micro Ch. 2 Quiz pt 1

Which of the following statements regarding the circular-flow diagram is true? a. The factors of production are owned by households. b. If Susan works for IBM and receives a paycheck, the transaction takes place in the market for goods and services. c. If IBM sells a computer, the transaction takes place in the market for factors of production. d. The factors of production are owned by firms. e. None of the above is true.

a. The factors of production are owned by households.

Economic models are a. built with assumptions. b. useless if they are simple. c. created to duplicate reality. d. usually made of wood and plastic.

a. built with assumptions.

Points on the production possibilities frontier are a. efficient. b. inefficient. c. unattainable. d. normative. e. none of the above.

a. efficient.

In which of the following cases is the assumption most reasonable? a. To address the impact of taxes on income distribution, an economist assumes that everyone earns the same income. b. To address the benefits of trade, an economist assumes that there are two people and two goods. c. To estimate the speed at which a beach ball falls, a physicist assumes that it falls in a vacuum. d. To address the impact of money growth on inflation, an economist assumes that money is strictly coins.

b. To address the benefits of trade, an economist assumes that there are two people and two goods.

Which of the following will not shift a country's production possibilities frontier outward? a. an increase in the labor force b. a reduction in unemployment c. an increase in the capital stock d. an advance in technology

b. a reduction in unemployment

Which of the following is most likely to produce scientific evidence about a theory? a. an economist employed by the AFL/CIO doing research on the impact of trade restrictions on workers' wages b. a tenured economist employed at a leading university analyzing the impact of bank regulations on rural lending c. a lawyer employed by General Motors addressing the impact of air bags on passenger safety d. a radio talk show host collecting data on how capital markets respond to taxation

b. a tenured economist employed at a leading university analyzing the impact of bank regulations on rural lending

Economic growth is depicted by a. a shift in the production possibilities frontier inward. b. a movement along a production possibilities frontier toward capital goods. c. a shift in the production possibilities frontier outward. d. a movement from inside the curve toward the curve.

c. a shift in the production possibilities frontier outward.

Which of the following is not a factor of production? a. land b. labor c. capital d. money e. All of the above are factors of production.

d. money

The scientific method requires that a. scientists use precision equipment. b. only incorrect theories are tested. c. only correct theories are tested. d. scientists use test tubes and have clean labs. e. scientists be objective.

e. scientists be objective.