Question 1

Which of the following is necessary to build a good economic model?

Accepted Answer

A)  normative statements 
B)  assumptions 
C)  opinions 
D)  complex math 
E)  realism 
A)  normative statements 
B)  assumptions 
C)  opinions 
D)  complex math 
E)  realism B

Question 2

Why might Shaquille O'Neal,a 7'1" former National Basketball Association (NBA) player,hire professional movers to help him move,even though his size and strength likely make him more proficient (better) at furniture moving than the professionals he may hire?

Accepted Answer

Even today,Shaquille O'Neal has certain occupational opportunities,like being a professional basketball analyst,that most movers do not possess.This suggests that Shaq's opportunity cost may be greater than that of the professional movers,giving the movers a comparative advantage.This was easily apparent when he was still actively playing in the NBA.Moving himself might have meant missing out on practice time,which is important for his continued high-level of performance.Even now that he has retired,the things that he can do with his time (his opportunity cost) may be more valuable than what the movers give up,which still gives the movers a comparative advantage.Because of this,Shaq can be better off hiring movers even if he has an absolute advantage in moving his possessions.

Question 3

An economist's use of experiments and real-world data to test a theory is an example of:

Accepted Answer

A)  the scientific method in economics. 
B)  macroeconomics. 
C)  economic growth. 
D)  normative analysis. 
E)  comparative advantage. 
A)  the scientific method in economics. 
B)  macroeconomics. 
C)  economic growth. 
D)  normative analysis. 
E)  comparative advantage. A

Question 4

Consider the following scenario to answer the next four questions: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie.
-Specialization and trade allow individuals to:

Accepted Answer

A)  consume outside their own production possibilities frontier (PPF). 
B)  shift their PPF outward. 
C)  produce more goods with less technology. 
D)  eliminate scarcity. 
E)  produce fewer goods with less technology. 
A)  consume outside their own production possibilities frontier (PPF). 
B)  shift their PPF outward. 
C)  produce more goods with less technology. 
D)  eliminate scarcity. 
E)  produce fewer goods with less technology.

Question 5

Refer to the following figure to answer the next four questions.
  
-Which of the following represents an inefficient point?

Accepted Answer

A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E 
A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E

Question 6

Which of the following is a normative statement?

Accepted Answer

A)  The sky is blue. 
B)  The sky is green with pink polka dots. 
C)  Points on the production possibilities frontier (PPF) are efficient. 
D)  Points outside the PPF are unattainable with current resources. 
E)  We should strive to push the PPF outward. 
A)  The sky is blue. 
B)  The sky is green with pink polka dots. 
C)  Points on the production possibilities frontier (PPF) are efficient. 
D)  Points outside the PPF are unattainable with current resources. 
E)  We should strive to push the PPF outward.

Question 7

Which of the following is a normative statement?

Accepted Answer

A)  You should wear a helmet when cycling. 
B)  The sky is blue. 
C)  A bicycle has two wheels. 
D)  A unicycle has five wheels. 
E)  Electricity follows the path of least resistance. 
A)  You should wear a helmet when cycling. 
B)  The sky is blue. 
C)  A bicycle has two wheels. 
D)  A unicycle has five wheels. 
E)  Electricity follows the path of least resistance.

Question 8

The process of using current resources to create new capital is:

Accepted Answer

A)  absolute advantage. 
B)  comparative advantage. 
C)  specialization. 
D)  investment. 
E)  free. 
A)  absolute advantage. 
B)  comparative advantage. 
C)  specialization. 
D)  investment. 
E)  free.

Question 9

Which of the following is a positive statement?

Accepted Answer

A)  An economist should test every theory at least twice. 
B)  Increases in the minimum wage cause unemployment. 
C)  We ought to deregulate the mortgage market. 
D)  The government must provide unlimited health care to citizens. 
E)  We should forgo some current consumption in order to invest in the future. 
A)  An economist should test every theory at least twice. 
B)  Increases in the minimum wage cause unemployment. 
C)  We ought to deregulate the mortgage market. 
D)  The government must provide unlimited health care to citizens. 
E)  We should forgo some current consumption in order to invest in the future.

Question 10

To determine which of two producers has a comparative advantage,you would need to know their:

Accepted Answer

A)  increasing relative costs. 
B)  opportunity costs of production for both goods. 
C)  normative beliefs. 
D)  zero-sum games. 
E)  level of investment. 
A)  increasing relative costs. 
B)  opportunity costs of production for both goods. 
C)  normative beliefs. 
D)  zero-sum games. 
E)  level of investment.

Question 11

Consider the following scenario to answer the next four questions: Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Joey takes four hours to bake 1 loaf of bread and four hours to make 1 pie.
-What is Rachel's opportunity cost of baking 1 pie?

Accepted Answer

A)  2 pies 
B)  1 pie 
C)  1 loaf of bread 
D)  1/2 loaf of bread 
E)  2 loaves of bread 
A)  2 pies 
B)  1 pie 
C)  1 loaf of bread 
D)  1/2 loaf of bread 
E)  2 loaves of bread

Question 12

A positive statement:

Accepted Answer

A)  is a claim that can be tested. 
B)  is a statement about what ought to be. 
C)  is a declaration of opinion. 
D)  is a claim that cannot be tested. 
E)  cannot be evaluated using the scientific method. 
A)  is a claim that can be tested. 
B)  is a statement about what ought to be. 
C)  is a declaration of opinion. 
D)  is a claim that cannot be tested. 
E)  cannot be evaluated using the scientific method.

Question 13

Why do economists use models?

Accepted Answer

A)  Models are used to add complexity to a simple world. 
B)  Models allow us to study a simplified version of a complex world. 
C)  Models allow us to control exogenous factors. 
D)  Models make the world harder to understand. 
E)  Models allow us to examine more factors than what actually exists in our world. 
A)  Models are used to add complexity to a simple world. 
B)  Models allow us to study a simplified version of a complex world. 
C)  Models allow us to control exogenous factors. 
D)  Models make the world harder to understand. 
E)  Models allow us to examine more factors than what actually exists in our world.

Question 14

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next two questions.
  
-Which statement best describes the absolute advantage as shown in the graphs?

Accepted Answer

A)  Pam has an absolute advantage in the production of both. 
B)  Jim has an absolute advantage in the production of both. 
C)  Jim has an absolute advantage in the production of pizzas, and Pam has an absolute advantage in the production of stromboli. 
D)  Pam has an absolute advantage in the production of pizzas, and Jim has an absolute advantage in the production of stromboli. 
E)  They both have an absolute advantage in the production of stromboli. 
A)  Pam has an absolute advantage in the production of both. 
B)  Jim has an absolute advantage in the production of both. 
C)  Jim has an absolute advantage in the production of pizzas, and Pam has an absolute advantage in the production of stromboli. 
D)  Pam has an absolute advantage in the production of pizzas, and Jim has an absolute advantage in the production of stromboli. 
E)  They both have an absolute advantage in the production of stromboli.

Question 15

Draw a production possibilities frontier (PPF) for Good A and Good B.Suppose that these goods are subject to increasing relative costs in production,and be sure that your graph reflects this fact.
Now suppose that a new and innovative technology enhances the production of Good A but not Good B.Illustrate how this new innovation changes the production possibilities frontier (PPF).

Accepted Answer

The answer of Draw a production possibilities frontier (PPF) for...

Question 16

You are considering the "dress well,test well" theory,which argues that you perform better on exams when you dress nicely than you do when you wear sweatpants.If you want to test this theory over the course of the semester,which of the following would be an endogenous factor in your experiment?

Accepted Answer

A)  your innate ability in the subject 
B)  the difficulty of the exam 
C)  the relative mix of multiple-choice and short-answer questions 
D)  your clothing choice for the exam 
E)  the amount of time you spend studying for the exam 
A)  your innate ability in the subject 
B)  the difficulty of the exam 
C)  the relative mix of multiple-choice and short-answer questions 
D)  your clothing choice for the exam 
E)  the amount of time you spend studying for the exam

Question 17

The important act of holding all other variables constant while examining a particular variable is known as:

Accepted Answer

A)  endogeneity. 
B)  a normative statement. 
C)  a positive statement. 
D)  macroeconomics. 
E)  ceteris paribus. 
A)  endogeneity. 
B)  a normative statement. 
C)  a positive statement. 
D)  macroeconomics. 
E)  ceteris paribus.

Question 18

When testing a model rocket on your campus quad,which of the following would be an endogenous factor?

Accepted Answer

A)  the current wind speed across the quad 
B)  the quad's elevation and air pressure 
C)  the extent of precipitation 
D)  the gravitational pull of the earth 
E)  the size of the rocket engine 
A)  the current wind speed across the quad 
B)  the quad's elevation and air pressure 
C)  the extent of precipitation 
D)  the gravitational pull of the earth 
E)  the size of the rocket engine

Question 19

Goods that are produced now so that they can be used to produce other goods in the future are called:

Accepted Answer

A)  capital goods. 
B)  consumer goods. 
C)  investment goods. 
D)  normal goods. 
E)  opportunity goods. 
A)  capital goods. 
B)  consumer goods. 
C)  investment goods. 
D)  normal goods. 
E)  opportunity goods.

Question 20

Refer to the following figure for the next three questions.
  
-The opportunity cost of increasing the production of apple pies from 12 to 14 pies is:

Accepted Answer

A)  2 blueberry pies. 
B)  14 apple pies. 
C)  7 blueberry pies. 
D)  4 blueberry pies. 
E)  2 apple pies. 
A)  2 blueberry pies. 
B)  14 apple pies. 
C)  7 blueberry pies. 
D)  4 blueberry pies. 
E)  2 apple pies.

Which of the following is necessary to build a good economic model?

Why might Shaquille O'Neal,a 7'1" former National Basketball Association (NBA) player,hire professional movers to help him move,even though his size and strength likely make him more proficient (better) at furniture moving than the professionals he may hire?

An economist's use of experiments and real-world data to test a theory is an example of:

Refer to the following figure to answer the next four questions. -Which of the following represents an inefficient point?

Which of the following is a normative statement?

Which of the following is a normative statement?

The process of using current resources to create new capital is:

Which of the following is a positive statement?

To determine which of two producers has a comparative advantage,you would need to know their:

A positive statement:

Why do economists use models?

You are considering the "dress well,test well" theory,which argues that you perform better on exams when you dress nicely than you do when you wear sweatpants.If you want to test this theory over the course of the semester,which of the following would be an endogenous factor in your experiment?

The important act of holding all other variables constant while examining a particular variable is known as:

When testing a model rocket on your campus quad,which of the following would be an endogenous factor?

Goods that are produced now so that they can be used to produce other goods in the future are called:

Refer to the following figure for the next three questions. -The opportunity cost of increasing the production of apple pies from 12 to 14 pies is:

The Five Foundations of Economics

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 2: Model Building and Gains From Trade

Which of the following is necessary to build a good economic model?

Why might Shaquille O'Neal,a 7'1" former National Basketball Association (NBA) player,hire professional movers to help him move,even though his size and strength likely make him more proficient (better) at furniture moving than the professionals he may hire?

An economist's use of experiments and real-world data to test a theory is an example of:

Refer to the following figure to answer the next four questions. -Which of the following represents an inefficient point?

Which of the following is a normative statement?

Which of the following is a normative statement?

The process of using current resources to create new capital is:

Which of the following is a positive statement?

To determine which of two producers has a comparative advantage,you would need to know their:

A positive statement:

Why do economists use models?

You are considering the "dress well,test well" theory,which argues that you perform better on exams when you dress nicely than you do when you wear sweatpants.If you want to test this theory over the course of the semester,which of the following would be an endogenous factor in your experiment?

The important act of holding all other variables constant while examining a particular variable is known as:

When testing a model rocket on your campus quad,which of the following would be an endogenous factor?

Goods that are produced now so that they can be used to produce other goods in the future are called:

Refer to the following figure for the next three questions. -The opportunity cost of increasing the production of apple pies from 12 to 14 pies is:

The Five Foundations of Economics

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters