Question 1

Which of the following is a normative statement?

Accepted Answer

A)  The current exchange rate is 0.7 British pounds per U.S. dollar. 
B)  In January, the average temperature in Fargo, North Dakota, is 56 degrees. 
C)  Winters in Arkansas are too cold. 
D)  On average, people save 15% when they switch to GEICO. 
E)  University of Virginia graduates earn more than Duke University graduates. 
A)  The current exchange rate is 0.7 British pounds per U.S. dollar. 
B)  In January, the average temperature in Fargo, North Dakota, is 56 degrees. 
C)  Winters in Arkansas are too cold. 
D)  On average, people save 15% when they switch to GEICO. 
E)  University of Virginia graduates earn more than Duke University graduates.

Question 2

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the questions. $$\begin{array} { | l | l | l | } 
\hline & \text { Sculptures } & \text { Paintings } \
\hline \text { Michael } & 10 & 5 \
\hline \text { Angelo } & 6 & 2 \
\hline
\end{array}$$
-What is Michael's opportunity cost of a painting?

Accepted Answer

A)  1/2 painting 
B)  1/2 sculpture 
C)  3 paintings 
D)  2 sculptures 
E)  2 paintings 
A)  1/2 painting 
B)  1/2 sculpture 
C)  3 paintings 
D)  2 sculptures 
E)  2 paintings

Question 3

Economists use the scientific method and the tools of economics to study:

Accepted Answer

A)  only the decisions of individuals. 
B)  only the decisions of business firms. 
C)  only economic growth and gross domestic product (GDP). 
D)  only the production possibilities curve. 
E)  anything around them; the world is the economist's laboratory. 
A)  only the decisions of individuals. 
B)  only the decisions of business firms. 
C)  only economic growth and gross domestic product (GDP). 
D)  only the production possibilities curve. 
E)  anything around them; the world is the economist's laboratory.

Question 4

Which of the following is a positive statement?

Accepted Answer

A)  Individuals should make good long-term decisions. 
B)  Corporations should maximize shareholder value. 
C)  Government should reduce the level of unemployment. 
D)  The most important effects of policy happen in the short term. 
E)  The unemployment rate is 8%. 
A)  Individuals should make good long-term decisions. 
B)  Corporations should maximize shareholder value. 
C)  Government should reduce the level of unemployment. 
D)  The most important effects of policy happen in the short term. 
E)  The unemployment rate is 8%.

Question 5

Suppose that, during your afternoon shift working at the library, you could either reshelve books or process interlibrary loan (ILL) requests. Draw a production possibilities frontier (PPF) that describes your production trade-offs. Your production of each of these goods is subject to increasing relative costs in production, so be sure that your graph reflects this fact.
Now suppose that a new online request system increases your efficiency at processing ILL requests but does not affect your reshelving ability. Show, on the same graph, how this new innovation changes the PPF.

Accepted Answer

The answer of Suppose that, during your afternoon shift working...

Question 6

Forgoing current consumption so that those resources can be used to produce new capital is called:

Accepted Answer

A)  absolute advantage. 
B)  comparative advantage. 
C)  investment. 
D)  scarcity. 
E)  saving. 
A)  absolute advantage. 
B)  comparative advantage. 
C)  investment. 
D)  scarcity. 
E)  saving.

Question 7

Variables that are not accounted for in a model are called:

Accepted Answer

A)  endogenous factors. 
B)  exogenous factors. 
C)  normative statements. 
D)  positive statements. 
E)  the scientific method. 
A)  endogenous factors. 
B)  exogenous factors. 
C)  normative statements. 
D)  positive statements. 
E)  the scientific method.

Question 8

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor, unemployment is illustrated by:

Accepted Answer

A)  movement from a point within the frontier to a point on the frontier. 
B)  a point outside the frontier. 
C)  a point within the frontier. 
D)  movement from a point on the frontier to another point on the frontier. 
E)  a point on the frontier. 
A)  movement from a point within the frontier to a point on the frontier. 
B)  a point outside the frontier. 
C)  a point within the frontier. 
D)  movement from a point on the frontier to another point on the frontier. 
E)  a point on the frontier.

Question 9

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions.
 
-Given current resources and technology, the attainable range is best described as:

Accepted Answer

A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: points inside the PPF and points on the PPF. 
E)  Area O: points outside the PPF and points on the PPF. 
A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: points inside the PPF and points on the PPF. 
E)  Area O: points outside the PPF and points on the PPF.

Question 10

Suppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)? $$\begin{array} { | l | l | l | l | l | } 
\hline & \begin{array} { l } 
\text { Maximum } \
\text { Number of } \
\text { Salads }
\end{array} & \begin{array} { l } 
\text { Opportunity } \
\text { Cost of 1 } \
\text { Salad }
\end{array} & \begin{array} { l } 
\text { Maximum } \
\text { Number of } \
\text { Steaks }
\end{array} & \begin{array} { l } 
\text { Omportumity } \
\text { Cost of 1 } \
\text { Steak }
\end{array} \
\hline \text { Dwight } & 9 & 1 / 3 \text { steak } & 3 & 3 \text { salads } \
\hline \mathrm { Jim } & 12 & 1 / 2 \text { steak } & 6 & 2 \text { salads } \
\hline
\end{array}$$

Accepted Answer

A)  1 salad per 1 steak 
B)  2 salads per 1 steak 
C)  2.5 salads per 1 steak 
D)  3 salads per 1 steak 
E)  3.5 salads per 1 steak 
A)  1 salad per 1 steak 
B)  2 salads per 1 steak 
C)  2.5 salads per 1 steak 
D)  3 salads per 1 steak 
E)  3.5 salads per 1 steak

Question 11

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 questions.
 
-What is DiNozzo's opportunity cost of making a wooden boat?

Accepted Answer

A)  20 solved crimes 
B)  30 solved crimes 
C)  10 solved crimes 
D)  1/20 of a boat 
E)  1/10 of a boat 
A)  20 solved crimes 
B)  30 solved crimes 
C)  10 solved crimes 
D)  1/20 of a boat 
E)  1/10 of a boat

Question 12

Refer to the following figure to answer the questions.
 
-In the figure, point E is:

Accepted Answer

A)  an efficient point. 
B)  unattainable with current resources. 
C)  an inefficient point. 
D)  the equilibrium. 
E)  evidence that trade does not enrich society. 
A)  an efficient point. 
B)  unattainable with current resources. 
C)  an inefficient point. 
D)  the equilibrium. 
E)  evidence that trade does not enrich society.

Question 13

Ceteris paribus means:

Accepted Answer

A)  in sets of two. 
B)  constant opportunity cost. 
C)  other things being equal. 
D)  buyer beware. 
E)  there is no reason to argue about people's tastes. 
A)  in sets of two. 
B)  constant opportunity cost. 
C)  other things being equal. 
D)  buyer beware. 
E)  there is no reason to argue about people's tastes.

Question 14

Refer to the graph below. This society could reach point F when there is a(n):

Accepted Answer

A)  increase in the monetary price of apple pie. 
B)  credible new study that shows blueberries reduce the risk of heart attack. 
C)  increase in technology that makes pie bakers more efficient. 
D)  new regulation that makes pie baking more costly. 
E)  increase in the monetary price of blueberry pie. 
A)  increase in the monetary price of apple pie. 
B)  credible new study that shows blueberries reduce the risk of heart attack. 
C)  increase in technology that makes pie bakers more efficient. 
D)  new regulation that makes pie baking more costly. 
E)  increase in the monetary price of blueberry pie.

Question 15

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 16

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.

Question 17

The table below shows the maximum number of burgers or hot dogs that Vinny and The Situation can cook in 1 hour.
a. Fill in the rest of the table with the opportunity cost of burgers and hot dogs for each person. Be sure to include the units.
b. Identify who has a comparative advantage in producing each good. $$\begin{array} { | l | l | l | l | l | } 
\hline & \begin{array} { l } 
\text { Maximum } \
\text { Burgers }
\end{array} & \begin{array} { l } 
\text { Maximum } \
\text { Hot Dogs }
\end{array} & \begin{array} { l } 
\text { Opportunity } \
\text { Cost of 1 } \
\text { Burger }
\end{array} & \begin{array} { l } 
\text { Opportunity } \
\text { Cost of 1 Hot } \
\text { Dog }
\end{array} \
\hline \text { Vinuy } & 30 & 60 & & \
\hline \begin{array} { l } 
\text { The } \
\text { Situation }
\end{array} & 50 & 75 & & \
\hline
\end{array}$$

Accepted Answer

a. @#IMG-DLM& b. The Situation has a com

Question 18

The opportunity cost of every investment in capital goods is:

Accepted Answer

A)  current consumption (consumer goods). 
B)  future consumption (capital goods today). 
C)  absolute advantage. 
D)  comparative advantage. 
E)  scarcity. 
A)  current consumption (consumer goods). 
B)  future consumption (capital goods today). 
C)  absolute advantage. 
D)  comparative advantage. 
E)  scarcity.

Question 19

In the movie A Knight's Tale, three peasants win a jousting tournament and must decide whether they should enjoy most of their winnings now or use most of it for training to improve their future jousting performance. Use appropriate production possibilities frontiers (PPFs) and words to describe the investment trade-off they face.

Accepted Answer

This is a classic example of the trade-o

Question 20

Which of the following is a positive statement?

Accepted Answer

A)  My dog should lose some weight. 
B)  Legally requiring dogs to have rabies shots will reduce the number of rabid dogs. 
C)  You should take your dog to the veterinarian once a year for a checkup. 
D)  Chihuahuas are cuter than bulldogs. 
E)  All dogs should be required to wear leashes at all times. 
A)  My dog should lose some weight. 
B)  Legally requiring dogs to have rabies shots will reduce the number of rabid dogs. 
C)  You should take your dog to the veterinarian once a year for a checkup. 
D)  Chihuahuas are cuter than bulldogs. 
E)  All dogs should be required to wear leashes at all times.

Which of the following is a normative statement?

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the questions. Sculptures Paintings Michael 10 5 Angelo 6 2 -What is Michael's opportunity cost of a painting?

Economists use the scientific method and the tools of economics to study:

Which of the following is a positive statement?

Forgoing current consumption so that those resources can be used to produce new capital is called:

Variables that are not accounted for in a model are called:

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor, unemployment is illustrated by:

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions. -Given current resources and technology, the attainable range is best described as:

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 questions. -What is DiNozzo's opportunity cost of making a wooden boat?

Refer to the following figure to answer the questions. -In the figure, point E is:

Ceteris paribus means:

Refer to the graph below. This society could reach point F when there is a(n):

Which of the following is a positive statement?

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

The opportunity cost of every investment in capital goods is:

Which of the following is a positive statement?

The Five Foundations of Economics

The Market at Work: Supply and Demand

Elasticity

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income, Inequality, and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

Exam 2: Model Building and Gains From Trade

Which of the following is a normative statement?

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the questions. Sculptures Paintings Michael 10 5 Angelo 6 2 -What is Michael's opportunity cost of a painting?

Economists use the scientific method and the tools of economics to study:

Which of the following is a positive statement?

Forgoing current consumption so that those resources can be used to produce new capital is called:

Variables that are not accounted for in a model are called:

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor, unemployment is illustrated by:

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions. -Given current resources and technology, the attainable range is best described as:

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 questions. -What is DiNozzo's opportunity cost of making a wooden boat?

Refer to the following figure to answer the questions. -In the figure, point E is:

Ceteris paribus means:

Refer to the graph below. This society could reach point F when there is a(n):

Which of the following is a positive statement?

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

The opportunity cost of every investment in capital goods is:

Which of the following is a positive statement?

The Five Foundations of Economics

The Market at Work: Supply and Demand

Elasticity

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income, Inequality, and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters