Econ Exam 1 Ch. 2

Refer to Figure 2-4. This economy has the ability to produce at which point(s)? a. R, T, U b. Q, R, T, U c. T d. R, U

a. R, T, U

Refer to Figure 2-13. Which of the following combinations of points are both efficient and attainable for this economy? a. G, H b. J, K c. F, I, L d. F, G, H, I, L

c. F, I, L

Refer to Figure 2-13. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology? a. F, G b. I, L c. J, K d. G, H

c. J, K

Refer to Figure 2-4. This economy cannot produce at which point(s)? a. Q b. S c. Q, S d. Q, S, T

c. Q, S

Refer to Figure 2-4. Unemployment could cause this economy to produce at which point(s)? a. R, U b. Q, S c. T d. Q, S, T

c. T

Refer to Figure 2-1. Which arrow represents the flow of goods and services? a. C b. D c. A d. B

d. B

Economic models are built with a. facts about the legal system. b. statistical forecasts. c. recommendations concerning public policies. d. assumptions.

d. assumptions.

A model that shows how dollars flow through markets among households and firms is called the a. demand and supply diagram. b. comparative advantage model. c. production possibilities frontier. d. circular-flow diagram.

d. circular-flow diagram.

Microeconomics is the study of a. how money affects the economy. b. how government affects the economy. c. how the economy as a whole works. d. how individual households and firms make decisions.

d. how individual households and firms make decisions.

According to the circular-flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates 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 labor for income. d. in the markets for goods and services exchanging flowers for wages, rent, and profit.

a. in the markets for factors of production exchanging labor for income.

A production possibilities frontier shifts outward when a. the economy experiences economic growth. b. the desires of the economy's citizens change. c. opportunity costs are lessened. d. at least one of the basic principles of economics is violated.

a. the economy experiences economic growth.

A production possibilities frontier can shift outward if a. there is a technological improvement. b. resources are shifted from the production of one good to the production of the other good. c. government increases the amount of money in the economy. d. the economy abandons inefficient production methods in favor of efficient production methods.

a. there is a technological improvement

Factors of production are a. assumed to be owned by firms in the circular-flow diagram. b. also called output. c. abundant in most economies. d. used to produce goods and services.

d. used to produce goods and services.

Refer to Figure 2-10, Panel (a). To gain 2 tractors by moving from point W to point V, society must sacrifice a. 12 sofas. b. employment. c. efficiency. d. More than one of the above is correct.

a. 12 sofas.

Macroeconomics is the study of a. economy-wide phenomena. b. individual decision makers. c. international trade. d. markets for large products.

a. economy-wide phenomena

An economic outcome is said to be efficient if the economy is a. getting all it can get from the scarce resources it has available. b. conserving on resources, rather than using all available resources. c. able to produce more than what is currently being produced without additional resources. d. using all of the scarce resources it has available.

a. getting all it can get from the scarce resources it has available.

Refer to Figure 2-10, Panel (a). The movement from point W to point Y could be caused by a. unemployment. b. economic growth. c. an improvement in efficiency. d. an advance in production technology.

a. unemployment.

Refer to Figure 2-4. Efficient production is represented by which point(s)? a. Q, R, U b. R, U c. R, T, U d. S, T

b. R, U

Refer to Figure 2-4. Inefficient production is represented by which point(s)? a. Q, S b. T c. Q, S, T d. R, U

b. T

Any point on a country's production possibilities frontier represents a combination of two goods that an economy a. can produce using some portion, but not all, of its resources and technology. b. can produce using all available resources and technology. c. may be able to produce in the future with more resources and/or superior technology. d. will never be able to produce.

b. can produce using all available resources and technology.

Economists make assumptions to a. make it easier to teach economic concepts and analysis. b. make a complex world easier to understand. c. provide issues for political discussion. d. create policy alternatives that are incomplete or subject to criticism.

b. make a complex world easier to understand.

Efficiency is illustrated by a. the circular-flow diagram only. b. the production possibilities frontier only. c. neither the production possibilities frontier nor the circular-flow diagram. d. both the production possibilities frontier and the circular-flow diagram.

b. the production possibilities frontier only.

Refer to Figure 2-10, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by a. an improvement in sofa production technology. b. an improvement in both sofa and tractor production technology. c. an improvement in tractor production technology. d. unemployment.

c. an improvement in tractor production technology.

Economic models a. are simplifications of reality, and in this respect economic models are very different from other scientific models. b. are constructed to mirror reality as closely as possible, and in this respect economic models are very different from other scientific models. c. are simplifications of reality, and in this respect economic models are no different from other scientific models. d. are constructed to mirror reality as closely as possible, and in this respect economic models are no different from other scientific models.

c. are simplifications of reality, and in this respect economic models are no different from other scientific models.

Economic models a. are useful because they do not omit any real-world details. b. are not useful because they omit many real-world details. c. are usually composed of diagrams and equations. d. are usually plastic representations of the economy.

c. are usually composed of diagrams and equations.

Refer to Figure 2-12. The shift of the production possibilities frontier from A to B can best be described as a. an improvement in the allocation of resources. b. a downturn in the economy. c. economic growth. d. an enhancement of equality.

c. economic growth.

Another term for factors of production is a. goods. b. services. c. output. d. inputs.

d. inputs.

An economy's production of two goods is efficient if a. all members of society consume equal portions of the goods. b. the opportunity cost of producing more of one good is zero. c. the goods are produced using only some of society's available resources. d. it is impossible to produce more of one good without producing less of the other.

d. it is impossible to produce more of one good without producing less of the other.

Refer to Figure 2-10, Panel (a). Production at point Y is a. impossible but efficient. b. possible and efficient. c. impossible and inefficient. d. possible but inefficient.

d. possible but inefficient.

A model can be accurately described as a a. theoretical abstraction with very little value. b. realistic and carefully constructed theory. c. device that is useful only to the people who created it. d. simplification of reality.

d. simplification of reality.

Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. When society moves from point A to point B, a. the opportunity cost is increasing. b. it moves from an inefficient point to an efficient point. c. it is giving up cars to get sofas. d. the opportunity cost is the same as when society moves from point B to point C.

d. the opportunity cost is the same as when society moves from point B to point C.