Microeconomics Chapter 2 Practice Problems

b. resources are not completely adaptable

Economists believe that production possibilities frontiers are often bowed because a. trade-offs inevitably create unemployment b. resources are not completely adaptable c. opportunity costs are constant d. of improvements in technology

b. laboratory experiments

In conducting their research, economists often substitute historical events and historical episodes for a. theories and observations b. laboratory experiments c. models d. assumptions

d. wages rent and profit

In the circular flow diagram, which of the following items flows from firms to households through the markets for the factors of production? a. goods and services b. dollars paid to land, labor, and capital c. dollars spent on goods and services d. wages rent and profit

c. dollars spent on goods and services

In the circular flow diagram, which of the following items flows from households to firms through the markets for goods and services? a. goods and services b. dollars paid to land, labor, and capital c. dollars spent on goods and services d. wages rent and profit

a. households only

In the simple circular-flow diagram, who consumes the goods and services that firms produce? a. households only b. firms only c. both households and firms d. neither households nor firms

a. on the production possibilities frontier

Production is efficient if the economy is producing at a point a. on the production possibilities frontier b. outside the production possibilities frontier c. on or inside the production possibilities frontier d. inside the production possibilities frontier

c. usually regarded as an art in scientific thinking

The decision of which assumptions to make is a. an easy decision for an economist, but a difficult decision for a physicist or a chemist b. not a particularly important decision for an economist c. usually regarded as an art in scientific thinking d. wages, rent, and profit

C. contribute to an understanding of how the World Works

The goal of an economist who formulates new theories is to a. provide an interesting framework on 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

d. Treasury

The nation's antitrust laws are enforced by economists at the department of a. Labor b. Health and Human Services c. Justice d. Treasury

b. the available production technology

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 a. society's preferences b. the available production technology c. a fair distribution of the output d. the available demand the output

False

True or False: A productions possibility frontier has a bowed shape if the opportunity cost is constant at all levels of output

True

True or False: Economic Models are most often compromised of diagrams and equations

True

True or False: Evaluating normative statements involves values as well as facts

True

True or False: 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.

False

True or False: In the Circular-Flow Diagram, firms consume all the goods and services they produce

False

True or False: Normative Statements describe how the world is, while positive statements prescribe how the world should be.

c. income taxes should be reduced

Which of the following is an example of a normative statement as opposed to positive statement? a. The price of gasoline came down sharply during the second half of 2006 b. If the government were to set a maximum legal price on gasoline, then there would be a shortage of gasoline c. income taxes should be reduced d. the federal government obtains much of its revenue from income taxes

b. reducing emissions reduces days missed from school due to asthma

Which of the following is an example of a positive statement as opposed to normative statement? a. Americans deserve a cleaner environment b. reducing emissions reduces days missed from school due to asthma c. all Americans are entitled to quality health care d. Economic policies should focus on improving equality

a. descriptive

normative statements are NOT a. descriptive b. prescriptive c. claims about how the world should be d. made by economists speaking as policy advisors

c. Microeconomics and macroeconomics are distinct from one another yet they are closely related

which of the following statements beset captures the relationship between microeconomics and macroeconomics? a. For the most part, micro-economists are unconcerned with macroeconomics and macroeconomists are unconcerned with microeconomics b. Micro-economists 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