Question 1

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> This diagram should duplicate the essen...

Question 2

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data.

Accepted Answer

A) True 
 B)False

Question 3

The "broken window fallacy"

Accepted Answer

A)  explains why inflation is so high.
B)  is a justification for the government to print more money.
C)  is illustrated when a government program is justified not on its merits but on the number of jobs it will create.
D)  has nothing to do with public policy.E) A) and B)
F) None of the above

Question 4

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Accepted Answer

A)  This month, the economy reduced the unemployment of its resources.
B)  This month, the economy experienced an improvement in technology.
C)  This month, the economy experienced an increase in resources
D)  All of the above are correct.E) A) and C)
F) B) and D)

Question 5

A demand curve shows the relationship between price and

Accepted Answer

A)  income.
B)  quantity demanded.
C)  production.
D)  income and quantity demanded.E) A) and B)
F) B) and C)

Question 6

In the circular-flow diagram,

Accepted Answer

A)  profit flows from households to firms.
B)  labor flows from households to firms.
C)  services flow from households to firms.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 7

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

Question 8

Figure 2-6 
-Refer to Figure 2-6. The opportunity cost of this economy moving from point K to point H is

Accepted Answer

A)  zero.
B)  50 blankets.
C)  60 pillows.
D)  50 blankets and 60 pillows.E) C) and D)
F) A) and B)

Question 9

The goal of an economist who formulates new theories is to

Accepted Answer

A)  provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works.
B)  provoke stimulating debate in scientific journals.
C)  contribute to an understanding of how the world works.
D)  demonstrate that economists, like other scientists, can formulate testable theories.E) B) and D)
F) B) and C)

Question 10

Draw a production possibilities frontier showing increasing opportunity cost of hammers in terms of horseshoes.
a.On the graph, identify the area of feasible outcomes and the area of infeasible outcomes.
b.On the graph, label a point that is efficient and a point that is inefficient.
c.On the graph, illustrate the effect of the discovery of a new vein of iron ore, a resource needed to make both horseshoes and hammers, on this economy.
d.On a second graph, illustrate the effect of a new computerized assembly line in the production of hammers on this economy.

Accepted Answer

The answer of Draw a production possibilities frontier showing increasing...

Question 11

Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

Accepted Answer

A) True 
 B)False

Question 12

When a variable that is named on an axis of a graph changes, the curve shifts.

Accepted Answer

A) True 
 B)False

Question 13

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) A) and B)
F) B) and C)

Question 14

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

Accepted Answer

A)  Unemployed labor is put to work producing jam and bread.
B)  The economy puts its idle capital to work producing jam and bread.
C)  The economy experiences economic growth.
D)  All of the above are correct.E) A) and D)
F) All of the above

Question 15

In the circular-flow diagram,

Accepted Answer

A)  firms own the factors of production.
B)  the factors of production are labor, land, and capital.
C)  the factors of production are also called "output."
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 16

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

Question 17

Figure 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of income payments?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and D)
F) B) and C)

Question 18

Almost all economists agree that rent control

Accepted Answer

A)  has no effect on the rental income of landlords.
B)  allows the market for housing to work more efficiently.
C)  adversely affects the availability and quality of housing.
D)  is a very inexpensive way to help the most needy members of society.E) All of the above
F) C) and D)

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. If this society is producing at point T,

Accepted Answer

A)  there is unemployment.
B)  production is efficient.
C)  growth can only be achieved through an advancement in technology.
D)  the opportunity cost of producing one more sweater is approximately 40 bushels of apples.E) A) and B)
F) C) and D)

Question 20

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

Exam 2: Thinking Like an Economist

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

Correct Answer
verified

Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

Correct Answer
verified

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Correct Answer
verified

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data.

Correct Answer
verified

The "broken window fallacy"

Correct Answer
verified

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

Correct Answer
verified

Figure 2-6 -Refer to Figure 2-6. The opportunity cost of this economy moving from point K to point H is

Correct Answer
verified

In the circular-flow diagram,

Correct Answer
verified

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

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. If this society is producing at point T,

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

Almost all economists agree that rent control

Correct Answer
verified

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Correct Answer
verified
This diagram should duplicate the essen...
View Answer

When a variable that is named on an axis of a graph changes, the curve shifts.

Correct Answer
verified

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of income payments?

Correct Answer
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Correct Answer
verified

The goal of an economist who formulates new theories is to

Correct Answer
verified

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

Correct Answer
verified

A demand curve shows the relationship between price and

Correct Answer
verified

In the circular-flow diagram,

Correct Answer
verified

Exam 2: Thinking Like an Economist

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

Correct AnswerverifiedShow Answer

Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

Correct AnswerverifiedShow Answer

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Correct AnswerverifiedShow Answer

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data.

Correct AnswerverifiedShow Answer

The "broken window fallacy"

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 2-6 -Refer to Figure 2-6. The opportunity cost of this economy moving from point K to point H is

Correct AnswerverifiedShow Answer

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

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

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. If this society is producing at point T,

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

Almost all economists agree that rent control

Correct AnswerverifiedShow Answer

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Correct Answerverified This diagram should duplicate the essen...View AnswerShow Answer

When a variable that is named on an axis of a graph changes, the curve shifts.

Correct AnswerverifiedShow Answer

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of income payments?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The goal of an economist who formulates new theories is to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A demand curve shows the relationship between price and

Correct AnswerverifiedShow Answer

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

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This diagram should duplicate the essen...
View Answer

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Correct Answer
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