Question 1

A country's production possibilities boundary shows that

Accepted Answer

A)  when a society combines its resources efficiently, it cannot produce more of one good without producing less of the other good. 
B)  the supply for goods always exceeds the demand. 
C)  when a society combines its resources inefficiently, it cannot produce more of one good without producing less of the other good. 
D)  when a society combines its resources efficiently, it is always possible to produce more of all goods. 
E)  all points inside the boundary are preferred to all points on the boundary. 
A)  when a society combines its resources efficiently, it cannot produce more of one good without producing less of the other good. 
B)  the supply for goods always exceeds the demand. 
C)  when a society combines its resources inefficiently, it cannot produce more of one good without producing less of the other good. 
D)  when a society combines its resources efficiently, it is always possible to produce more of all goods. 
E)  all points inside the boundary are preferred to all points on the boundary.

Question 2

The diagram below shows two production possibilities boundaries for Country X.   FIGURE 1- 3
-Refer to Figure 1- 3. If Country X is currently producing at point A, it could move to point B if

Accepted Answer

A)  Country X is no longer able to produce the quantity of capital goods at point A. 
B)  some resources were switched from the consumption goods industries to the capital goods industries. 
C)  some resources were switched from the capital goods industries to the consumption goods industries. 
D)  the cost of producing consumer goods were to increase. 
E)  the cost of producing capital goods were to increase. 
A)  Country X is no longer able to produce the quantity of capital goods at point A. 
B)  some resources were switched from the consumption goods industries to the capital goods industries. 
C)  some resources were switched from the capital goods industries to the consumption goods industries. 
D)  the cost of producing consumer goods were to increase. 
E)  the cost of producing capital goods were to increase.

Question 3

Labour services are bought and sold in a

Accepted Answer

A)  foreign exchange market. 
B)  mixed market. 
C)  product market. 
D)  factor market. 
E)  goods market. 
A)  foreign exchange market. 
B)  mixed market. 
C)  product market. 
D)  factor market. 
E)  goods market.

Question 4

On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the

Accepted Answer

A)  area within the boundary. 
B)  distance from the origin to the boundary. 
C)  unattainable points outside the boundary. 
D)  negative slope of the boundary. 
E)  points on the boundary. 
A)  area within the boundary. 
B)  distance from the origin to the boundary. 
C)  unattainable points outside the boundary. 
D)  negative slope of the boundary. 
E)  points on the boundary.

Question 5

Suppose drought destroys many millions of acres of valuable Canadian farmland. The effect on the Canadian economy would be to move

Accepted Answer

A)  its production possibilities boundary inward. 
B)  it beyond its production possibilities boundary. 
C)  it along its production possibilities boundary. 
D)  its production possibilities boundary outward. 
E)  none of the above. There would be no change in Canada's production possibilities boundary. 
A)  its production possibilities boundary inward. 
B)  it beyond its production possibilities boundary. 
C)  it along its production possibilities boundary. 
D)  its production possibilities boundary outward. 
E)  none of the above. There would be no change in Canada's production possibilities boundary.

Question 6

Suppose fire destroy many millions of hectares of valuable Canadian forest. The effect on the Canadian economy would be best illustrated by _ the production possibilities boundary.

Accepted Answer

A)  a shift outward of 
B)  a movement to a point beyond 
C)  a movement inside 
D)  an inward shift of 
E)  a movement along 
A)  a shift outward of 
B)  a movement to a point beyond 
C)  a movement inside 
D)  an inward shift of 
E)  a movement along

Question 7

Specialization of labour means that

Accepted Answer

A)  job security is ensured. 
B)  each worker is self- sufficient. 
C)  different individuals perform different tasks in the production process of any given product. 
D)  different individuals produce different products. 
E)  a barter economy is not necessary. 
A)  job security is ensured. 
B)  each worker is self- sufficient. 
C)  different individuals perform different tasks in the production process of any given product. 
D)  different individuals produce different products. 
E)  a barter economy is not necessary.

Question 8

A point lying inside the production possibilities boundary is one at which

Accepted Answer

A)  more output could be produced with existing resources. 
B)  it is not possible to produce more output with existing resources. 
C)  the economy has run out of resources. 
D)  there is no scarcity. 
E)  the opportunity cost of producing more output is negative. 
A)  more output could be produced with existing resources. 
B)  it is not possible to produce more output with existing resources. 
C)  the economy has run out of resources. 
D)  there is no scarcity. 
E)  the opportunity cost of producing more output is negative.

Question 9

A basic underlying point in economics is that

Accepted Answer

A)  people have unlimited wants in the face of limited resources. 
B)  people have limited wants in the face of limited resources. 
C)  governments should satisfy the needs of the people. 
D)  there are unlimited 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)  people have limited wants in the face of limited resources. 
C)  governments should satisfy the needs of the people. 
D)  there are unlimited resources. 
E)  governments should never interfere in the workings of a market economy.

Question 10

Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her.   FIGURE 1- 2
-Refer to Figure 1- 2. For Madeleine, the opportunity cost of one regular coffee is

Accepted Answer

A)  1/4 of a regular coffee. 
B)  80 lattes. 
C)  4 lattes. 
D)  1/4 of a latte. 
E)  20 lattes 
A)  1/4 of a regular coffee. 
B)  80 lattes. 
C)  4 lattes. 
D)  1/4 of a latte. 
E)  20 lattes

Question 11

The downward- sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue.   FIGURE 1- 5
-Refer to Figure 1- 5. Suppose the government's current spending is shown by point D. In this case,

Accepted Answer

A)  more education expenditures can be achieved only by sacrificing some health expenditures. 
B)  the government should spend its total budget so as to get to point B, since more health spending and more education spending are both clearly desirable. 
C)  the prices of education and health care have increased beyond the government's ability to pay. 
D)  more health expenditures can be achieved only by sacrificing some education expenditures. 
E)  the government is not spending its total budget. 
A)  more education expenditures can be achieved only by sacrificing some health expenditures. 
B)  the government should spend its total budget so as to get to point B, since more health spending and more education spending are both clearly desirable. 
C)  the prices of education and health care have increased beyond the government's ability to pay. 
D)  more health expenditures can be achieved only by sacrificing some education expenditures. 
E)  the government is not spending its total budget.

Question 12

Most modern economies in the world today

Accepted Answer

A)  are similar to feudal systems. 
B)  have pure market exchange. 
C)  are mostly run by government decree. 
D)  have a mix of traditional, command and market elements. 
E)  are complex systems that defy description and analysis. 
A)  are similar to feudal systems. 
B)  have pure market exchange. 
C)  are mostly run by government decree. 
D)  have a mix of traditional, command and market elements. 
E)  are complex systems that defy description and analysis.

Question 13

Economics is the study of

Accepted Answer

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

Question 14

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. $$\begin{array}{l}
\begin{array} { | l | l | l | } 
\hline & \text { Fishing lures } & \text { Mowed lawns } \
\hline \text { Tristan } & 12 & 3 \
\hline \text { Thomas } & 6 & 6 \
\hline
\end{array}\
\text { TABLE 1- } 1
\end{array}$$
-Refer to Table 1- 1. What is Tristan's opportunity cost of producing one mowed lawn?

Accepted Answer

A)  4 fishing lures 
B)  12 fishing lures 
C)  6 fishing lures 
D)  one fishing lure 
E)  3 fishing lures 
A)  4 fishing lures 
B)  12 fishing lures 
C)  6 fishing lures 
D)  one fishing lure 
E)  3 fishing lures

Question 15

In the Canadian economy, most decisions regarding resource allocation are made by

Accepted Answer

A)  the various levels of government. 
B)  consumers and producers interacting in the price system. 
C)  legal contract. 
D)  business firms only. 
E)  negotiation between unions and firms. 
A)  the various levels of government. 
B)  consumers and producers interacting in the price system. 
C)  legal contract. 
D)  business firms only. 
E)  negotiation between unions and firms.

Question 16

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. $$\begin{array}{l}
\begin{array} { | l | l | l | } 
\hline & \text { Fishing lures } & \text { Mowed lawns } \
\hline \text { Tristan } & 12 & 3 \
\hline \text { Thomas } & 6 & 6 \
\hline
\end{array}\
\text { TABLE 1- } 1
\end{array}$$
-Refer to Table 1- 1. If Tristan and Thomas want to maximize their joint output from one day of work, how should they specialize their production?

Accepted Answer

A)  Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns 
B)  Tristan produces 6 lures and 3 mowed lawns 
C)  Tristan produces 6 lures; Thomas produces 6 lures 
D)  Tristan produces 12 lures; Thomas produces 6 mowed lawns 
E)  Tristan produces nothing, Thomas produces 6 lures and 6 mowed lawns 
A)  Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns 
B)  Tristan produces 6 lures and 3 mowed lawns 
C)  Tristan produces 6 lures; Thomas produces 6 lures 
D)  Tristan produces 12 lures; Thomas produces 6 mowed lawns 
E)  Tristan produces nothing, Thomas produces 6 lures and 6 mowed lawns

Question 17

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

Accepted Answer

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

Question 18

During the nineteenth and early twentieth centuries, millions of people immigrated to western Canada. The effect on the Canadian economy was to

Accepted Answer

A)  move it beyond its new production possibilities boundary. 
B)  shift its production possibilities boundary inward. 
C)  shift its production possibilities boundary outward. 
D)  move it inside its new production possibilities boundary. 
E)  move it along an unchanged production possibilities boundary. 
A)  move it beyond its new production possibilities boundary. 
B)  shift its production possibilities boundary inward. 
C)  shift its production possibilities boundary outward. 
D)  move it inside its new production possibilities boundary. 
E)  move it along an unchanged production possibilities boundary.

Question 19

One of the major results of the greater specialization of labour is that

Accepted Answer

A)  there is an increased need for government to intervene in the marketplace. 
B)  there is a greater need for trade. 
C)  the circular flow of income contracts. 
D)  each worker must become more self- sufficient. 
E)  the overall output of the economy declines. 
A)  there is an increased need for government to intervene in the marketplace. 
B)  there is a greater need for trade. 
C)  the circular flow of income contracts. 
D)  each worker must become more self- sufficient. 
E)  the overall output of the economy declines.

Question 20

Suppose there are three alternatives to attending a social event: read a novel (you value this at $10), go to work (you could earn $20), or watch videos with some friends (you value this at $25). The opportunity cost of attending the social event is

Accepted Answer

A)  $45. 
B)  $20. 
C)  $10. 
D)  zero. 
E)  $25. 
A)  $45. 
B)  $20. 
C)  $10. 
D)  zero. 
E)  $25.

A country's production possibilities boundary shows that

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1- 3 -Refer to Figure 1- 3. If Country X is currently producing at point A, it could move to point B if

Labour services are bought and sold in a

On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the

Suppose drought destroys many millions of acres of valuable Canadian farmland. The effect on the Canadian economy would be to move

Suppose fire destroy many millions of hectares of valuable Canadian forest. The effect on the Canadian economy would be best illustrated by _ the production possibilities boundary.

Specialization of labour means that

A point lying inside the production possibilities boundary is one at which

A basic underlying point in economics is that

Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her. FIGURE 1- 2 -Refer to Figure 1- 2. For Madeleine, the opportunity cost of one regular coffee is

The downward- sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue. FIGURE 1- 5 -Refer to Figure 1- 5. Suppose the government's current spending is shown by point D. In this case,

Most modern economies in the world today

Economics is the study of

In the Canadian economy, most decisions regarding resource allocation are made by

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

During the nineteenth and early twentieth centuries, millions of people immigrated to western Canada. The effect on the Canadian economy was to

One of the major results of the greater specialization of labour is that

Suppose there are three alternatives to attending a social event: read a novel (you value this at $10), go to work (you could earn $20), or watch videos with some friends (you value this at $25). The opportunity cost of attending the social event is

Economic Theories, Data, and Graphs

Demand, Supply, and Price

Elasticity

Markets in Action

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

Filters

Exam 1: Economic Issues and Concepts

A country's production possibilities boundary shows that

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1- 3 -Refer to Figure 1- 3. If Country X is currently producing at point A, it could move to point B if

Labour services are bought and sold in a

On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the

Suppose drought destroys many millions of acres of valuable Canadian farmland. The effect on the Canadian economy would be to move

Suppose fire destroy many millions of hectares of valuable Canadian forest. The effect on the Canadian economy would be best illustrated by _ the production possibilities boundary.

Specialization of labour means that

A point lying inside the production possibilities boundary is one at which

A basic underlying point in economics is that

Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her. FIGURE 1- 2 -Refer to Figure 1- 2. For Madeleine, the opportunity cost of one regular coffee is

The downward- sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue. FIGURE 1- 5 -Refer to Figure 1- 5. Suppose the government's current spending is shown by point D. In this case,

Most modern economies in the world today

Economics is the study of

In the Canadian economy, most decisions regarding resource allocation are made by

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

During the nineteenth and early twentieth centuries, millions of people immigrated to western Canada. The effect on the Canadian economy was to

One of the major results of the greater specialization of labour is that

Suppose there are three alternatives to attending a social event: read a novel (you value this at $10), go to work (you could earn $20), or watch videos with some friends (you value this at $25). The opportunity cost of attending the social event is

Economic Theories, Data, and Graphs

Demand, Supply, and Price

Elasticity

Markets in Action

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

Filters