficient.

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Figure 2-14 -Refer to Figure 2-14. The opportunity cost of an additional doghouse increases as more doghouses are produced.

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For economists, substitutes for laboratory experiments often come in the form of

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An economy's production of two goods is efficient if

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Figure 2-14 -Refer to Figure 2-14. 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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Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a) . Production is

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Figure 2-12 -Refer to Figure 2-12. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

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Figure 2-16 -Refer to Figure 2-16. The opportunity cost of obtaining approximately 20 additional gadgets by moving from point B to point C is

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