Question 1

Figure 2-3 
-Refer to Figure 2-3.Which shape refers to the markets for goods and services?

Accepted Answer

A)  oval A
B)  oval B
C)  rectangle 1
D)  rectangle 2E) B) and C)
F) A) and D)

Question 2

Which of the following is an example of using the scientific method with a natural experiment?

Accepted Answer

A)  measuring how long it takes a marble to fall from a ten story building
B)  comparing plant growth with and without a soil additive
C)  tracking the price of oil when a war in the Middle East interrupts the flow of crude oil
D)  observing the reaction when two chemicals are mixed togetherE) A) and D)
F) All of the above

Question 3

Who said,"The whole of science is nothing more than the refinement of everyday thinking"?

Accepted Answer

A)  Isaac Newton
B)  Albert Einstein
C)  Adam Smith
D)  Benjamin FranklinE) A) and B)
F) A) and C)

Question 4

Figure 2-3 
-Refer to Figure 2-3.What is flowing from rectangle 1 to oval A?

Accepted Answer

A)  revenue
B)  goods and services sold
C)  factors of production
D)  labor,land,and capitalE) A) and B)
F) All of the above

Question 5

Figure 2-8 
-Refer to Figure 2-8.Which point on the graph best represents the fact that,because resources are scarce,not every conceivable outcome is feasible?

Accepted Answer

A)  point J
B)  point K
C)  point L
D)  point ME) B) and D)
F) None of the above

Question 6

Figure 2-9

-Refer to Figure 2-9,Panel (a) .The opportunity cost of moving from point M to point L is

Accepted Answer

A)  2 donuts.
B)  2 donuts and 4 cups of coffee.
C)  4 donuts.
D)  4 cups of coffee.E) A) and C)
F) All of the above

Question 7

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) A) and C)
F) A) and B)

Question 8

In building economic models,economists often omit

Accepted Answer

A)  assumptions.
B)  theories.
C)  details.
D)  equations.E) B) and D)
F) B) and C)

Question 9

Historical episodes are

Accepted Answer

A)  valuable to economists because they allow economists to see how the science of economics has evolved.
B)  valuable to economists because they allow economists to evaluate economic theories.
C)  not of concern to economists because economics is about predicting the future,not dwelling on the past.
D)  not of concern to economists because the exact circumstances of historical episodes are unlikely to be observed again.E) C) and D)
F) B) and C)

Question 10

In the circular-flow diagram,firms produce

Accepted Answer

A)  goods and services using factors of production.
B)  output using inputs.
C)  factors of production using goods and services.
D)  Both (a) and (b) are correct.E) None of the above
F) A) and B)

Question 11

Figure 2-8 
-Refer to Figure 2-8.Point K represents an outcome in which

Accepted Answer

A)  production is inefficient.
B)  some of the economy's resources are unemployed.
C)  the economy is using all of its resources to produce hammers.
D)  the economy is using all of its nails to produce hammers.E) A) and D)
F) All of the above

Question 12

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A)  a controlled experiment that lead to the formulation of a scientific theory.
B)  being in the right place at the right time.
C)  an idea whose time had come.
D)  the interplay between observation and theory in science.E) A) and D)
F) A) and B)

Question 13

Figure 2-7 
-Refer to Figure 2-7.What is the opportunity cost of moving from point M to point L?

Accepted Answer

A)  zero
B)  15 tvs
C)  20 engines and 15 tvs
D)  20 enginesE) None of the above
F) C) and D)

Question 14

Which of the following statements about economic models is correct?

Accepted Answer

A)  Economic models are built to mirror reality exactly.
B)  Economic models are useful,but they should not be used for the purpose of improving public policies.
C)  Because economic models omit many details,they allow us to see what is truly important.
D)  Economic models seldom incorporate equations or diagrams.E) C) and D)
F) B) and D)

Question 15

Figure 2-4 
-Refer to Figure 2-4.This economy has the ability to produce at which point(s) ?

Accepted Answer

A)  Q,R,T,U
B)  R,T,U
C)  R,U
D)  TE) B) and D)
F) A) and B)

Question 16

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.If this society is producing at point T,

Accepted Answer

A)  there is unemployment.
B)  production is efficient.
C)  growth can only be achieved through an advancement in technology.
D)  the opportunity cost of producing one more sweater is approximately 40 bushels of apples.E) B) and D)
F) C) and D)

Question 17

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A)  performing an experiment in an economic system.
B)  applying mathematical methods to economic analysis.
C)  analyzing available data.
D)  formulating theories about economic events.E) B) and D)
F) B) and C)

Question 18

In constructing models,economists

Accepted Answer

A)  leave out equations,since equations and models tend to contradict one another.
B)  ignore the long run,since models are useful only for short-run analysis.
C)  sometimes make assumptions that are contrary to features of the real world.
D)  try to include every feature of the economy.E) A) and C)
F) B) and D)

Question 19

Indiadesh is a country that produces two goods,textiles and computers.Last year,Indiadesh produced 50,000 textiles and 1300 computers.This year it produced 45,000 textiles and 1100 computers.Given no further information,which of the following events could explain this change?

Accepted Answer

A)  Indiadesh decreased unemployment.
B)  Indiadesh experienced an improvement in textile-making technology.
C)  Indiadesh experienced an improvement in computer-making technology.
D)  Indiadesh experienced a reduction in resources.E) C) and D)
F) B) and C)

Question 20

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.E) A) and D)
F) A) and C)

Exam 2: Thinking Like an Economist: The Economist As Scientist

Figure 2-3 -Refer to Figure 2-3.What is flowing from rectangle 1 to oval A?

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The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

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Figure 2-3 -Refer to Figure 2-3.Which shape refers to the markets for goods and services?

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Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

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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.If this society is producing at point T,

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Which of the following is an example of using the scientific method with a natural experiment?

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Indiadesh is a country that produces two goods,textiles and computers.Last year,Indiadesh produced 50,000 textiles and 1300 computers.This year it produced 45,000 textiles and 1100 computers.Given no further information,which of the following events could explain this change?

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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

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In the circular-flow diagram,firms produce

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Figure 2-8 -Refer to Figure 2-8.Which point on the graph best represents the fact that,because resources are scarce,not every conceivable outcome is feasible?

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Figure 2-8 -Refer to Figure 2-8.Point K represents an outcome in which

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In constructing models,economists

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Which of the following statements about economic models is correct?

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In building economic models,economists often omit

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Who said,"The whole of science is nothing more than the refinement of everyday thinking"?

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Figure 2-9 -Refer to Figure 2-9,Panel (a) .The opportunity cost of moving from point M to point L is

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

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Figure 2-4 -Refer to Figure 2-4.This economy has the ability to produce at which point(s) ?

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Historical episodes are

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Figure 2-7 -Refer to Figure 2-7.What is the opportunity cost of moving from point M to point L?

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