Question 1

Which terms are used by an economist?

Accepted Answer

A)   ollie and slide
B)   torts and contracts
C)   absorption and oxidizing reactions
D)   deadweight loss and efficiencyE) B) and D)
F) A) and B)

Question 2

Which of the following is a one-variable graph?

Accepted Answer

A)   a demand curve
B)   a production possibilities curve
C)   a circular-flow diagram
D)   a bar graphE) All of the above
F) None of the above

Question 3

The tradeoff between the production of different goods can change because of technological improvement over time.

Accepted Answer

A) True 
 B)False

Question 4

Figure 2-8 
-Refer to Figure 2-8. What would be an efficient combination of bathtubs and barrels?

Accepted Answer

A)   15 barrels and 6 bathtubs
B)   10 barrels and 14 bathtubs
C)   15 barrels and 10 bathtubs
D)   25 barrels and 12 bathtubsE) All of the above
F) A) and B)

Question 5

When economists are trying to explain the world they are acting as scientists, and when they are trying to improve it, they are policymakers.

Accepted Answer

A) True 
 B)False

Question 6

In a circular-flow diagram, which flows are involved?

Accepted Answer

A)   Taxes flow from households to firms, and transfer payments flow from firms to households.
B)   Income payments flow from firms to households, and sales revenue flows from households to firms.
C)   Resources flow from firms to households, and goods and services flow from households to firms.
D)   Inputs and outputs flow in the same direction as the flow of dollars, from firms to households.E) None of the above
F) C) and D)

Question 7

When a production possibilities frontier is linear, what does it show?

Accepted Answer

A)   a truer picture of real life than a bowed-out production possibilities frontier
B)   that resources are perfectly adaptable from the production of one good to another
C)   an example of increasing opportunity cost
D)   an example of decreasing opportunity costE) None of the above
F) All of the above

Question 8

Figure 2-10 
-Refer to Figure 2-10. What could have caused the movement from point B to point C?

Accepted Answer

A)   inflation
B)   a change in income
C)   a change in the price of roses
D)   a change in the cost of producing rosesE) B) and C)
F) All of the above

Question 9

What do almost all economists agree on about rent control?

Accepted Answer

A)   It improves the availability and quality of housing.
B)   It allows the market for housing to work more efficiently.
C)   It adversely affects the availability and quality of housing.
D)   It is a very inexpensive way to help the most needy members of society.E) A) and B)
F) None of the above

Question 10

Which of the following is NOT a problem associated with graphing in economics?

Accepted Answer

A)   omitted variables
B)   holding everything else constant
C)   reverse causality
D)   the ability to show a relationship between two variablesE) None of the above
F) B) and D)

Question 11

Why is the use of theory and observation more difficult in economics than in sciences, such as physics?

Accepted Answer

A)   It is difficult to evaluate an economic experiment.
B)   It is difficult to devise an economic experiment.
C)   It is difficult to actually perform an experiment in an economic system.
D)   It is difficult to find participants for an economics experiment.E) None of the above
F) C) and D)

Question 12

Figure 2-1 
-Refer to Figure 2-1. Which arrow shows the flow of the factors of production?

Accepted Answer

A)   arrow A
B)   arrow B
C)   arrow C
D)   arrow DE) None of the above
F) A) and B)

Question 13

The field of economics is divided into two subfields: microeconomics and macroeconomics.

Accepted Answer

A) True 
 B)False

Question 14

Figure 2-4 
-Refer to Figure 2-4. Suppose the economy is at point A. What is the opportunity cost of increasing the production of toothbrushes by 10 units?

Accepted Answer

A)   5 toasters
B)   10 toasters
C)   15 toasters
D)   20 toastersE) A) and B)
F) None of the above

Question 15

Figure 2-8 
-Refer to Figure 2-8. Which combination is NOT possible for this economy to produce?

Accepted Answer

A)   10 barrels and 14 bathtubs
B)   20 barrels and 8 bathtubs
C)   25 barrels and 10 bathtubs
D)   30 barrels and 6 bathtubsE) All of the above
F) None of the above

Question 16

When economists are speaking as policy advisors, which statements are they more likely to use?

Accepted Answer

A)   normative statements
B)   positive statements
C)   objective statements
D)   descriptive statementsE) A) and B)
F) A) and C)

Question 17

Which of the following is an example of a product that experiences infrequent price changes?

Accepted Answer

A)   stocks on the Toronto Stock Exchange
B)   gasoline
C)   monthly cell-phone plan
D)   seasonal produce at the grocery storeE) A) and C)
F) A) and B)

Question 18

What do good economic models do?

Accepted Answer

A)   They often leave out important variables, causing serious errors.
B)   They omit many details to allow us to see what is truly important.
C)   They are designed to give a complete picture of a given relationship.
D)   They leave economics to be interpreted in many ways by governments.E) A) and B)
F) A) and D)

Question 19

Figure 2-2 
-Refer to Figure 2-2. In which market are households sellers?

Accepted Answer

A)   Box A
B)   Box B
C)   Box C
D)   Box DE) None of the above
F) A) and B)

Question 20

What happens when economists test theories?

Accepted Answer

A)   They must make do with whatever data the world gives them.
B)   They can manipulate conditions easier than other scientific fields.
C)   They can enlist the government's help to manipulate economic conditions.
D)   They can achieve statistically valid results with much smaller sample sizes.E) B) and D)
F) A) and C)

Exam 2: Thinking Like an Economist

The field of economics is divided into two subfields: microeconomics and macroeconomics.

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Which of the following is NOT a problem associated with graphing in economics?

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When a production possibilities frontier is linear, what does it show?

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Which of the following is an example of a product that experiences infrequent price changes?

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Which of the following is a one-variable graph?

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When economists are speaking as policy advisors, which statements are they more likely to use?

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Figure 2-4 -Refer to Figure 2-4. Suppose the economy is at point A. What is the opportunity cost of increasing the production of toothbrushes by 10 units?

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Figure 2-8 -Refer to Figure 2-8. What would be an efficient combination of bathtubs and barrels?

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Figure 2-8 -Refer to Figure 2-8. Which combination is NOT possible for this economy to produce?

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Figure 2-2 -Refer to Figure 2-2. In which market are households sellers?

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The tradeoff between the production of different goods can change because of technological improvement over time.

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What do almost all economists agree on about rent control?

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Which terms are used by an economist?

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In a circular-flow diagram, which flows are involved?

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What happens when economists test theories?

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What do good economic models do?

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Why is the use of theory and observation more difficult in economics than in sciences, such as physics?

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Figure 2-1 -Refer to Figure 2-1. Which arrow shows the flow of the factors of production?

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When economists are trying to explain the world they are acting as scientists, and when they are trying to improve it, they are policymakers.

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Figure 2-10 -Refer to Figure 2-10. What could have caused the movement from point B to point C?

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