Name: 
 

Chapter 2A Quiz



Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

1. 

Which is the best statement about the way economists study the economy?
a.
They study the past, but do not try to predict the future.
b.
They use a probabilistic approach based on correlations between economic events.
c.
They devise theories, collect data, then analyze the data to test the theories.
d.
They use controlled experiments much the same way a biologist or physicist does.
 

2. 

Because it is difficult for economists to use experiments to generate data, they generally must
a.
do without data.
b.
use whatever data the world gives them.
c.
select a committee of economists to make up data for all economists to use.
d.
use hypothetical, computer-generated data.
 

3. 

The most common data for testing economic theories come from
a.
carefully controlled and conducted laboratory experiments.
b.
traditional economies.
c.
historical episodes of economic change.
d.
centrally planned economies.
 

4. 

Good assumptions can
a.
cause economists to leave out important variables which make their theories worthless.
b.
simplify the complex world and make it easier to understand.
c.
further complicate an already difficult topic.
d.
allow economists to see the 'big picture' instead of only small segments.
 

5. 

When scientists make good assumptions, they
a.
greatly simplify the problem without substantially affecting the answer.
b.
further complicate an already complicated subject.
c.
can leave out necessary variables that may result in incorrect answers.
d.
may not be able to reach an appropriate conclusion.
 

6. 

The production possibilities frontier is a
a.
map which shows the frontier beyond which agriculture is unprofitable.
b.
map which shows areas of the world in which capitalist production is now possible.
c.
graph which shows the various combinations of resources that can be used to produce a given level of output.
d.
graph that shows the various combinations of output the economy can possibly produce given the available resources and technology.
 

7. 

If an economy is producing efficiently
a.
there is no way to produce more of one good without producing less of the other.
b.
it is possible to produce more of both goods.
c.
it is possible to produce more of one good without producing less of the other.
d.
it is not possible to produce more of one good at any cost.
 

8. 

Which of the following concepts is NOT illustrated by the production possibilities frontier?
a.
efficiency
b.
opportunity cost
c.
equity
d.
tradeoffs
 

9. 

When a production possibilities frontier is linear it shows
a.
a truer picture of real life than a bowed out production possibilities frontier.
b.
that resources are perfectly shiftable from the production of one good to another.
c.
an example of increasing opportunity cost.
d.
All of the above are correct.
 
 
Figure 2-3
chapter_2a_practice_files/i0110000.jpg
 

10. 

Refer to Figure 2-3. The economy can produce at which point or points?
a.
B, D, E
b.
A, B, D, E
c.
D, C
d.
D
 

11. 

Refer to Figure 2-3. Which point represents the maximum possible production of tubas?
a.
A
b.
B
c.
D
d.
E
 

12. 

Refer to Figure 2-3. The economy CANNOT produce at which point or points?
a.
A
b.
C
c.
A, C
d.
A, C, D,
 

13. 

Refer to Figure 2-3. Which point or points are inefficient?
a.
A, C
b.
D, C
c.
C
d.
D
 
 
Figure 2-4
chapter_2a_practice_files/i0160000.jpg
 

14. 

Refer to Figure 2-4. The opportunity cost to the economy of getting 30 additional toothbrushes by moving from point A to point D is
a.
10 toasters.
b.
15 toasters.
c.
20 toasters.
d.
25 toasters.
 

15. 

Refer to Figure 2-4. The opportunity cost in terms of toothbrushes of getting 10 additional toasters by moving from point B to point A is
a.
20 toothbrushes.
b.
10 toothbrushes.
c.
5 toothbrushes.
d.
zero, since the economy has the additional resources to produce 10 additional toasters.
 
 
Figure 2-5
chapter_2a_practice_files/i0190000.jpg
 

16. 

Refer to Figure 2-5. The shift of the frontier from A to B was most likely caused by which of the following?
a.
technological improvement in the production of batteries
b.
more labor available in the economy
c.
a general technological breakthrough
d.
more capital available in the economy
 

17. 

The production possibilities frontier is bowed outward if
a.
resources are not perfectly shiftable.
b.
the amount of resources increases.
c.
the level of technology increases.
d.
Both b and c are correct
 
 
Figure 2-7
chapter_2a_practice_files/i0220000.jpg
 

18. 

Refer to Figure 2-7. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?
a.
an increase in resources necessary to produce capital goods
b.
an improvement in the technology of producing consumer goods
c.
an increase in the overall level of technology in the economy
d.
an increase in unemployment
 
 
Production Possibilities for Toyland

Table 2-1
Dolls
Fire Trucks
400
    0
300
200
200
350
100
450
    0
500
 

19. 

Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of dolls from 200 to 300?
a.
200 fire trucks
b.
150 fire trucks
c.
100 fire trucks
d.
It is impossible to tell what the opportunity cost is since in this example costs are not constant.
 

20. 

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

21. 

A microeconomist might study each of the following EXCEPT
a.
the effects of rent control on housing in New York City.
b.
how a college student makes financial decisions.
c.
how tariffs on shoes affects the shoe industry.
d.
the effect on the economy when unemployment rates change.
 

22. 

When economists are trying to help improve the world they are
a.
concerned with positive economics.
b.
policy advisors.
c.
scientists.
d.
meddling.
 

23. 

Economists view positive statements as
a.
affirmative, justifying existing economic policy.
b.
optimistic, putting the best possible interpretation on things.
c.
descriptive, making a claim about how the world is.
d.
prescriptive, making a claim about how the world ought to be.
 

24. 

Which of the following is an example of a positive statement?
a.
Prices rise when the government prints too much money.
b.
If welfare payments increase, the world will be a better place.
c.
Inflation is more harmful to the economy than unemployment.
d.
The benefits to the economy of improved equity are greater than the costs of reduced efficiency.
 

25. 

Which of the following is an example of a normative statement?
a.
If the price of a product decreases, quantity demanded increases.
b.
Reducing tax rates on the wealthy would be good for the country.
c.
If the national saving rate were to increase, so would the rate of economic growth.
d.
All of the above are correct.
 



 
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