Question 1

Figure 2-14 
-Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

Accepted Answer

A) True 
 B)False

Question 2

In the circular-flow diagram, another name for goods and services produced by firms is

Accepted Answer

A)  factors of production.
B)  output.
C)  inputs.
D)  resources.E) A) and B)
F) B) and D)

Question 3

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) A) and D)

Question 4

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Accepted Answer

A) True 
 B)False

Question 5

Economists at the Department of Justice

Accepted Answer

A)  track the behavior of the nation's money supply.
B)  advise Congress on economic matters.
C)  help enforce the nation's antitrust laws.
D)  prepare the federal budget.E) All of the above
F) A) and D)

Question 6

Figure 2-8
 
-Refer to Figure 2-8, Panel (a) . In order to gain 2 donuts by moving from point L to point M, society must sacrifice

Accepted Answer

A)  efficiency.
B)  employment.
C)  4 cups of coffee.
D)  More than one of the above is correct.E) None of the above
F) A) and B)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Figure 2-6 
-Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B?

Accepted Answer

A)  zero
B)  6 clocks
C)  6 clocks and 15 candles
D)  15 candlesE) C) and D)
F) All of the above

Question 9

The y-coordinate of an ordered pair specifies the

Accepted Answer

A)  diagonal location of the point.
B)  vertical location of the point.
C)  horizontal location of the point.
D)  quadrant location in which the point is located.E) B) and D)
F) A) and B)

Question 10

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

Accepted Answer

A) True 
 B)False

Question 11

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

Accepted Answer

A) True 
 B)False

Question 12

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

Accepted Answer

A) True 
 B)False

Question 13

The slope of a steep upward-sloping line will be a

Accepted Answer

A)  small positive number.
B)  large positive number.
C)  small negative number.
D)  large negative number.E) B) and D)
F) A) and B)

Question 14

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 15

Figure 2-13 
-Refer to Figure 2-13. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Accepted Answer

A)  The less coffee a person drinks per day, the more time he can go without sleep.
B)  There is no relationship between how much coffee per day a person drinks and how long he can go without sleep.
C)  The more coffee a person drinks per day, the more time he can go without sleep.
D)  The more coffee a person drinks per day, the less time he can go without sleep.E) B) and C)
F) A) and D)

Question 16

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

Accepted Answer

A)  Inflation is more harmful to the economy than unemployment is.
B)  If welfare payments increase, the world will be a better place.
C)  Prices rise when the government prints too much money.
D)  When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.E) C) and D)
F) B) and C)

Question 17

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)  One economist believes the North American Free Trade Agreement (NAFT
A)   has led to a loss of American jobs; another economist disputes this claim.
B)  One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving.
C)  One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people.
D)  One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth.E) A) and C)
F) All of the above

Question 18

"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

Accepted Answer

A) True 
 B)False

Question 19

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Accepted Answer

A) True 
 B)False

Question 20

In the circular-flow diagram, factors of production include land, labor, and capital.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

The slope of a steep upward-sloping line will be a

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

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Figure 2-8 -Refer to Figure 2-8, Panel (a) . In order to gain 2 donuts by moving from point L to point M, society must sacrifice

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If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

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Economists at the Department of Justice

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Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

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An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

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"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

Correct AnswerverifiedShow Answer

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

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In the circular-flow diagram, factors of production include land, labor, and capital.

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Figure 2-13 -Refer to Figure 2-13. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

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

Correct AnswerverifiedShow Answer

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the circular-flow diagram, another name for goods and services produced by firms is

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The y-coordinate of an ordered pair specifies the

Correct AnswerverifiedShow Answer

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

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Figure 2-14 -Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

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Figure 2-6 -Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B?

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