This document contains a 32-question multiple choice problem set assessing understanding of key concepts in introductory economics. It covers topics like the scientific method, economic models and assumptions, production possibilities frontiers, opportunity costs, positive and normative statements, and differences between how economists study issues as scientists versus policy advisors. The questions require applying definitions and graphs to analyze scenarios about an economy's production and evaluating statements as either positive descriptions or normative opinions.
This document contains a 32-question multiple choice problem set assessing understanding of key concepts in introductory economics. It covers topics like the scientific method, economic models and assumptions, production possibilities frontiers, opportunity costs, positive and normative statements, and differences between how economists study issues as scientists versus policy advisors. The questions require applying definitions and graphs to analyze scenarios about an economy's production and evaluating statements as either positive descriptions or normative opinions.
This document contains a 32-question multiple choice problem set assessing understanding of key concepts in introductory economics. It covers topics like the scientific method, economic models and assumptions, production possibilities frontiers, opportunity costs, positive and normative statements, and differences between how economists study issues as scientists versus policy advisors. The questions require applying definitions and graphs to analyze scenarios about an economy's production and evaluating statements as either positive descriptions or normative opinions.
This document contains a 32-question multiple choice problem set assessing understanding of key concepts in introductory economics. It covers topics like the scientific method, economic models and assumptions, production possibilities frontiers, opportunity costs, positive and normative statements, and differences between how economists study issues as scientists versus policy advisors. The questions require applying definitions and graphs to analyze scenarios about an economy's production and evaluating statements as either positive descriptions or normative opinions.
Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The scientific method is a. the use of modern technology to understand the way the world works. b. the use of controlled laboratory experiments to understand the way the world works. c. the dispassionate development and testing of theories about how the world works. d. the search for evidence to support preconceived theories about how the world works. 2. The scientific method is applicable to studying a. natural sciences, but not social sciences. b. social sciences, but not natural sciences. c. both natural sciences and social sciences. d. None of the above is correct. 3. Which of the following statements applies to economics, as well as to other sciences such as physics? a. Experiments are considered valid only when they are conducted in a laboratory. b. Good theories do not need to be tested. c. Real-world observations often lead to theories. d. Economics, as well as other sciences, is concerned primarily with abstract concepts. 4. With respect to how economists study the economy, which of the following statements is most accurate? a. Economists study the past, but they do not try to predict the future. b. Economists use rules of thumb to predict the future. c. Economists devise theories, collect data, and analyze the data to test the theories. d. Economists use controlled experiments in much the same way that biologists and physicists do. 5. Economists face an obstacle that many other scientists do not face. What is that obstacle? a. It is often difficult to formulate theories in economics. b. It is often difficult and sometimes impossible to perform experiments in economics. c. Economics cannot be addressed objectively; it must be addressed subjectively. d. The scientific method cannot be applied to the study of economics. 6. Economists make assumptions in order to a. mimic the methodologies employed by other scientists. b. minimize the number of experiments that yield no useful data. c. minimize the likelihood that some aspect of the problem at hand is being overlooked. d. focus their thinking on the essence of the problem at hand. 7. For an economist, the idea of making assumptions is regarded generally as a a. bad idea, since doing so leads to the omission of important ideas and variables from economic models. b. bad idea, since doing so invariably leads to data-collection problems. c. good idea, since doing so helps to simplify the complex world and make it easier to understand. d. good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.
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8. A model can be accurately described as a a. theoretical abstraction with very little value. b. device that is useful only to the people who created it. c. realistic and carefully constructed theory. d. simplification of reality. 9. Economic models a. cannot be useful if they are based on false assumptions. b. were once thought to be useful, but that is no longer true. c. must incorporate all aspects of the economy if they are to be useful. d. can be useful, even if they are not particularly realistic.
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____ 10. The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and a. societys preferences. b. the available production technology. c. a fair distribution of the output. d. the available demand for the output. ____ 11. The production possibilities frontier is a graph that shows the various combinations of output that an economy a. should produce. b. wants to produce. c. can produce. d. demands. ____ 12. Where can an economy not produce? a. inside its production possibilities frontier b. on its production possibilities frontier c. outside its production possibilities frontier d. at the endpoints of its production possibilities frontier ____ 13. Production is efficient if the economy is producing at a point a. on the production possibilities frontier. b. outside the production possibilities frontier. c. on or inside the production possibilities frontier. d. inside the production possibilities frontier. ____ 14. When an economy is operating inside its production possibilities frontier, we know that a. there are unused resources or inefficiencies in the economy. b. all of the economys resources are fully employed. c. economic growth would have to occur in order for the economy to move to a point on the frontier. d. in order to produce more of one good, the economy would have to give up some of the other good. ____ 15. The production possibilities frontier provides an illustration of the principle that a. trade can make everyone better off. b. governments can sometimes improve market outcomes. c. people face trade-offs. d. people respond to incentives. ____ 16. Which of the following trade-offs does the production possibilities frontier illustrate? a. if an economy wants to increase efficiency in production, then it must sacrifice equality in
consumption b. once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other c. for an economy to consume more of one good, it must stop consuming the other good entirely d. for an economy to produce and consume goods, it must sacrifice environmental quality ____ 17. The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the a. amount of the other good that must be given up. b. market price of the additional amount produced. c. amount of resources that must be devoted to its production. d. number of dollars that must be spent to produce it. ____ 18. When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good a. increases as more of the good is produced. b. decreases as more of the good is produced. c. does not change as more of the good is produced. d. may increase, decrease, or not change as more of the good is produced. ____ 19. A production possibilities frontier can shift outward if a. government increases the amount of money in the economy. b. there is a technological improvement. c. resources are shifted from the production of one good to the production of the other good. d. the economy abandons inefficient production methods in favor of efficient production methods. ____ 20. A production possibilities frontier shifts outward when a. the economy experiences economic growth. b. the desires of the economys citizens change. c. at least one of the basic principles of economics is violated. d. opportunity costs are lessened. Figure 2-5 baseballs 225 200 175 150 125 100 75 50 25 F 30 60 90 120 150 180 210 240 270 300 330 bananas D C B A
____ 21. Refer to Figure 2-5. If this economy devotes all of its resources to the production of bananas, then it will produce
a. b. c. d.
0 bananas and 200 baseballs. 180 bananas and 125 baseballs. 300 bananas and 0 baseballs. 300 bananas and 200 baseballs.
____ 22. Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point C is a. 75 baseballs. b. 125 baseballs. c. 125 baseballs and 240 bananas. d. 240 bananas. ____ 23. Refer to Figure 2-5. The opportunity cost of this economy moving from point D to point B is a. zero. b. 50 baseballs. c. 60 bananas. d. 50 baseballs and 60 bananas. ____ 24. For economists, statements about the world are of two types: a. assumptions and theories. b. true statements and false statements. c. specific statements and general statements. d. positive statements and normative statements. ____ 25. Normative statements are a. prescriptive, whereas positive statements are descriptive. b. descriptive, whereas positive statements are prescriptive. c. backward-looking, whereas positive statements are forward-looking. d. forward-looking, whereas positive statements are backward-looking. ____ 26. Positive statements are a. prescriptive. b. claims about how the world should be. c. claims about how the world is. d. made by economists speaking as policy advisers. ____ 27. One way to characterize the difference between positive statements and normative statements is as follows: a. Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. b. Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. c. Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. d. Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements. ____ 28. Economists speaking like scientists make a. normative statements. b. prescriptive statements. c. claims about how the world is. d. claims about how the world should be. ____ 29. Economists speaking like policy advisers make a. positive statements.
b. descriptive statements. c. claims about how the world is. d. claims about how the world should be. ____ 30. Prices rise when the quantity of money rises rapidly is an example of a a. negative economic statement. b. positive economic statement. c. normative economic statement. d. statement that contradicts one of the basic principles of economics. ____ 31. Economists sometimes give conflicting advice because a. graduate students in economics are encouraged to argue with each other. b. economists have different values and scientific judgment. c. economists acting as scientists do not like to agree with economists acting as policy advisers. d. economics is more of a belief system than a science. ____ 32. Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because a. economists have not yet convinced the general public that the policies are undesirable. b. economists engage in positive analysis, not normative analysis. c. economists have values that are different from the values of most non-economists. d. economists theories are not easily confirmed or refuted in laboratory analysis.
Problem Set #2 Answer Section
MULTIPLE CHOICE 1. ANS: NAT: TOP: 2. ANS: NAT: TOP: 3. ANS: NAT: TOP: 4. ANS: NAT: TOP: 5. ANS: NAT: TOP: 6. ANS: NAT: TOP: 7. ANS: NAT: TOP: 8. ANS: NAT: TOP: 9. ANS: NAT: TOP: 10. ANS: NAT: TOP: 11. ANS: NAT: TOP: 12. ANS: NAT: TOP: 13. ANS: NAT: TOP: 14. ANS: NAT: TOP: 15. ANS: C PTS: 1 DIF: 1 REF: 2-1 Analytic LOC: The study of economics and definitions in economics Scientific method MSC: Definitional C PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: The study of economics and definitions in economics Scientific method MSC: Interpretive C PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: The study of economics and definitions in economics Economists MSC: Interpretive C PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: The study of economics and definitions in economics Economists MSC: Interpretive B PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: The study of economics and definitions in economics Economists MSC: Interpretive D PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: The study of economics and definitions in economics Assumptions MSC: Interpretive C PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: The study of economics and definitions in economics Assumptions MSC: Interpretive D PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Economic models MSC: Interpretive D PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Economic models MSC: Interpretive B PTS: 1 DIF: 1 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier MSC: Definitional C PTS: 1 DIF: 1 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier MSC: Definitional C PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier MSC: Interpretive A PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier | Efficiency MSC: Interpretive A PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier MSC: Interpretive C PTS: 1 DIF: 1 REF: 2-1
Analytic LOC: Understanding and applying economic models Production possibilities frontier | Trade-offs MSC: Definitional B PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier MSC: Interpretive A PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier | Opportunity cost MSC: Interpretive A PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier | Opportunity cost MSC: Interpretive B PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier MSC: Interpretive A PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier | Economic growth MSC: Interpretive C PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier MSC: Applicative B PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier | Opportunity cost MSC: Applicative A PTS: 1 DIF: 2 REF: 2-1 Analytic LOC: Understanding and applying economic models Production possibilities frontier | Opportunity cost MSC: Applicative D PTS: 1 DIF: 2 REF: 2-2 Analytic LOC: The study of economics and definitions in economics Economists | Positive statements | Normative statements MSC: Interpretive A PTS: 1 DIF: 1 REF: 2-2 Analytic LOC: The study of economics and definitions in economics Positive statements | Normative statements MSC: Definitional C PTS: 1 DIF: 1 REF: 2-2 Analytic LOC: The study of economics and definitions in economics Positive statements MSC: Definitional B PTS: 1 DIF: 2 REF: 2-2 Analytic LOC: The study of economics and definitions in economics Positive statements | Normative statements MSC: Interpretive C PTS: 1 DIF: 2 REF: 2-2 Analytic LOC: The study of economics and definitions in economics Economists | Positive statements MSC: Interpretive D PTS: 1 DIF: 2 REF: 2-2 Analytic LOC: The study of economics and definitions in economics Economists | Normative statements MSC: Interpretive B PTS: 1 DIF: 2 REF: 2-2 Analytic LOC: The study of economics and definitions in economics Positive statements MSC: Applicative B PTS: 1 DIF: 2 REF: 2-3 Analytic LOC: The study of economics and definitions in economics
TOP: 32. ANS: NAT: TOP:
Economists A Analytic Economists
MSC: PTS: LOC: MSC:
Interpretive 1 DIF: 2 REF: 2-3 The study of economics and definitions in economics Interpretive
