Question 1

In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 2

The slope of a line is equal to

Accepted Answer

A)   the change in the value of x divided by the change in the value of y.
B)   the change in the value of y divided by the change in the value of x.
C)   the horizontal distance divided by the vertical distance.
D)   the value of y divided by the value of x.E) B) and D)
F) C) and D)

Question 3

Figure 2-2 
-Refer to Figure 2-2. Carla regularly buys fruits and vegetables at a grocery store. Roberto regularly pays a lawn- care company to mow his lawn. If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram, then the money paid by Roberto to the lawn-care company is represented by an arrow

Accepted Answer

A)   from Box A to Box D.
B)   from Box B to Box C.
C)   from Box C to Box B.
D)   from Box D to Box A.E) B) and C)
F) A) and D)

Question 4

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False

Question 5

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) B) and D)
F) B) and C)

Question 6

An example of a price that changes only infrequently is the price of

Accepted Answer

A)   stocks on the New York Stock Exchange.
B)   crude oil.
C)   residential real estate.
D)   magazines sold at newsstands.E) A) and B)
F) B) and D)

Question 7

Table 2-5
 
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following statements is correct?

Accepted Answer

A)   The opportunity cost of a bushel of corn does not depend on how many bushels of wheat are being produced.
B)   The opportunity cost of a bushel of corn increases as more corn is produced.
C)   The opportunity cost of a bushel of corn decreases as more corn is produced.
D)   The opportunity cost of a bushel of wheat decreases as more wheat is produced.E) None of the above
F) A) and C)

Question 8

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

Accepted Answer

A)   2 donuts.
B)   2 donuts and 2 cups of coffee.
C)   2 cups of coffee.
D)   6 cups of coffee.E) None of the above
F) C) and D)

Question 9

In the simple circular-flow diagram, who buys the factors of production?

Accepted Answer

A)   households only
B)   firms only
C)   both households and firms
D)   neither households nor firmsE) A) and B)
F) A) and C)

Question 10

In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now?

Accepted Answer

A)   The economy experiences economic growth.
B)   There is a technological advance in the toy industry, but the greeting card industry experiences no such advance.
C)   There is a technological advance in the greeting card industry, but the toy industry experiences no such advance.
D)   All of the above are correct.E) C) and D)
F) A) and D)

Question 11

Figure 2-9
Panel a)  Panel b) 
  
-Refer to Figure 2-9, Panel a) . Production at point K is

Accepted Answer

A)   possible and efficient.
B)   possible but inefficient.
C)   impossible but efficient.
D)   impossible and inefficient.E) A) and D)
F) All of the above

Question 12

Historical episodes allow economists to illustrate and evaluate current economic theories.

Accepted Answer

A) True 
 B)False

Question 13

In the simple circular-flow diagram,

Accepted Answer

A)   households own the factors of production.
B)   households buy all the goods and services that firms produce.
C)   land, labor, and capital flow from households to firms.
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 14

Figure 2-5 
-Refer to Figure 2-5. This economy cannot currently produce 70 washers and 70 dryers because

Accepted Answer

A)   it is not using all of its resources.
B)   it is not using the most efficient production process.
C)   it does not have the resources and technology to produce that level of output.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 15

Figure 2-20
Relationship Between Years of Education and Annual Income 
-Refer to Figure 2-20. Senator Smith observes the graph and concludes that people who earn higher incomes attend school for more years. Senator Jones observes the graph and concludes that people who attend school for more years earn higher incomes. Who is correct?

Accepted Answer

A)   Senator Smith is correct.
B)   Senator Jones is correct.
C)   It is difficult to say which senator might be correct due to the reverse causality problem.
D)   It is difficult to say which senator might be correct due to omitted variable bias.E) All of the above
F) A) and C)

Question 16

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) B) and C)
F) C) and D)

Question 17

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Accepted Answer

A)   in the markets for factors of production exchanging labor for income.
B)   in the markets for factors of production exchanging flowers for revenue.
C)   in the markets for goods and services exchanging flowers for wages, rent, and profit.
D)   in the markets for goods and services exchanging labor for income.E) None of the above
F) A) and B)

Question 18

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

Accepted Answer

A)   the effect of foreign direct investment on economic growth
B)   the effect of a sales tax on the cigarette industry
C)   the effect of an investment tax credit on the economy's capital stock
D)   the effect of a war on government spendingE) B) and C)
F) A) and B)

Question 19

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?

Accepted Answer

A)   Dylan receives a salary for his work as a financial analyst for an investment firm.
B)   Kristin buys two business suits to wear to her job as a Chief Information Officer.
C)   Jim receives clean water in his home in exchange for paying his water bill.
D)   Caroline owns a nail salon and receives payments from her clients for her services.E) A) and D)
F) C) and D)

Question 20

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Correct Answer
verified

In the simple circular-flow diagram, who buys the factors of production?

Correct Answer
verified

In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Historical episodes allow economists to illustrate and evaluate current economic theories.

Correct Answer
verified

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Correct Answer
verified

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Correct Answer
verified

Figure 2-5 -Refer to Figure 2-5. This economy cannot currently produce 70 washers and 70 dryers because

Correct Answer
verified

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Correct Answer
verified

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?

Correct Answer
verified

Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following statements is correct?

Correct Answer
verified

The slope of a line is equal to

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

Correct Answer
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An example of a price that changes only infrequently is the price of

Correct Answer
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In the simple circular-flow diagram,

Correct Answer
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Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a) . Production at point K is

Correct Answer
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Correct Answer
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Correct Answer
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Exam 2: Thinking Like an Economist

Correct AnswerverifiedShow Answer

In the simple circular-flow diagram, who buys the factors of production?

Correct AnswerverifiedShow Answer

In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Historical episodes allow economists to illustrate and evaluate current economic theories.

Correct AnswerverifiedShow Answer

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Correct AnswerverifiedShow Answer

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Correct AnswerverifiedShow Answer

Figure 2-5 -Refer to Figure 2-5. This economy cannot currently produce 70 washers and 70 dryers because

Correct AnswerverifiedShow Answer

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Correct AnswerverifiedShow Answer

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?

Correct AnswerverifiedShow Answer

Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The slope of a line is equal 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

An example of a price that changes only infrequently is the price of

Correct AnswerverifiedShow Answer

In the simple circular-flow diagram,

Correct AnswerverifiedShow Answer

Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a) . Production at point K is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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