econ chap 2

The scientific method requires that ________.

• a. scientists use test tubes and have clean labs

• b. scientists be objective

• c. scientists use precision equipment

• d. only incorrect theories are tested

• e. only correct theories are tested

Which of the following is most likely to produce scientific evidence about a theory?

• a. A radio talk show host collecting data on how capital markets respond to taxation

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  b. An economist employed by the AFL/CIO doing research on the impact of trade restrictions on workers' wages

• c. A lawyer employed by Toyota addressing the impact of air bags on passenger safety

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

Answer explanation

a. Radio talk show host Likely biased or informal data collection; not peer-reviewed or systematic.

b. Economist at AFL/CIO (a labor union) May have incentives to produce results supporting union positions — not purely scientific.

c. Lawyer at Toyota Focused on legal or corporate defense, not scientific research

.d. Tenured university economist Most likely to conduct objective, peer-reviewed, and data-based research — following scientific methods.

Which of the following statements regarding the circular-flow diagram is true

• a. The factors of production are owned by households

• b. If Alicia works for Apple and receives a paycheck, the transaction takes place in the market for goods and services

• c. If Apple sells a computer, the transaction takes place in the market for factors of production.

• 
  d. The factors of production are owned by firms.

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  e. None of the answer choices are correct.

In which of the following cases is the assumption most reasonable?

• a. To estimate the speed at which a beach ball falls, a physicist assumes that it falls in a vacuum.

• b. To address the impact of money growth on inflation, an economist assumes that money is strictly coins.

• c. To address the impact of taxes on income distribution, an economist assumes that everyone earns the same income.

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  d. To address the benefits of international trade, an economist assumes that there are two countries, each producing two goods.

Economic models are ________.

• a. built with assumptions

• b. created to duplicate reality

• c. useless if they are simple

• 
  d. usually made of wood and plastic

Which of the following is not a factor of production?

• a. Land

• b. Labor

• c. Capital

• d. Money

• e. All of the answer choices are factors of production.

Points on the production possibilities frontier are ________.

• a. efficient

• c. inefficient

• d. unattainable

• e. normative

Which of the following will not shift a country's production possibilities frontier outward?

• a. An increase in the capital stock

• b. An advance in technology

• c. A reduction in unemployment

• d. An increase in the labor force

Answer explanation

A reduction in unemployment means that more of the existing resources (labor) are being employed. It represents moving from a point inside the PPF toward the frontier, not expanding it

Economic growth is depicted by ________.

• a. a movement along a production possibilities frontier toward consumption goods

• b. a movement from inside the production possibilities frontier toward the frontier

• c. a shift in the production possibilities frontier inward

• 
  d. a shift in the production possibilities frontier outward

If the economy is operating at point C, the opportunity cost of producing an additional 15 units of bacon is ________.

• a. 10 units of eggs

• 
  b. 20 units of eggs

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  c. 30 units of eggs

• d. 40 units of eggs

• e. 50 units of eggs