Question 1

Which of the following best describes the two primary roles of economists?

Accepted Answer

Scientists who try to explain the world and policy advisors who try to improve it.

Question 2

In the circular-flow diagram, which of the following is NOT a correct pairing of market and flow?

Accepted Answer

Households sell factors of production in the market for goods and services.

Question 3

Suppose an economy can produce either 100 airplanes or 5,000 tons of soybeans. If the opportunity cost of producing 1 airplane is constant, what is the opportunity cost of producing 1 ton of soybeans?

Accepted Answer

$$0.02$$ airplanes

Question 4

Which of the following statements is a positive statement?

Accepted Answer

An increase in the price of gasoline will reduce the quantity demanded.

Question 5

If a point lies inside the Production Possibilities Frontier (PPF), what does this indicate about the economy?

Accepted Answer

Some resources are underutilized or unemployed.

Question 6

Why might the PPF be bowed outward rather than a straight line?

Accepted Answer

Because resources are not equally suited to producing every good.

Question 7

Which of the following would cause the PPF to shift outward?

Accepted Answer

An improvement in technology.

Question 8

Which of the following is an example of a normative statement?

Accepted Answer

The government should eliminate agricultural subsidies.

Question 9

If the opportunity cost of producing 1 ton of soybeans is $$0.02$$ airplanes, how many airplanes must be given up to produce 2,500 tons of soybeans?

Accepted Answer

$$50$$ airplanes

Question 10

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual households and firms; macroeconomics studies the economy as a whole.

Question 11

A country is currently producing at a point on its PPF. What must happen for the country to produce more of one good?

Accepted Answer

It must produce less of the other good.

Question 12

Which of the following is NOT an assumption of the standard PPF model?

Accepted Answer

Resources are unlimited.

Question 13

If a country is producing at a point outside its PPF, what does this indicate?

Accepted Answer

The combination is unattainable with current resources and technology.

Question 14

Which of the following best explains why economists use models?

Accepted Answer

To simplify reality and focus on what is truly important.

Question 15

Suppose the government increases the quantity of money in the economy. According to most economists, what is the likely effect on prices?

Accepted Answer

Prices will rise.

Question 16

Which of the following is a reason why economists may disagree on policy advice?

Accepted Answer

They may have different values and therefore different normative views.

Question 17

If the opportunity cost of producing 1 airplane is 50 tons of soybeans, what is the opportunity cost of producing 2 airplanes?

Accepted Answer

$$100$$ tons of soybeans

Question 18

Which of the following is an example of a scientific judgment that economists might disagree on?

Accepted Answer

The size of the effect of minimum wage laws on unemployment.

Question 19

In the circular-flow diagram, what do firms receive in exchange for selling goods and services?

Accepted Answer

Revenue

Question 20

Which of the following best describes a natural experiment in economics?

Accepted Answer

An event in the real world that allows economists to study the effects of a variable as if it were an experiment.

Chap 2 Ec 201

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