1) Normative statements are
a. descriptive.
b. claims about how the world should be.
c. claims about how the world is.
d. made by economists speaking as scientists.
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2) Policymaking in a representative democracy
a. is straightforward and does not involve any disagreement.
b. benefits from the input of economists, even if their advice is not always followed.
c. is conducted without the input of economists.
d. is always based exclusively on the results of economic analysis.
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3) Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
Hours Needed to Make 1 Quantity Produced in 2400 Hours
Car Airplane Cars Airplanes
Japan 30 150 80 16
Korea 50 150 48 16
Refer to Table 3-7. Korea has an absolute advantage in the production of
a. cars and a comparative advantage in the production of cars.
b. cars and a comparative advantage in the production of airplanes.
c. neither good and a comparative advantage in the production of cars.
d. neither good and a comparative advantage in the production of airplanes.
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4) The value of the price elasticity of demand for a good will be relatively large when
a. there are no good substitutes available for the good.
b. the time period in question is relatively short.
c. the good is a luxury rather than a necessity.
d. All of the above are correct.
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5) Which of the following statements best represents the principle represented by the adage, “There is no such thing as a free lunch”?
a. Melissa can attend the concert only if she takes her sister with her.
b. Greg is hungry and homeless.
c. Brian must repair the tire on his bike before he can ride it to class.
d. Kendra must decide between going to Colorado or Cancun for spring break.
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6)
Refer to Figure 2-17. The graph above is a
a. bar graph
b. scatterplot
c. pie chart
d. time series analysis
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7)
Refer to Figure 3-4. If the production possibilities frontier shown for Perry is for 6 months of writing, then how long does it take Perry to write one poem?
a. 1/3 month
b. 1/2 month
c. 2 months
d. 3 months
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8) Total output in an economy increases when each person specializes because
a. there is less competition for the same resources.
b. each person spends more time producing that product in which he or she has a comparative advantage.
c. a wider variety of products will be produced within each country due to specialization.
d. government necessarily plays a larger role in the economy due to specialization.
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9) There are very few, if any, good substitutes for motor oil. Therefore, the
a. demand for motor oil would tend to be inelastic.
b. demand for motor oil would tend to be elastic.
c. demand for motor oil would tend to respond strongly to changes in prices of other goods.
d. supply of motor oil would tend to respond strongly to changes in peoples tastes for large cars relative to their tastes for small cars.
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10)
Refer to Figure 3-11. The nation of Cropitia has a comparative advantage over Bonovia in producing ham if
a. Cropitia can produce more than 400 pounds of ham per month.
b. Cropitia can produce more than 320 pounds of cheese per month.
c. Cropitias opportunity cost of producing a pound of ham is less than 0.8 pounds of cheese.
d. Cropitias opportunity cost of producing a pound of ham is greater than 0.8 pounds of cheese.
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11) Almost all economists agree that rent control
a. has no effect on the rental income of landlords.
b. allows the market for housing to work more efficiently.
c. adversely affects the availability and quality of housing.
d. is a very inexpensive way to help the most needy members of society.
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12) You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should
a. compare the total cost of your education to the total benefits of your education.
b. compare the total cost of your education to the benefits of staying one more semester.
c. compare the cost of staying one more semester to the benefits of staying one more semester.
d. compare the total benefits of your education to the cost of staying one more semester.
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13)
Refer to Figure 3-7. If Bintu and Juba each divides her time equally between making bowls and making cups, then total production is
a. 2 bowls and 6 cups.
b. 3 bowls and 7 cups.
c. 4 bowls and 8 cups.
d. 6 bowls and 14 cups.
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14) Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is
a. 0.36 bushel of corn.
b. 2.8 bushels of corn.
c. 14 bushels of corn.
d. 70 bushels of corn.
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15) Refer to Table 3-7. Japan has an absolute advantage in the production of
a. cars and a comparative advantage in the production of cars.
b. cars and a comparative advantage in the production of airplanes.
c. neither good and a comparative advantage in the production of cars.
d. neither good and a comparative advantage in the production of airplanes.
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16)
Refer to Figure 3-4. If Perry and Jordan each divides their time equally between writing novels and writing poems, then total production is
a. 2 novels and 6 poems.
b. 3 novels and 12 poems.
c. 4 novels and 12 poems.
d. 6 novels and 24 poems.
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17)
Refer to Figure 2-4. It is possible for this economy to produce
a. 40 notepads and 20 lamps.
b. 50 notepads and 30 lamps.
c. 70 notepads and 40 lamps.
d. All of the above.
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18) Table 3-14
The following table contains some production possibilities for an economy for a given year.
Cars Newspapers
10 400
12 360
14 ?
Refer to Table 3-14. If the production possibilities frontier is bowed outward, then ? could be
a. 340.
b. 330.
c. 320.
d. 310.
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19) Refer to Table 3-4. The rancher has an absolute advantage in the production of
a. meat.
b. potatoes.
c. both goods.
d. neither good.
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20) Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
Hours Needed To Make 1 Amount Produced in 40 Hours
mixer toaster mixers toasters
Maya 8 5 5 8
Miguel 20 10 2 4
Refer to Table 3-6. Miguel has an absolute advantage in the production of
a. both goods and a comparative advantage in the production of mixers.
b. both goods and a comparative advantage in the production of toasters.
c. neither good and a comparative advantage in the production of mixers.
d. neither good and a comparative advantage in the production of toasters.
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21) Table 2-5

Cookies (in dozens) Coffee (in pounds)
1000 0
800 350
600 650
400 800
200 1000
0 1150

Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of cookies and coffee is not currently attainable but would be attainable if there was an improvement in overall production technology?
a. 800 dozen cookies and 150 pounds of coffee
b. 700 dozen cookies and 400 pounds of coffee
c. 500 dozen cookies and 850 pounds of coffee
d. 300 dozen cookies and 900 pounds of coffee
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22) To say that government intervenes in the economy to promote efficiency is to say that government is attempting to
a. create a more fair distribution of income.
b. change the way in which the economic pie is divided.
c. enlarge the economic pie.
d. All of the above are correct.
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23) Table 3-13
The following table contains some production possibilities for an economy for a given month.
Sweaters Gloves
4 300
6 ?
8 100
Refer to Table 3-13. If the production possibilities frontier is bowed outward, then ? could be
a. 100.
b. 150.
c. 200.
d. 250.
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24)
Refer to Figure 6-21. The equilibrium price in the market before the tax is imposed is
a. $1.
b. $2.
c. $5.
d. $6.
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25) Refer to Table 3-1. Relative to the rancher, the farmer has
a. a comparative advantage in the production of meat, because the farmers opportunity cost of a pound of meat is lower than the ranchers opportunity cost of a pound of meat.
b. a comparative advantage in the production of potatoes, because the rancher requires less time than the farmer to produce a pound of potatoes.
c. a comparative advantage in the production of potatoes; relative to the farmer, the rancher has a comparative advantage in the production of meat.
d. an absolute advantage in the production of both meat and potatoes.
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26)
Refer to Figure 4-22. Panel (d) shows which of the following?
a. a decrease in demand and a decrease in quantity supplied
b. a decrease in demand and a decrease in supply
c. a decrease in quantity demanded and a decrease in quantity supplied
d. a decrease in quantity demanded and a decrease in supply
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27) A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is
a. inelastic.
b. unit elastic.
c. elastic.
d. highly responsive to changes in income.
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28) If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the left.
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29) It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.
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30) Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.
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31) Economists at the U.S. Department of the Treasury help design U.S. coins and paper money.
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32) A price ceiling set below the equilibrium price is nonbinding.
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33) Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.
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