ECN 212 EXAM QUESTIONS AND REVISED ANSWERS (ALL ARE CORRECT)
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ECN 212
ECN 212 EXAM QUESTIONS AND REVISED ANSWERS (ALL ARE CORRECT)
The table above shows one set of production possibilities. What is the opportunity cost of increasing the production of corn from 800 bushels to 1,200 bushels?
a. 400 bushels of wheat
b. 500 bushels of wheat
c. 200 bushels of wheat
...
ECN 212 EXAM QUESTIONS AND
REVISED ANSWERS (ALL ARE
CORRECT)
The table above shows one set of production possibilities. What is the opportunity cost
of increasing the production of corn from 800 bushels to 1,200 bushels?
a. 400 bushels of wheat
b. 500 bushels of wheat
c. 200 bushels of wheat
d. 1,300 bushels of wheat - Answer- b. 500 bushels of wheat
Feedback: The opportunity cost of increasing the production of corn from 800 bushels to
1,200 bushels is represented by the amount of wheat given up in order to do so. When
the economy produces 800 bushels of corn, it also produces 1800 bushels of wheat.
However, in order to produce 1,200 bushels of corn, it can only produce 1300 bushels
of wheat. Therefore, the economy must give up 1,800 - 1,300 = 500 bushels of wheat in
order to increase production of corn from 800 bushels to 1,200 bushels.
Differences in scientific judgment between economists are similar to all of the following
except _______.
a. two biologists arguing about the fairness of health insurance premiums
b. doctors debating which antibiotic is appropriate for a particular infection
c. physicists debating how much friction is caused by salt on the roads
d. meteorologists debating how much snow fall we will get in the upcoming blizzard -
Answer- a. two biologists arguing about the fairness of health insurance premiums
Feedback: Economists often appear to give conflicting advice to policymakers. The two
basic reasons for this are differences in scientific judgments and differences in values.
Differences in scientific judgment come about when different positive views about an
outcome cause economists to form different normative viewpoints. However, differences
in values also play a role in explaining why different public policies are encouraged. In
this case, two biologists arguing about the fairness of health insurance premiums most
resembles differences in values rather than in scientific judgment.
In the circular-flow diagram, which of the following items does not flow from firms to
households?
a. Output
b. Wages
c. Labor
, d. Goods - Answer- c. Labor
Feedback: In the markets for goods and services, firms sell output to households. The
firms then use this flow of dollars to purchase factors of production from households.
Therefore, wages, rent, and profit also flow from firms to households in the form of
income.
In the circular-flow diagram, which of the following do households not do?
a. Buy goods and services that firms produce
b. Sell their labor to firms
c. Own the factors of production
d. Produce goods and services - Answer- d. Produce goods and services
Feedback: In the circular-flow diagram, households sell the use of their labor, land, and
capital to firms in the markets for the factors of production. The flow of money they
receive from doing so is used in the markets for goods and services to purchase the
output those firms produce.
The advice of economists is the only thing a policymaker has to consider when
implementing a proposed policy.
True
False - Answer- False:
Feedback: Economists are one of several different groups that advise political leaders
when making important decisions. For example, communications advisers help
politicians explain their proposed policy to the public, while press advisers help
politicians to understand how the news media will report on the proposal. In contrast,
political advisers will help politicians identify which groups will support, or oppose, the
proposal. In short, it is common for politicians to take the advice of other types of
advisers, rather than taking the advice of economic advisers, even in the event that the
economists have suggested the best policy.
Which of the following steps does an economist not take when studying the economy?
a. Collect data
b. Analyze data
c. Devise theories
d. Create data in a laboratory - Answer- d. Create data in a laboratory
Feedback: When studying the economy, an economist begins by devising a theory, then
collecting relevant data, and finally analyzing that data. Unfortunately, economists often
cannot rely on experiments to create data and instead they are forced to work with pre-
existing data sets about the world around them.
Which of the following is an example of a normative, as opposed to positive, statement?
a. Gasoline prices ought to be lower than they are now.
b. An increase in the cigarette tax would cause a decrease in the number of smokers.
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