Question 1

Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred

Accepted Answer

A)  disagree about the validity of a positive theory.
B)  have different normative views about tax policy.
C)  must both be incorrect because tax policy is never that simple.
D)  None of the above is correct.E) A) and C)
F) A) and B)

Question 2

"The US should not restrict employers from outsourcing work to foreign countries" is a normative statement.

Accepted Answer

A) True 
 B)False

Question 3

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) All of the above
F) B) and C)

Question 4

Unemployment would cause an economy to

Accepted Answer

A)  produce inside its production possibilities frontier.
B)  produce on its production possibilities frontier.
C)  produce outside its production possibilities frontier.
D)  experience an inward shift of its production possibilities frontier.E) None of the above
F) All of the above

Question 5

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) C) and D)
F) All of the above

Question 6

It is possible for an economy to increase its production of both goods if the economy

Accepted Answer

A)  moves downward and to the right along its production possibilities frontier and the frontier is bowed outward.
B)  moves upward and to the left along its production possibilities frontier and the frontier is bowed outward.
C)  moves in either direction along its production possibilities frontier and the frontier is a straight line.
D)  moves from a situation of inefficient production to a situation of efficient production.E) B) and C)
F) A) and B)

Question 7

Since 1946, the president of the United States has received guidance from a group comprised of three members and a staff of a few dozen economists known as the

Accepted Answer

Council of...

Question 8

The scientific method is the dispassionate development and testing of theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 9

Economists, like mathematicians, physicists, and biologists,

Accepted Answer

A)  make use of the scientific method.
B)  try to address their subject with a scientist's objectivity.
C)  devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 10

Figure 2-9
Panel (a) 
Panel (b)   
-Refer to Figure 2-9, Panel (a) . The opportunity cost of one cup of coffee is highest when the economy produces

Accepted Answer

A)  0 cups of coffee.
B)  2 cups of coffee.
C)  4 cups of coffee.
D)  6 cups of coffee.E) A) and B)
F) B) and D)

Question 11

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

Accepted Answer

A)  society's preferences.
B)  the available production technology.
C)  a fair distribution of the output.
D)  the available demand for the output.E) B) and C)
F) None of the above

Question 12

What type of statement is a prescriptive statement about how the world ought to be?

Accepted Answer

The answer of What type of statement is a prescriptive...

Question 13

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. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Accepted Answer

The answer of Figure 2-14  Consider the production possibilities...

Question 14

Figure 2-22 
-Refer to Figure 2-22. What is the slope of the line with points A, B, and C?

Accepted Answer

The answer of Figure 2-22 
-Refer to Figure 2-22. What...

Question 15

Figure 2-7 
-Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Accepted Answer

A)  0 engines and 40 tvs.
B)  10 engines and 35 tvs.
C)  40 engines and 0 tvs.
D)  40 engines and 40 tvs.E) All of the above
F) C) and D)

Question 16

Alfonso has noticed that increases in unemployment insurance claims are associated with recessions, and therefore he advocates limits on unemployment insurance so as to prevent recessions. Mary has noticed that most drug addicts once attended schools, and therefore she advocates getting rid of schools so as to prevent drug addiction.

Accepted Answer

A)  The reasoning of both Alfonso and Mary suffers from the omitted variable problem.
B)  The reasoning of both Alfonso and Mary suffers from the reverse causality problem.
C)  Alfonso's reasoning suffers from the reverse causality problem, and Mary's reasoning suffers from the omitted variable problem.
D)  Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem.E) A) and D)
F) A) and C)

Question 17

Figure 2-7 
-Refer to Figure 2-7. This economy has the ability to produce at which point(s) ?

Accepted Answer

A)  N, O, P
B)  L, M
C)  L, M, N, O, P
D)  L, M, QE) B) and D)
F) All of the above

Question 18

Figure 2-2 
-Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

Accepted Answer

A)  households and government.
B)  firms and government.
C)  the markets for goods and services and the markets for financial assets.
D)  the markets for goods and services and the markets for factors of production.E) All of the above
F) B) and C)

Question 19

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. What is the opportunity cost of moving from point R to point Q?

Accepted Answer

80 bushels...

Question 20

When studying the effects of changes in public policy, economists believe that

Accepted Answer

A)  it is important to distinguish between the short run and the long run.
B)  the assumptions used in studying those effects should be the same for the short run as for the long run.
C)  the short-run effects of those changes are always more beneficial to society than are the long-run effects.
D)  the long-run effects of those changes are always more beneficial to society than are the short-run effects.E) A) and C)
F) A) and D)

Exam 2: Thinking Like an Economist

The scientific method is the dispassionate development and testing of theories about how the world works.

Correct Answer
verified

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

Correct Answer
verified

It is possible for an economy to increase its production of both goods if the economy

Correct Answer
verified

What type of statement is a prescriptive statement about how the world ought to be?

Correct Answer
verified

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) . The opportunity cost of one cup of coffee is highest when the economy produces

Correct Answer
verified

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

Correct Answer
verified

Figure 2-7 -Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Correct Answer
verified

Correct Answer
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When studying the effects of changes in public policy, economists believe that

Correct Answer
verified

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

Correct Answer
verified

Figure 2-7 -Refer to Figure 2-7. This economy has the ability to produce at which point(s) ?

Correct Answer
verified

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. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Correct Answer
verified

Unemployment would cause an economy to

Correct Answer
verified

Figure 2-2 -Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

Correct Answer
verified

Economists, like mathematicians, physicists, and biologists,

Correct Answer
verified

Correct Answer
verified

"The US should not restrict employers from outsourcing work to foreign countries" is a normative statement.

Correct Answer
verified

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. What is the opportunity cost of moving from point R to point Q?

Correct Answer
verified
80 bushels...
View Answer

Figure 2-22 -Refer to Figure 2-22. What is the slope of the line with points A, B, and C?

Correct Answer
verified

Since 1946, the president of the United States has received guidance from a group comprised of three members and a staff of a few dozen economists known as the

Correct Answer
verified
Council of...
View Answer

Exam 2: Thinking Like an Economist

The scientific method is the dispassionate development and testing of theories about how the world works.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

It is possible for an economy to increase its production of both goods if the economy

Correct AnswerverifiedShow Answer

What type of statement is a prescriptive statement about how the world ought to be?

Correct AnswerverifiedShow Answer

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) . The opportunity cost of one cup of coffee is highest when the economy produces

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 2-7 -Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When studying the effects of changes in public policy, economists believe that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 2-7 -Refer to Figure 2-7. This economy has the ability to produce at which point(s) ?

Correct AnswerverifiedShow Answer

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. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Correct AnswerverifiedShow Answer

Unemployment would cause an economy to

Correct AnswerverifiedShow Answer

Figure 2-2 -Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

Correct AnswerverifiedShow Answer

Economists, like mathematicians, physicists, and biologists,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

"The US should not restrict employers from outsourcing work to foreign countries" is a normative statement.

Correct AnswerverifiedShow Answer

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. What is the opportunity cost of moving from point R to point Q?

Correct Answerverified80 bushels...View AnswerShow Answer

Figure 2-22 -Refer to Figure 2-22. What is the slope of the line with points A, B, and C?

Correct AnswerverifiedShow Answer

Since 1946, the president of the United States has received guidance from a group comprised of three members and a staff of a few dozen economists known as the

Correct AnswerverifiedCouncil of...View AnswerShow Answer

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80 bushels...
View Answer

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Council of...
View Answer