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Exam 2: Thinking Like an Economist

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Question 61

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Economists use one standard set of assumptions to answer all economic questions.

A) True
B) False

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Question 62

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Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

A) a controlled experiment that lead to the formulation of a scientific theory.
B) being in the right place at the right time.
C) an idea whose time had come.
D) the interplay between observation and theory in science.

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

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Question 63

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

Points inside the production possibilities frontier represent inefficient levels of production.

In the circular-flow diagram, which of the following is not a factor of production?

Table 2-1 The following table contains some production possibilities for an economy for a given month. $\begin{array} { | c | c | } \hline \text { Tables } & \text { Chairs } \\\hline 5 & 300 \\\hline 10 & ? \\\hline 15 & 100 \\\hline\end{array}$ -Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Normative conclusions

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of goods and services?

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

Identify each of the following topics as being part of microeconomics or macroeconomics: a.the impact of a change in consumer income on the purchase of luxury automobiles b.the effect of a change in the price of Coke on the purchase of Pepsi c.the impact of a war in the Middle East on the rate of inflation in the United States d.factors influencing the rate of economic growth e.factors influencing the demand for tractors f. the impact of tax policy on national saving g. the effect of pollution taxes on the U.S. copper industry h. the degree of competition in the cable television industry i. the effect of a balanced-budget amendment on economic stability j. the impact of deregulation on the savings and loan industry

Figure 2-3 -Refer to Figure 2-3. Unemployment could cause this economy to produce at which point(s) ?

The scientific method is applicable to studying

Albert Einstein once made the following observation about science:

Production possibilities frontiers are usually bowed outward. This is because

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

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

Table 2-5 $\begin{array} { | c | c | } \hline \text { Cooki=s (in dazens) } & \text { Caffe (inguund) } \\\hline 1000 & 0 \\\hline 800 & 350 \\\hline 600 & 650 \\\hline 400 & 800 \\\hline 200 & 1000 \\\hline 0 & 1150 \\\hline\end{array}$ -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is

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

Figure 2-15 Relationship between Price and Cups of Coffee -Refer to Figure 2-15. The slope of the line containing points A and B is

A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is