Q: If Fatoula’s demand curve is $$QD = 45 - 4P$$, what is the quantity demanded when the price is $$P = 7$$?

$$QD = 45 - 4 \times 7 = 45 - 28 = 17$$

Question 1

Which of the following best describes the scientific method as used by economists?

Accepted Answer

Economists use observation, theory, and more observation, but often face challenges in conducting experiments.

Question 2

In the circular-flow diagram, which role do households play in the market for factors of production?

Accepted Answer

Households are sellers, and firms are buyers.

Question 3

Which statement is an example of a normative statement?

Accepted Answer

The government should print less money.

Question 4

Refer to the production possibilities frontier (PPF) graph. If the economy is operating at point D, what does this indicate?

Accepted Answer

The economy is not using all its resources efficiently; it could produce more of either good without sacrificing the other.

Question 5

If the PPF shifts outward, as shown in the graph, what could be a possible cause?

Accepted Answer

An improvement in production technology.

Question 6

Which of the following is a positive, rather than a normative, statement?

Accepted Answer

Law X will reduce national income.

Question 7

What is the slope of Fatoula’s demand curve for novels between the points (21, $$6) and (13, 8$$)?

Accepted Answer

$$\frac{8-6}{13-21} = \frac{2}{-8} = -\frac{1}{4}$$

Question 8

If Fatoula’s demand curve is $$QD = 45 - 4P$$, what is the quantity demanded when the price is $$P = 7$$?

Accepted Answer

$$QD = 45 - 4 	imes 7 = 45 - 28 = 17$$

Question 9

Which of the following would cause a shift to the right in the demand curve for novels?

Accepted Answer

An increase in consumer income.

Question 10

What is the main difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies how households and firms make decisions and interact in markets, while macroeconomics studies economy-wide phenomena such as inflation, unemployment, and growth.

Question 11

Which government department regularly relies on the advice of economists for tax policy?

Accepted Answer

Department of Finance

Question 12

If a graph shows a positive correlation between the number of lighters in a house and the risk of cancer, what is a potential pitfall in interpreting this result?

Accepted Answer

There may be an omitted variable, such as smoking, that explains the correlation.

Question 13

Which of the following best illustrates reverse causality?

Accepted Answer

More violent crimes cause more police officers to be hired.

Question 14

Most economists agree that rent controls:

Accepted Answer

Reduce the quality and quantity of housing.

Question 15

Suppose the functional form of a linear demand curve is $$QD = a - bP. If$$ $$a = 48$$ and $$b = 4$$, what is the price at which quantity demanded is zero?

Accepted Answer

$$P = \frac{a}{b} = \frac{48}{4} = 12$$

Question 16

If a time-series graph shows a sharp increase in unemployment rate during a recession, what type of graph is being used?

Accepted Answer

Time-series graph

Question 17

If economists disagree about whether a tax should be based on income or consumption, what is the most likely reason?

Accepted Answer

Differences in scientific judgments and values.

Question 18

If the slope of a line is calculated as $$\frac{\Delta y}{\Delta x}$$, what is the slope between the points (5, 10) and (25, 5)?

Accepted Answer

$$\frac{5-10}{25-5} = \frac{-5}{20} = -0.25$$

Question 19

Which of the following is NOT a common type of graph used by economists to display data?

Accepted Answer

Venn diagram

Thinking Like an Economist: Methodology, Models, and Graphical Analysis

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