Question 1

When two variables move in the same direction, the curve relating them is

Accepted Answer

A)   upward sloping, and we say the variables are positively related.
B)   upward sloping, and we say the variables are negatively related.
C)   downward sloping, and we say the variables are positively related.
D)   downward sloping, and we say the variables are negatively related.E) B) and C)
F) All of the above

Question 2

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

Question 3

For economists, statements about the world are of two types:

Accepted Answer

A)   assumptions and theories.
B)   true statements and false statements.
C)   specific statements and general statements.
D)   positive statements and normative statements.E) C) and D)
F) B) and D)

Question 4

Economic models

Accepted Answer

A)   are people who act out the behavior of firms and households so that economists can study this behavior.
B)   are usually detailed replications of reality.
C)   incorporate simplifying assumptions that often contradict reality, but also help economists better understand reality.
D)   are useful to researchers but not to teachers because economic models omit many details of the real-world economy.E) A) and B)
F) All of the above

Question 5

The decision of which assumptions to make is

Accepted Answer

A)   an easy decision for an economist, but a difficult decision for a physicist or a chemist.
B)   not a particularly important decision for an economist.
C)   usually regarded as an art in scientific thinking.
D)   usually regarded as the easiest part of the scientific method.E) A) and B)
F) B) and D)

Question 6

Figure 2-7 
-Refer to Figure 2-7. Unemployment could cause this economy to produce at which points) ?

Accepted Answer

A)   L, M
B)   N, O, P, Q
C)   N, O, P
D)   QE) B) and C)
F) A) and C)

Question 7

Which of the following is not held constant when looking at an individual's demand curve?

Accepted Answer

A)   income
B)   price
C)   preferences
D)   the availability of alternative goodsE) None of the above
F) B) and C)

Question 8

Figure 2-18
Relationship between Price and Restaurant Meals 
-Refer to Figure 2-18. A movement from point A to point B is called

Accepted Answer

A)   a shift in demand.
B)   a movement along the demand curve.
C)   a shift in supply.
D)   a movement along the supply curve.E) A) and B)
F) A) and C)

Question 9

Different values are not a reason for disagreement among economists.

Accepted Answer

A) True 
 B)False

Question 10

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following trade-offs does the production possibilities frontier illustrate?

Accepted Answer

A)   If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption.
B)   Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other.
C)   For an economy to consume more of one good, it must stop consuming the other good entirely.
D)   For an economy to produce and consume goods, it must sacrifice environmental quality.E) B) and C)
F) All of the above

Question 12

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Accepted Answer

A)   efficiency
B)   opportunity cost
C)   equality
D)   trade-offsE) C) and D)
F) B) and C)

Question 13

Where can an economy not produce?

Accepted Answer

A)   inside its production possibilities frontier
B)   on its production possibilities frontier
C)   outside its production possibilities frontier
D)   at the endpoints of its production possibilities frontierE) All of the above
F) C) and D)

Question 14

In the circular-flow diagram, factors of production are the goods and services produced by firms.

Accepted Answer

A) True 
 B)False

Question 15

In addition to advising the president, one duty of the Council of Economic Advisers is to

Accepted Answer

A)   prepare the federal budget.
B)   write government regulations.
C)   advise Congress on economic matters.
D)   write the annual Economic Report of the President.E) None of the above
F) C) and D)

Question 16

Economists speaking like scientists make

Accepted Answer

A)   normative statements.
B)   prescriptive statements.
C)   claims about how the world is.
D)   claims about how the world should be.E) A) and B)
F) B) and C)

Question 17

Figure 2-14  Consider the production possibilities curve for a country that can produce sweaters, apples in bushels), or a combination of the two.
-Refer to Figure 2-14. Which points) on the graph isare) unattainable given current resources and technology?

Accepted Answer

The answer of Figure 2-14  Consider the production possibilities...

Question 18

In the ordered pair 10,30), 10 is the y-coordinate and 30 is the z-coordinate.

Accepted Answer

A) True 
 B)False

Question 19

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Accepted Answer

A)   will never be able to produce.
B)   can produce using all available resources and technology.
C)   can produce using some portion, but not all, of its resources and technology.
D)   may be able to produce in the future with more resources and/or superior technology.E) B) and D)
F) B) and C)

Question 20

When two variables move in opposite directions, the curve relating them is

Accepted Answer

A)   upward sloping, and we say the variables are positively related.
B)   upward sloping, and we say the variables are negatively related.
C)   downward sloping, and we say the variables are positively related.
D)   downward sloping, and we say the variables are negatively related.E) None of the above
F) A) and D)

Exam 2: Thinking Like an Economist

When two variables move in the same direction, the curve relating them is

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Economists speaking like scientists make

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Evaluating normative statements involves values as well as facts.

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Which of the following concepts cannot be illustrated by the production possibilities frontier?

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Figure 2-7 -Refer to Figure 2-7. Unemployment could cause this economy to produce at which points) ?

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The decision of which assumptions to make is

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Which of the following is not held constant when looking at an individual's demand curve?

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Any point on a country's production possibilities frontier represents a combination of two goods that an economy

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

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When two variables move in opposite directions, the curve relating them is

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In addition to advising the president, one duty of the Council of Economic Advisers is to

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Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. A movement from point A to point B is called

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Which of the following trade-offs does the production possibilities frontier illustrate?

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Economic models

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In the circular-flow diagram, factors of production are the goods and services produced by firms.

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Different values are not a reason for disagreement among economists.

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In the ordered pair 10,30), 10 is the y-coordinate and 30 is the z-coordinate.

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Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples in bushels), or a combination of the two. -Refer to Figure 2-14. Which points) on the graph isare) unattainable given current resources and technology?

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Where can an economy not produce?

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For economists, statements about the world are of two types:

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