Question 1

Which of the following best describes the study of economics?

Accepted Answer

A) how to plan an economy 
B) how to limit human wants so that scarce resources are sufficient 
C) why resources are scarce 
D) the allocation of scarce resources among alternative uses 
E) how to distribute income as equally as possible 
A) how to plan an economy 
B) how to limit human wants so that scarce resources are sufficient 
C) why resources are scarce 
D) the allocation of scarce resources among alternative uses 
E) how to distribute income as equally as possible

Question 2

If a country's production possibilities boundary is drawn as a straight (downward-sloping)line it indicates

Accepted Answer

A) decreasing opportunity cost of producing more of either good. 
B) the use of the scarce resources in an economy. 
C) constant opportunity cost of producing more of either good. 
D) an unfair distribution of resources in an economy. 
E) increasing opportunity cost of producing more of either good. 
A) decreasing opportunity cost of producing more of either good. 
B) the use of the scarce resources in an economy. 
C) constant opportunity cost of producing more of either good. 
D) an unfair distribution of resources in an economy. 
E) increasing opportunity cost of producing more of either good.

Question 3

Suppose a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one cake?

Accepted Answer

A) 0.4 pies 
B) 0.25 pies 
C) 2.5 pies 
D) 0.4 cakes 
E) 2.5 cakes 
A) 0.4 pies 
B) 0.25 pies 
C) 2.5 pies 
D) 0.4 cakes 
E) 2.5 cakes

Question 4

In traditional economies,economic behaviour is

Accepted Answer

A) largely determined by a central authority. 
B) based primarily on custom and habit. 
C) directed only by self-interest. 
D) affected by elements of tradition,government command,and market incentives. 
E) random and unpredictable. 
A) largely determined by a central authority. 
B) based primarily on custom and habit. 
C) directed only by self-interest. 
D) affected by elements of tradition,government command,and market incentives. 
E) random and unpredictable.

Question 5

In a pure market economy,the role of government is limited to provision of : i)a basic legal and institutional structure.
Ii)intervention in the allocation of resources in some areas of the economy.
Iii)redistribution of income.
Iv)stabilization of economic conditions generally.
Which of the above points is true?

Accepted Answer

A) Only i). 
B) Only i)and ii). 
C) Only i)and iv). 
D) Only i),ii),and iv). 
E) All of the points are provided by government in a pure market economy. 
A) Only i). 
B) Only i)and ii). 
C) Only i)and iv). 
D) Only i),ii),and iv). 
E) All of the points are provided by government in a pure market economy.

Question 6

Scarcity arises from limited resources.For this reason,all economic choices involve

Accepted Answer

A) a value judgement. 
B) an educated decision. 
C) an opportunity cost. 
D) complementary ends. 
E) greed. 
A) a value judgement. 
B) an educated decision. 
C) an opportunity cost. 
D) complementary ends. 
E) greed.

Question 7

In the current Canadian economy,the majority of choices on how resources are allocated are made by

Accepted Answer

A) the various levels of government. 
B) negotiation between unions and firms. 
C) business firms only. 
D) legal contracts. 
E) consumers and firms through the price system. 
A) the various levels of government. 
B) negotiation between unions and firms. 
C) business firms only. 
D) legal contracts. 
E) consumers and firms through the price system.

Question 8

Which of the following best completes the definition of opportunity cost? The opportunity cost of choosing any one alternative is the

Accepted Answer

A) market cost of the next best alternative. 
B) value of the next best alternative that is given up. 
C) the revenues that would be given up if that alternative is not chosen. 
D) value of all other alternatives combined. 
E) value of resources used to make that alternative available to the market. 
A) market cost of the next best alternative. 
B) value of the next best alternative that is given up. 
C) the revenues that would be given up if that alternative is not chosen. 
D) value of all other alternatives combined. 
E) value of resources used to make that alternative available to the market.

Question 9

With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms.   FIGURE 1-2 Refer to Figure 1-2.What is the price of a textbook in this example?

Accepted Answer

A) $25 
B) $40 
C) $50 
D) $100 
E) $250 
A) $25 
B) $40 
C) $50 
D) $100 
E) $250

Question 10

Which of the following statements best describes a barter system of exchange?

Accepted Answer

A) It involves the trading of goods directly for other goods. 
B) It requires the use of money. 
C) It eliminates the transactions costs involved in exchange. 
D) It developed late in history. 
E) It is the most efficient form of exchange. 
A) It involves the trading of goods directly for other goods. 
B) It requires the use of money. 
C) It eliminates the transactions costs involved in exchange. 
D) It developed late in history. 
E) It is the most efficient form of exchange.

Question 11

FIGURE 1-5 Refer to Figure 1-5.Suppose the relevant production possibilities boundary is the one labelled B.This boundary implies that

Accepted Answer

A) the concept of opportunity cost is not at work in this economy. 
B) the opportunity cost of producing either capital goods or consumer goods does not depend on how much of each good is produced. 
C) consumer goods are preferred to capital goods. 
D) in this society,the resources are not efficiently employed. 
E) capital goods are preferred to consumer goods. 
A) the concept of opportunity cost is not at work in this economy. 
B) the opportunity cost of producing either capital goods or consumer goods does not depend on how much of each good is produced. 
C) consumer goods are preferred to capital goods. 
D) in this society,the resources are not efficiently employed. 
E) capital goods are preferred to consumer goods.

Question 12

Which of the following has most contributed to the globalization of the economy?

Accepted Answer

A) the decreased importance of agriculture 
B) reductions in transportation and communication costs 
C) the shift toward a market economy in China 
D) tariffs and trade barriers 
E) the decline in the relative importance of manufacturing 
A) the decreased importance of agriculture 
B) reductions in transportation and communication costs 
C) the shift toward a market economy in China 
D) tariffs and trade barriers 
E) the decline in the relative importance of manufacturing

Question 13

Suppose Andrea has a job that pays her $50 000 per year (after taxes).She is considering quitting her job and going to university full time for four years.Tuition fees and books will cost $12 000 per year.Living expenses in either situation will cost $20 000 per year.What is the opportunity cost of Andrea's four-year university degree?

Accepted Answer

A) $128 000 
B) $200 000 
C) $240 000 
D) $248 000 
E) $288 000 
A) $128 000 
B) $200 000 
C) $240 000 
D) $248 000 
E) $288 000

Question 14

Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs   to purchase,and Model B,which costs $50 000 to purchase.You have a budget of   for the purchase of new vehicles.What is the opportunity cost of one Model B vehicle?

Accepted Answer

A) 0 
B) 3/5 of a Model A vehicle 
C) 5/3 of a Model A vehicle 
D) 5 Model A vehicles 
E) 3 Model A vehicles 
A) 0 
B) 3/5 of a Model A vehicle 
C) 5/3 of a Model A vehicle 
D) 5 Model A vehicles 
E) 3 Model A vehicles

Question 15

Scarcity is likely to be

Accepted Answer

A) a problem that will be solved by the proper use of available resources. 
B) unique to the twenty-first century. 
C) a problem that will always exist. 
D) a result of the work ethic. 
E) eliminated with a better understanding of economics. 
A) a problem that will be solved by the proper use of available resources. 
B) unique to the twenty-first century. 
C) a problem that will always exist. 
D) a result of the work ethic. 
E) eliminated with a better understanding of economics.

Question 16

In command economies,economic behaviour is

Accepted Answer

A) largely determined by a central authority. 
B) based primarily on custom and habit. 
C) directed by individual self-interest. 
D) largely affected by elements of tradition and market incentives. 
E) random and unpredictable. 
A) largely determined by a central authority. 
B) based primarily on custom and habit. 
C) directed by individual self-interest. 
D) largely affected by elements of tradition and market incentives. 
E) random and unpredictable.

Question 17

Consider a production possibilities boundary showing the quantity of military goods and the quantity of civilian goods on the two axes.A movement along the production possibilities boundary could be caused by

Accepted Answer

A) the employment of previously idle resources. 
B) the reallocation of resources between military and civilian goods. 
C) the growth of productive capacity. 
D) an increase in the labour supply. 
E) technological progress. 
A) the employment of previously idle resources. 
B) the reallocation of resources between military and civilian goods. 
C) the growth of productive capacity. 
D) an increase in the labour supply. 
E) technological progress.

Question 18

Which of the following statements best describes the underlying feature of most economic problems?

Accepted Answer

A) People have unlimited wants in the face of limited resources. 
B) There are unlimited resources. 
C) Resources are distributed fairly. 
D) People have limited wants in the face of limited resources. 
E) Governments should never interfere in the workings of a market economy. 
A) People have unlimited wants in the face of limited resources. 
B) There are unlimited resources. 
C) Resources are distributed fairly. 
D) People have limited wants in the face of limited resources. 
E) Governments should never interfere in the workings of a market economy.

Question 19

A straight-line production possibilities boundary differs from a concave boundary in which of the following ways?

Accepted Answer

A) The straight-line boundary illustrates constant opportunity costs,whereas the concave boundary illustrates increasing opportunity costs. 
B) The concave boundary illustrates constant opportunity costs,whereas the straight-line boundary illustrates decreasing opportunity costs. 
C) The straight-line boundary does not show scarcity,whereas the concave boundary does. 
D) The straight-line boundary shows opportunity cost,whereas the concave boundary does not. 
E) A straight-line boundary is associated with a command economy,whereas a concave boundary is associated with a free-market economy. 
A) The straight-line boundary illustrates constant opportunity costs,whereas the concave boundary illustrates increasing opportunity costs. 
B) The concave boundary illustrates constant opportunity costs,whereas the straight-line boundary illustrates decreasing opportunity costs. 
C) The straight-line boundary does not show scarcity,whereas the concave boundary does. 
D) The straight-line boundary shows opportunity cost,whereas the concave boundary does not. 
E) A straight-line boundary is associated with a command economy,whereas a concave boundary is associated with a free-market economy.

Question 20

The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.   TABLE 1-1 Refer to Table 1-1.What is Thomas's opportunity cost of producing one mowed lawn?

Accepted Answer

A) 0 fishing lures 
B) 1/6 fishing lure 
C) one fishing lure 
D) 6 fishing lures 
E) 12 fishing lures 
A) 0 fishing lures 
B) 1/6 fishing lure 
C) one fishing lure 
D) 6 fishing lures 
E) 12 fishing lures

Which of the following best describes the study of economics?

If a country's production possibilities boundary is drawn as a straight (downward-sloping)line it indicates

Suppose a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one cake?

In traditional economies,economic behaviour is

Scarcity arises from limited resources.For this reason,all economic choices involve

In the current Canadian economy,the majority of choices on how resources are allocated are made by

Which of the following best completes the definition of opportunity cost? The opportunity cost of choosing any one alternative is the

With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2 Refer to Figure 1-2.What is the price of a textbook in this example?

Which of the following statements best describes a barter system of exchange?

FIGURE 1-5 Refer to Figure 1-5.Suppose the relevant production possibilities boundary is the one labelled B.This boundary implies that

Which of the following has most contributed to the globalization of the economy?

Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs to purchase,and Model B,which costs $50 000 to purchase.You have a budget of for the purchase of new vehicles.What is the opportunity cost of one Model B vehicle?

Scarcity is likely to be

In command economies,economic behaviour is

Consider a production possibilities boundary showing the quantity of military goods and the quantity of civilian goods on the two axes.A movement along the production possibilities boundary could be caused by

Which of the following statements best describes the underlying feature of most economic problems?

A straight-line production possibilities boundary differs from a concave boundary in which of the following ways?

The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns. TABLE 1-1 Refer to Table 1-1.What is Thomas's opportunity cost of producing one mowed lawn?

Economic Theories, data, and Graphs

Demand, supply, and Price

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Real Gdp and the Price Level in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

Exam 1: Economic Issues and Concepts

Which of the following best describes the study of economics?

If a country's production possibilities boundary is drawn as a straight (downward-sloping)line it indicates

Suppose a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one cake?

In traditional economies,economic behaviour is

Scarcity arises from limited resources.For this reason,all economic choices involve

In the current Canadian economy,the majority of choices on how resources are allocated are made by

Which of the following best completes the definition of opportunity cost? The opportunity cost of choosing any one alternative is the

With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2 Refer to Figure 1-2.What is the price of a textbook in this example?

Which of the following statements best describes a barter system of exchange?

FIGURE 1-5 Refer to Figure 1-5.Suppose the relevant production possibilities boundary is the one labelled B.This boundary implies that

Which of the following has most contributed to the globalization of the economy?

Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs to purchase,and Model B,which costs $50 000 to purchase.You have a budget of for the purchase of new vehicles.What is the opportunity cost of one Model B vehicle?

Scarcity is likely to be

In command economies,economic behaviour is

Consider a production possibilities boundary showing the quantity of military goods and the quantity of civilian goods on the two axes.A movement along the production possibilities boundary could be caused by

Which of the following statements best describes the underlying feature of most economic problems?

A straight-line production possibilities boundary differs from a concave boundary in which of the following ways?

The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns. TABLE 1-1 Refer to Table 1-1.What is Thomas's opportunity cost of producing one mowed lawn?

Economic Theories, data, and Graphs

Demand, supply, and Price

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Real Gdp and the Price Level in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters