Question 1

Which of the following is not correct?

Accepted Answer

A)  When developing economic theories, graphs offer a way to visually express ideas that might be less clear if described with equations or words.
B)  Graphs are one way of expressing the relationships among variables.
C)  When studying the relationship between two economic variables, graphs allow economists to draw indisputable conclusions about causes and effects.
D)  When analyzing economic data, graphs provide a powerful way of finding and interpreting patterns.E) A) and B)
F) B) and C)

Question 2

Differences in scientific judgement between economists is similar to all of the following except

Accepted Answer

A)  astronomers debating whether the sun or earth was at the center of the solar system.
B)  meteorologists debating the existence of global warming.
C)  two politicians arguing about the fairness of the tax code.
D)  explorers debating whether or not the earth was flat before the time of Christopher Columbus.E) B) and C)
F) A) and D)

Question 3

Factors of production are

Accepted Answer

A)  used to produce goods and services.
B)  also called output.
C)  abundant in most economies.
D)  assumed to be owned by firms in the circular-flow diagram.E) A) and B)
F) C) and D)

Question 4

Figure 2-5 
-Refer to Figure 2-5. If this economy devotes all of its resources to the production of sweaters, then it will produce

Accepted Answer

A)  0 sweaters and 200 soccer balls.
B)  180 sweaters and 125 soccer balls.
C)  300 sweaters and 0 soccer balls.
D)  300 sweaters and 200 soccer balls.E) All of the above
F) A) and C)

Question 5

The nation's antitrust laws are enforced by economists at the Department of

Accepted Answer

A)  Labor.
B)  Health and Human Services.
C)  Justice.
D)  Treasury.E) None of the above
F) A) and C)

Question 6

Figure 2-14 
-Refer to Figure 2-14. It is possible for this economy to produce 75 doghouses.

Accepted Answer

A) True 
 B)False

Question 7

Normative statements are

Accepted Answer

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

Question 8

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good

Accepted Answer

A)  increases as more of the good is produced.
B)  decreases as more of the good is produced.
C)  does not change as more of the good is produced.
D)  may increase, decrease, or not change as more of the good is produced.E) B) and D)
F) B) and C)

Question 9

Figure 2-2 
-Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Accepted Answer

A)  flows of goods and services from households to firms.
B)  flows of inputs from households to firms.
C)  flows of rent payments paid to owners of land.
D)  flows of wages and salaries paid to workers.E) A) and D)
F) A) and C)

Question 10

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Accepted Answer

A) True 
 B)False

Question 11

Figure 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) B) and C)
F) B) and D)

Question 12

Which of the following is not correct?

Accepted Answer

A)  Economists use some familiar words in specialized ways.
B)  Economics has its own language and its own way of thinking, but few other fields of study do.
C)  Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language.
D)  The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live.E) All of the above
F) None of the above

Question 13

"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement.

Accepted Answer

A) True 
 B)False

Question 14

Figure 2-6 
-Refer to Figure 2-6. This economy cannot produce at which point(s) ?

Accepted Answer

A)  A, B, D
B)  C, D, F, G
C)  C, F, G
D)  DE) B) and C)
F) A) and D)

Question 15

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Accepted Answer

A)  similar opinions about the validity of economic theories
B)  significant differences in education
C)  differences in personal values
D)  a reliance on normative statement for research theoriesE) B) and C)
F) A) and D)

Question 17

A statement describing how the world is

Accepted Answer

A)  is a normative statement.
B)  is a positive statement.
C)  would only be made by an economist speaking as a policy adviser.
D)  would only be made by an economist employed by the government.E) A) and B)
F) C) and D)

Question 18

Figure 2-4 
-Refer to Figure 2-4. Efficient production is represented by which point(s) ?

Accepted Answer

A)  Y, Z
B)  W, Y, Z
C)  V, Y, Z
D)  VE) A) and B)
F) A) and C)

Question 19

You know an economist has crossed the line from policy adviser to scientist when he or she

Accepted Answer

A)  claims that the problem at hand is widely misunderstood by non-economists.
B)  makes positive statements.
C)  talks about values.
D)  makes a claim about how the world should be.E) B) and C)
F) None of the above

Question 20

In the ordered pair (17, 75) , 75 is the

Accepted Answer

A)  horizontal location of the point.
B)  the slope.
C)  the x-coordinate.
D)  the y-coordinate.E) A) and C)
F) None of the above

Exam 2: Thinking Like an Economist

Figure 2-5 -Refer to Figure 2-5. If this economy devotes all of its resources to the production of sweaters, then it will produce

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Figure 2-6 -Refer to Figure 2-6. This economy cannot produce at which point(s) ?

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Factors of production are

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In the ordered pair (17, 75) , 75 is the

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Which of the following is not correct?

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A statement describing how the world is

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All scientific models, including economic models, simplify reality in order to improve our understanding of it.

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Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

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"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement.

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Figure 2-14 -Refer to Figure 2-14. It is possible for this economy to produce 75 doghouses.

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Figure 2-2 -Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

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You know an economist has crossed the line from policy adviser to scientist when he or she

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Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

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When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good

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Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

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Differences in scientific judgement between economists is similar to all of the following except

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Normative statements are

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Which of the following is not correct?

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Figure 2-4 -Refer to Figure 2-4. Efficient production is represented by which point(s) ?

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The nation's antitrust laws are enforced by economists at the Department of

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