Question 1

Figure 2-7 
-Refer to Figure 2-7. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammers produced, in terms of nails,

Accepted Answer

A)  remains constant.
B)  increases.
C)  decreases.
D)  This cannot be determined from the graph.

Question 2

It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.

Accepted Answer

A) True 
 B)False

Question 3

A model that shows how dollars flow through markets among households and firms is called the

Accepted Answer

A)  production possibilities frontier.
B)  circular-flow diagram.
C)  demand and supply diagram.
D)  comparative advantage model.

Question 4

The design of tax policy is one of the responsibilities of economists who work at the

Accepted Answer

A)  Council of Economic Advisers.
B)  Federal Reserve.
C)  Department of the Treasury.
D)  Congressional Budget Office.

Question 5

The President receives economic policy advice from economists at each of the following except

Accepted Answer

A)  the Council of Economic Advisors.
B)  the Department of the Treasury.
C)  the Congressional Budget office.
D)  the Department of Labor.

Question 6

In the circular-flow diagram,

Accepted Answer

A)  firms are buyers in the markets for goods and services.
B)  households are sellers in the markets for the factors of production.
C)  firms are sellers in the markets for factors of production and in the markets for goods and services.
D)  dollars that are spent on goods and services flow directly from firms to households.

Question 7

Figure 2-8
 
-Refer to Figure 2-8, Panel (a) . The opportunity cost of moving from point J to point L is

Accepted Answer

A)  2 donuts.
B)  2 donuts and 2 cups of coffee.
C)  2 cups of coffee.
D)  6 cups of coffee.

Question 8

When an economist evaluates a positive statement, he or she is primarily

Accepted Answer

A)  examining evidence.
B)  evaluating values as well as facts.
C)  acting as a policy adviser.
D)  concerned with making a sound decision on how the world ought to be.

Question 9

The circular-flow diagram is an example of

Accepted Answer

A)  a laboratory experiment.
B)  an economic model.
C)  a mathematical model.
D)  All of the above are correct.

Question 10

Figure 2-2 
-Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

Accepted Answer

A)  households are represented by Box A.
B)  firms are represented by Box C.
C)  firms are represented by Box A.
D)  firms are sellers in Box B.

Question 11

Figure 2-12 
-Refer to Figure 2-12. Which of the following combinations of points are both efficient and attainable for this economy?

Accepted Answer

A)  B, C
B)  A, D, H
C)  A, B, C, D, H
D)  F, G

Question 12

Figure 2-3 
-Refer to Figure 2-3. This economy has the ability to produce at which point(s) ?

Accepted Answer

A)  J, K, M, N
B)  K, M, N
C)  K, N
D)  M

Question 13

Figure 2-12 
-Refer to Figure 2-12. One difference between points A and B is that

Accepted Answer

A)  Point B is unattainable with current resources, but point A is attainable.
B)  All resources are fully employed at point A but there is unemployment at point B.
C)  More output can be produced at point A but no additional output can be produced at point B.
D)  This economy produces more blankets at point B than at point A.

Question 14

Draw a production possibilities frontier showing increasing opportunity cost of hammers in terms of horseshoes.
a.On the graph, identify the area of feasible outcomes and the area of infeasible outcomes.
b.On the graph, label a point that is efficient and a point that is inefficient.
c.On the graph, illustrate the effect of the discovery of a new vein of iron ore, a resource needed to make both horseshoes and hammers, on this economy.
d.On a second graph, illustrate the effect of a new computerized assembly line in the production of hammers on this economy.

Accepted Answer

The answer of Draw a production possibilities frontier showing increasing...

Question 15

The art in scientific thinking is

Accepted Answer

A)  finding the right problem to study.
B)  deciding which assumptions to make.
C)  the ability to make an abstract subject easy to understand.
D)  not something in which economists have to be skilled.

Question 16

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2-14 
-Refer to Figure 2-14. The opportunity cost of moving from point A to point D is 10 dishwashers.

Accepted Answer

A) True 
 B)False

Question 18

Figure 2-2 
-Refer to Figure 2-2. Devin works as an attorney for a corporation and is paid a salary in exchange for the legal services he performs. Juan owns office buildings and rents his buildings to companies in exchange for rent payments. If Devin's income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram, then Juan's income is represented by a flow of dollars

Accepted Answer

A)  from Box A to Box C.
B)  from Box C to Box A.
C)  from Box B to Box D.
D)  from Box D to Box B.

Question 19

Figure 2-10 
-Refer to Figure 2-10. The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A)  simultaneous technological advances in the book and DVD industries.
B)  a reallocation of resources away from the production of DVDs and toward the production of books.
C)  economic growth.
D)  All of the above are correct.

Question 20

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

Accepted Answer

A)  One economist believes income tax cuts are unfair to those with low incomes; another economist believes income tax cuts are not unfair to those with low incomes.
B)  One economist believes unemployment causes more human suffering than does inflation; another economist believes inflation causes more human suffering than does unemployment.
C)  One economist believes the policies of the Democratic party offer the best hope for America's future; another economist believes the policies of the Republican party offer the best hope for America's future.
D)  One economist believes increases in the minimum wage increase unemployment; another economist believes increases in the minimum wage do not increase unemployment.

Exam 2: Thinking Like an Economist

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Figure 2-3 -Refer to Figure 2-3. This economy has the ability to produce at which point(s) ?

Correct Answer
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The art in scientific thinking is

Correct Answer
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Figure 2-8 -Refer to Figure 2-8, Panel (a) . The opportunity cost of moving from point J to point L is

Correct Answer
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A model that shows how dollars flow through markets among households and firms is called the

Correct Answer
verified

It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.

Correct Answer
verified

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Correct Answer
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The President receives economic policy advice from economists at each of the following except

Correct Answer
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Figure 2-14 -Refer to Figure 2-14. The opportunity cost of moving from point A to point D is 10 dishwashers.

Correct Answer
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Figure 2-12 -Refer to Figure 2-12. Which of the following combinations of points are both efficient and attainable for this economy?

Correct Answer
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The design of tax policy is one of the responsibilities of economists who work at the

Correct Answer
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Figure 2-12 -Refer to Figure 2-12. One difference between points A and B is that

Correct Answer
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In the circular-flow diagram,

Correct Answer
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Figure 2-10 -Refer to Figure 2-10. The shift of the production possibilities frontier from A to B illustrates

Correct Answer
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Figure 2-2 -Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

Correct Answer
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Correct Answer
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Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

Correct Answer
verified

The circular-flow diagram is an example of

Correct Answer
verified

When an economist evaluates a positive statement, he or she is primarily

Correct Answer
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Figure 2-7 -Refer to Figure 2-7. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammers produced, in terms of nails,

Correct Answer
verified

Exam 2: Thinking Like an Economist

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Figure 2-3 -Refer to Figure 2-3. This economy has the ability to produce at which point(s) ?

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The art in scientific thinking is

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8, Panel (a) . The opportunity cost of moving from point J to point L is

Correct AnswerverifiedShow Answer

A model that shows how dollars flow through markets among households and firms is called the

Correct AnswerverifiedShow Answer

It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.

Correct AnswerverifiedShow Answer

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Correct AnswerverifiedShow Answer

The President receives economic policy advice from economists at each of the following except

Correct AnswerverifiedShow Answer

Figure 2-14 -Refer to Figure 2-14. The opportunity cost of moving from point A to point D is 10 dishwashers.

Correct AnswerverifiedShow Answer

Figure 2-12 -Refer to Figure 2-12. Which of the following combinations of points are both efficient and attainable for this economy?

Correct AnswerverifiedShow Answer

The design of tax policy is one of the responsibilities of economists who work at the

Correct AnswerverifiedShow Answer

Figure 2-12 -Refer to Figure 2-12. One difference between points A and B is that

Correct AnswerverifiedShow Answer

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

Figure 2-10 -Refer to Figure 2-10. The shift of the production possibilities frontier from A to B illustrates

Correct AnswerverifiedShow Answer

Figure 2-2 -Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The circular-flow diagram is an example of

Correct AnswerverifiedShow Answer

When an economist evaluates a positive statement, he or she is primarily

Correct AnswerverifiedShow Answer

Figure 2-7 -Refer to Figure 2-7. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammers produced, in terms of nails,

Correct AnswerverifiedShow Answer

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