Question 1

Figure 2-3
 
-Refer to Figure 2-3.Efficient production is represented by which point(s) ?

Accepted Answer

A)   J, K, N
B)   K, M, N
C)   K, N
D)   L, ME) B) and D)
F) A) and B)

Question 2

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

Accepted Answer

A) True 
 B)False

Question 3

In the circular-flow diagram,which of the following is not a factor of production?

Accepted Answer

A)   labor
B)   land
C)   capital
D)   moneyE) A) and B)
F) None of the above

Question 4

Analysis of data on workers and those looking for work is conducted by economists at the

Accepted Answer

A)   Office of Management and Budget.
B)   Department of Labor.
C)   Congressional Budget Office.
D)   Department of the Treasury.E) B) and D)
F) A) and D)

Question 5

The circular-flow diagram explains,in general terms,how the economy is organized and how participants in the economy interact with one another.

Accepted Answer

A) True 
 B)False

Question 6

Figure 2-6
 
-Refer to Figure 2-6.If this economy devotes all of its resources to the production of clocks,then it will produce

Accepted Answer

A)   0 clocks and 35 candles.
B)   10 clocks and 25 candles.
C)   16 clocks and 0 candles.
D)   16 clocks and 35 candles.E) A) and D)
F) A) and C)

Question 7

Figure 2-6
 
-Refer to Figure 2-6.Unemployment could cause this economy to produce at which point(s) ?

Accepted Answer

A)   A, B
B)   C, D, F, G
C)   C, F, G
D)   DE) All of the above
F) A) and D)

Question 8

Figure 2-9

-Refer to Figure 2-9,Panel (a) and Panel (b) .Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b) ?

Accepted Answer

A)   the tradeoff between the production of printers and computers changes
B)   production of 2 printers and 5 computers becomes efficient
C)   production of 6 printers and 7 computers becomes possible
D)   the opportunity cost of a computer is higher at all levels of computer productionE) B) and C)
F) A) and B)

Question 9

In the circular-flow diagram,

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) A) and D)
F) A) and C)

Question 10

A circular-flow diagram is a model that

Accepted Answer

A)   helps to explain how participants in the economy interact with one another.
B)   helps to explain how the economy is organized.
C)   incorporates all aspects of the real economy.
D)   Both (a)  and (b)  are correct.E) All of the above
F) B) and C)

Question 11

Figure 2-14
 
-Refer to Figure 2-14.The opportunity cost of an additional doghouse increases as more doghouses are produced.

Accepted Answer

A) True 
 B)False

Question 12

The two loops in the circular-flow diagram represent

Accepted Answer

A)   the flow of goods and the flow of services.
B)   the flow of dollars and the flow of financial assets.
C)   the flow of inputs into production processes and the flow of outputs from production processes.
D)   the flows of inputs and outputs and the flow of dollars.E) A) and C)
F) A) and B)

Question 13

Which of the following is not an example of a positive,as opposed to normative,statement?

Accepted Answer

A)   Higher gasoline prices will reduce gasoline consumption.
B)   Equality is more important than efficiency.
C)   Trade restrictions lower our standard of living.
D)   If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.E) C) and D)
F) B) and C)

Question 14

Figure 2-2
 
-Refer to Figure 2-2.If Box A of this circular-flow diagram represents firms,then which box represents households?

Accepted Answer

A)   Box B
B)   Box C
C)   Box D
D)   Any one of the other boxes (B, C, or 
D)   could represent households.E) C) and D)
F) A) and D)

Question 15

Economists build economic models by

Accepted Answer

A)   generating data.
B)   conducting controlled experiments in a lab.
C)   making assumptions.
D)   reviewing statistical forecasts.E) A) and C)
F) B) and C)

Question 16

When a relevant variable that is not named on either axis changes,

Accepted Answer

A)   there will be a movement along the curve.
B)   the curve will rotate clockwise.
C)   the curve will be unaffected since only the variables on the axis affect the curve.
D)   the curve will shift.E) None of the above
F) B) and C)

Question 17

The production possibilities frontier illustrates

Accepted Answer

A)   the trade-off between efficiency and equality.
B)   the combination of output that an economy should produce.
C)   the combination of output that each member of society should consume.
D)   None of the above is correct.E) A) and B)
F) B) and D)

Question 18

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) None of the above
F) B) and C)

Question 19

When an economy is operating inside its production possibilities frontier,we know that

Accepted Answer

A)   there are unused resources or inefficiencies in the economy.
B)   all of the economy's resources are fully employed.
C)   economic growth would have to occur in order for the economy to move to a point on the frontier.
D)   in order to produce more of one good, the economy would have to give up some of the other good.E) B) and D)
F) A) and C)

Question 20

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)   households provide firms with savings for investment.
B)   households provide firms with labor, land, and capital.
C)   firms provide households with output.
D)   firms provide households with profit.E) B) and C)
F) A) and D)

Exam 2: Thinking Like an Economist.

The circular-flow diagram explains,in general terms,how the economy is organized and how participants in the economy interact with one another.

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Figure 2-14 -Refer to Figure 2-14.The opportunity cost of an additional doghouse increases as more doghouses are produced.

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

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Figure 2-6 -Refer to Figure 2-6.If this economy devotes all of its resources to the production of clocks,then it will produce

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Figure 2-9 -Refer to Figure 2-9,Panel (a) and Panel (b) .Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b) ?

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Analysis of data on workers and those looking for work is conducted by economists at the

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The production possibilities frontier illustrates

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The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

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When an economy is operating inside its production possibilities frontier,we know that

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Figure 2-2 -Refer to Figure 2-2.If Box A of this circular-flow diagram represents firms,then which box represents households?

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The two loops in the circular-flow diagram represent

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Figure 2-3 -Refer to Figure 2-3.Efficient production is represented by which point(s) ?

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In the markets for goods and services in the circular-flow diagram,

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When a relevant variable that is not named on either axis changes,

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Economists build economic models by

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Which of the following is not an example of a positive,as opposed to normative,statement?

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Figure 2-6 -Refer to Figure 2-6.Unemployment could cause this economy to produce at which point(s) ?

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A circular-flow diagram is a model that

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In the circular-flow diagram,

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In the circular-flow diagram,which of the following is not a factor of production?

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