Question 1

Economists regard events from the past as

Accepted Answer

A)  irrelevant, since history is unlikely to repeat itself.
B)  of limited interest, since those events seldom provide any useful economic data.
C)  interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories.
D)  interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future.E) C) and D)
F) All of the above

Question 2

A microeconomist - as opposed to a macroeconomist - might study

Accepted Answer

A)  the effect of a national healthcare program on the nation's unemployment rate.
B)  the effect of new regulations on production in the pulp and paper industry.
C)  the effect of changes in interest rates on gross domestic product.
D)  the growth rate of production in the economy.E) None of the above
F) C) and D)

Question 3

The prairie dog has always been considered a problem for American cattle ranchers. They dig holes that cattle and horses can step in, and they eat grass necessary for cattle. Recently, ranchers have discovered that there is a demand for prairie dogs as pets. In some areas, prairie dogs can sell for as high as $150 each. Cattlemen are now fencing off prairie dog towns on their land so these towns will not be disturbed by their cattle.
Draw a rancher's production possibilities frontier showing increasing opportunity cost of cattle production in terms of prairie dog production. Using a separate graph for each situation, show what would happen to the initial production possibilities frontier in each of the following situations:
a.The outcome is efficient, with ranchers choosing to produce equal numbers of cattle and prairie dogs.
b.As a protest against the government introducing the gray wolf back into the wild in their state, ranchers decide to withhold 25 percent of the available grassland for grazing.
c.The price of prairie dogs increases to $200 each, so ranchers decide to allot additional land for prairie dogs.
d.The government grants new leases to ranchers, giving them 10,000 new acres of grassland each for grazing.
e.
A drought destroys most of the available grass for grazing of cattle, but not for prairie dogs since they also eat plant roots.

Accepted Answer

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Question 4

When studying the effects of public policy changes, economists

Accepted Answer

A)  always refrain from making assumptions.
B)  sometimes make different assumptions about the short run and the long run.
C)  consider only the direct effects of those policy changes and not the indirect effects.
D)  consider only the short-run effects of those policy changes and not the long-run effects.E) B) and C)
F) None of the above

Question 5

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

Question 6

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

Accepted Answer

A)  goods and services
B)  land, labor, and capital
C)  dollars spent on goods and services
D)  wages, rent, and profitE) B) and D)
F) None of the above

Question 7

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 8

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Accepted Answer

A)  For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics.
B)  Microeconomists study markets for small products, whereas macroeconomists study markets for large products.
C)  Microeconomics and macroeconomics are distinct from one another, yet they are closely related.
D)  Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies.E) C) and D)
F) B) and D)

Question 9

Economists believe that production possibilities frontiers are often bowed because

Accepted Answer

A)  trade-offs inevitably create unemployment.
B)  resources are not completely adaptable.
C)  opportunity costs are constant.
D)  of improvements in technology.E) A) and D)
F) B) and C)

Question 10

Figure 2-19
In the following graph the x-axis shows the number of times a commuter rail train stops at a station per hour and the y-axis shows the number of commuter rail passengers per hour.
Commuter Rail Passengers by Frequency of Service 
-Refer to Figure 2-19. A policymaker observes this graph and concludes that increasing the frequency of commuter rail service is a certain way to get more commuters to choose the commuter rail instead of driving their own cars. You warn the policymaker about making a reverse causality mistake with which of the following statements?

Accepted Answer

A)  Higher gas prices are causing more people to choose the commuter rail over driving.
B)  The service frequency was increased in response to an increase in the number of passengers per hour.
C)  There is a positive relationship between frequency of stops and number of passengers.
D)  None of the above is correct.E) A) and B)
F) A) and C)

Question 11

Because it is difficult for economists to use experiments to generate data, they generally must

Accepted Answer

A)  do without data.
B)  substitute assumptions for data when data are unavailable.
C)  rely upon hypothetical data that were previously concocted by other economists.
D)  use whatever data the world gives them.E) A) and C)
F) A) and B)

Question 12

In the circular-flow diagram, another name for goods and services produced by firms is

Accepted Answer

A)  factors of production.
B)  output.
C)  inputs.
D)  resources.E) B) and C)
F) A) and D)

Question 13

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram?

Accepted Answer

A)  a landowner leases land to a farmer
B)  a farmer hires a teenager to help with harvest
C)  a construction company rents trucks for its business
D)  a woman buys corn for dinnerE) B) and C)
F) A) and B)

Question 14

For economists, conducting experiments is often difficult and sometimes impossible.

Accepted Answer

A) True 
 B)False

Question 15

Figure 2-8 
-Refer to Figure 2-8. Efficient production is represented by which point(s) ?

Accepted Answer

A)  J
B)  J, K
C)  J, K, L
D)  J, K, ME) All of the above
F) A) and C)

Question 16

The bowed shape of the production possibilities frontier can be explained by the fact that

Accepted Answer

A)  all resources are scarce.
B)  economic growth is always occurring.
C)  the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.
D)  the only way to get more of one good is to get less of the other.E) All of the above
F) A) and B)

Question 17

Which markets are represented in the simple circular-flow diagram?

Accepted Answer

A)  markets for goods and services and markets for financial assets
B)  markets for factors of production and markets for financial assets
C)  markets for goods and services and markets for factors of production
D)  markets for goods and services and markets for imports and exportsE) A) and B)
F) A) and C)

Question 18

Factors of production are

Accepted Answer

A)  the mathematical calculations firms make in determining their optimal production levels.
B)  social and political conditions that affect production.
C)  the physical relationships between economic inputs and outputs.
D)  inputs into the production process.E) A) and B)
F) A) and D)

Question 19

Economists at which administrative department help design tax policy?

Accepted Answer

Department...

Question 20

The scientific method can be applied to the study of economics.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Because it is difficult for economists to use experiments to generate data, they generally must

Correct Answer
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Which markets are represented in the simple circular-flow diagram?

Correct Answer
verified

Correct Answer
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Economists at which administrative department help design tax policy?

Correct Answer
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Department...
View Answer

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

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

Correct Answer
verified

A microeconomist - as opposed to a macroeconomist - might study

Correct Answer
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Factors of production are

Correct Answer
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The bowed shape of the production possibilities frontier can be explained by the fact that

Correct Answer
verified

In the circular-flow diagram, another name for goods and services produced by firms is

Correct Answer
verified

Economists believe that production possibilities frontiers are often bowed because

Correct Answer
verified

Correct Answer
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(a)
(b) ...
View Answer

The production possibilities frontier illustrates

Correct Answer
verified

The scientific method can be applied to the study of economics.

Correct Answer
verified

When studying the effects of public policy changes, economists

Correct Answer
verified

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Correct Answer
verified

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram?

Correct Answer
verified

Economists regard events from the past as

Correct Answer
verified

For economists, conducting experiments is often difficult and sometimes impossible.

Correct Answer
verified

Figure 2-8 -Refer to Figure 2-8. Efficient production is represented by which point(s) ?

Correct Answer
verified

Exam 2: Thinking Like an Economist

Because it is difficult for economists to use experiments to generate data, they generally must

Correct AnswerverifiedShow Answer

Which markets are represented in the simple circular-flow diagram?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists at which administrative department help design tax policy?

Correct AnswerverifiedDepartment...View AnswerShow Answer

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A microeconomist - as opposed to a macroeconomist - might study

Correct AnswerverifiedShow Answer

Factors of production are

Correct AnswerverifiedShow Answer

The bowed shape of the production possibilities frontier can be explained by the fact that

Correct AnswerverifiedShow Answer

In the circular-flow diagram, another name for goods and services produced by firms is

Correct AnswerverifiedShow Answer

Economists believe that production possibilities frontiers are often bowed because

Correct AnswerverifiedShow Answer

Correct Answerverified(a)(b) ...View AnswerShow Answer

The production possibilities frontier illustrates

Correct AnswerverifiedShow Answer

The scientific method can be applied to the study of economics.

Correct AnswerverifiedShow Answer

When studying the effects of public policy changes, economists

Correct AnswerverifiedShow Answer

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Correct AnswerverifiedShow Answer

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram?

Correct AnswerverifiedShow Answer

Economists regard events from the past as

Correct AnswerverifiedShow Answer

For economists, conducting experiments is often difficult and sometimes impossible.

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8. Efficient production is represented by which point(s) ?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Department...
View Answer

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(a)
(b) ...
View Answer

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