Question 1

How does the government enforce property rights?

Accepted Answer

A)  by requiring property owners to pay property taxes 
B)  by providing police and courts 
C)  by allowing people to decide whether or not they wish to own property 
D)  by providing a system of recording property deeds 
A)  by requiring property owners to pay property taxes 
B)  by providing police and courts 
C)  by allowing people to decide whether or not they wish to own property 
D)  by providing a system of recording property deeds

Question 2

If Canada decides to trade with Mexico, what do we know about the probable outcome?

Accepted Answer

A)  Mexico will be better off, but trade with a less developed country will not help Canada. 
B)  It will not benefit Mexico because workers in Canada are more productive. 
C)  It will benefit Mexico because workers in Canada are more productive. 
D)  Mexico and Canada can both be better off. 
A)  Mexico will be better off, but trade with a less developed country will not help Canada. 
B)  It will not benefit Mexico because workers in Canada are more productive. 
C)  It will benefit Mexico because workers in Canada are more productive. 
D)  Mexico and Canada can both be better off.

Question 3

How do people make decisions at the margin?

Accepted Answer

A)  by following the business cycle 
B)  by experience 
C)  by calculating dollar costs 
D)  by comparing costs and benefits 
A)  by following the business cycle 
B)  by experience 
C)  by calculating dollar costs 
D)  by comparing costs and benefits

Question 4

What is an increase in the overall level of prices in an economy called?

Accepted Answer

A)  economic growth 
B)  inflation 
C)  monetary policy 
D)  rate of return 
A)  economic growth 
B)  inflation 
C)  monetary policy 
D)  rate of return

Question 5

How good are markets at organizing economic activity?

Accepted Answer

A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not a good way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations. 
A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not a good way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations.

Question 6

In economics, what is the cost of something?

Accepted Answer

A)  the dollar amount of obtaining it 
B)  the value of the resources needed to produce it 
C)  what you give up to obtain it 
D)  the amount of labour to produce it 
A)  the dollar amount of obtaining it 
B)  the value of the resources needed to produce it 
C)  what you give up to obtain it 
D)  the amount of labour to produce it

Question 7

Monica has spent $120,000 purchasing and repairing an old cabin, which she expects to sell for $130,000. She discovers that she needs an additional repair, which will cost $20,000. She can sell the cabin as it is now for $115,000. What should she do?

Accepted Answer

A)  She should take the $115,000. 
B)  She should never sell something for less than its cost. 
C)  She should complete the repairs and sell the cabin. 
D)  It doesn't matter which action she takes; the outcome is the same either way. 
A)  She should take the $115,000. 
B)  She should never sell something for less than its cost. 
C)  She should complete the repairs and sell the cabin. 
D)  It doesn't matter which action she takes; the outcome is the same either way.

Question 8

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. What best explains the difference?

Accepted Answer

A)  The United Kingdom was more industrialized than Turkey. 
B)  The United Kingdom printed money at a slower rate than Turkey. 
C)  Workers in the United Kingdom were more productive than workers in Turkey. 
D)  There were more cases of market failure in Turkey than in the United Kingdom. 
A)  The United Kingdom was more industrialized than Turkey. 
B)  The United Kingdom printed money at a slower rate than Turkey. 
C)  Workers in the United Kingdom were more productive than workers in Turkey. 
D)  There were more cases of market failure in Turkey than in the United Kingdom.

Question 9

Why do taxes adversely affect the allocation of resources in society?

Accepted Answer

A)  because they do not always fall more heavily on the rich 
B)  because the taxes collected are not enough to finance government spending 
C)  because not everyone pays taxes 
D)  because they distort prices and thus the decisions of households and firms 
A)  because they do not always fall more heavily on the rich 
B)  because the taxes collected are not enough to finance government spending 
C)  because not everyone pays taxes 
D)  because they distort prices and thus the decisions of households and firms

Question 10

What can cause market failure?

Accepted Answer

A)  low consumer demand 
B)  government intervention and price controls 
C)  externalities and market power 
D)  high prices and foreign competition 
A)  low consumer demand 
B)  government intervention and price controls 
C)  externalities and market power 
D)  high prices and foreign competition

Question 11

David receives $200 as a birthday gift. In deciding how to spend the money, he narrows his options down to four: A, B, C, and D. The price of each option is $100, but David prefers B to C, C to A, and A to D. What is the opportunity cost of option B?

Accepted Answer

A)  It is David's valuation ofC. 
B)  It is David's valuation of A, C, and D together. 
C)  It is $200. 
D)  It is $100. 
A)  It is David's valuation ofC. 
B)  It is David's valuation of A, C, and D together. 
C)  It is $200. 
D)  It is $100.

Question 12

A donut shop sells fresh baked donuts from 5a.m. until 3 p.m. every day but Sunday. The cost of making and selling a dozen glazed donuts is $2.00. Because this shop does not sell day-old donuts the next day, what should the manager do if she still has ten dozen left at 2:30 p.m.?

Accepted Answer

A)  lower the price of the remaining donuts even if the price falls below $2.00 
B)  lower the price of the remaining donuts as long as it's more than $2.00 
C)  lower the price on all donuts so they will all be sold earlier in the day 
D)  donate them to the local Food Bank and produce ten fewer dozen tomorrow 
A)  lower the price of the remaining donuts even if the price falls below $2.00 
B)  lower the price of the remaining donuts as long as it's more than $2.00 
C)  lower the price on all donuts so they will all be sold earlier in the day 
D)  donate them to the local Food Bank and produce ten fewer dozen tomorrow

Question 13

What is the best way to measure the opportunity cost of gasoline?

Accepted Answer

A)  by the average price of a litre of gasoline 
B)  by the fuel efficiency of the average North American car 
C)  by the pollution emitted per 1 km of driving 
D)  by the number of minutes of work needed to pay for 1 km of driving 
A)  by the average price of a litre of gasoline 
B)  by the fuel efficiency of the average North American car 
C)  by the pollution emitted per 1 km of driving 
D)  by the number of minutes of work needed to pay for 1 km of driving

Question 14

Suppose that the average income of a Kenyan is higher than the average income of a South African. What might you conclude?

Accepted Answer

A)  South African firms are faced with stricter government regulations than Kenyan firms. 
B)  Total income is divided among fewer workers in Kenya since it has a smaller labour force than South Africa. 
C)  Kenya's climate allows for longer growing seasons and therefore Kenya can produce large quantities of grain. 
D)  Productivity in Kenya is higher than in South Africa. 
A)  South African firms are faced with stricter government regulations than Kenyan firms. 
B)  Total income is divided among fewer workers in Kenya since it has a smaller labour force than South Africa. 
C)  Kenya's climate allows for longer growing seasons and therefore Kenya can produce large quantities of grain. 
D)  Productivity in Kenya is higher than in South Africa.

Question 15

What does efficiency mean?

Accepted Answer

A)  Society is conserving resources in order to save them for the future. 
B)  Society's goods and services are distributed fairly among society's members. 
C)  Society has lessened its dependence on non-renewable energy sources. 
D)  Society is getting the most it can from its scarce resources. 
A)  Society is conserving resources in order to save them for the future. 
B)  Society's goods and services are distributed fairly among society's members. 
C)  Society has lessened its dependence on non-renewable energy sources. 
D)  Society is getting the most it can from its scarce resources.

Question 16

Productivity is the primary determinant of a country's living standards.

Accepted Answer

A) True 
 B)False

Question 17

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. Why has he decided to take the job?

Accepted Answer

A)  The marginal cost of leaving was greater than the marginal benefit. 
B)  The marginal benefit of leaving was greater than the marginal cost. 
C)  The marginal benefit of teaching was greater than the marginal cost. 
D)  The marginal cost of teaching was greater than the marginal benefit. 
A)  The marginal cost of leaving was greater than the marginal benefit. 
B)  The marginal benefit of leaving was greater than the marginal cost. 
C)  The marginal benefit of teaching was greater than the marginal cost. 
D)  The marginal cost of teaching was greater than the marginal benefit.

Question 18

What causes almost all variation in living standards in different countries?

Accepted Answer

A)  population growth rates 
B)  endowments of natural resources 
C)  proximity to foreign markets 
D)  productivity 
A)  population growth rates 
B)  endowments of natural resources 
C)  proximity to foreign markets 
D)  productivity

How does the government enforce property rights?

If Canada decides to trade with Mexico, what do we know about the probable outcome?

How do people make decisions at the margin?

What is an increase in the overall level of prices in an economy called?

How good are markets at organizing economic activity?

In economics, what is the cost of something?

Monica has spent $120,000 purchasing and repairing an old cabin, which she expects to sell for $130,000. She discovers that she needs an additional repair, which will cost $20,000. She can sell the cabin as it is now for $115,000. What should she do?

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. What best explains the difference?

Why do taxes adversely affect the allocation of resources in society?

What can cause market failure?

David receives $200 as a birthday gift. In deciding how to spend the money, he narrows his options down to four: A, B, C, and D. The price of each option is $100, but David prefers B to C, C to A, and A to D. What is the opportunity cost of option B?

A donut shop sells fresh baked donuts from 5a.m. until 3 p.m. every day but Sunday. The cost of making and selling a dozen glazed donuts is $2.00. Because this shop does not sell day-old donuts the next day, what should the manager do if she still has ten dozen left at 2:30 p.m.?

What is the best way to measure the opportunity cost of gasoline?

Suppose that the average income of a Kenyan is higher than the average income of a South African. What might you conclude?

What does efficiency mean?

Productivity is the primary determinant of a country's living standards.

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. Why has he decided to take the job?

What causes almost all variation in living standards in different countries?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 1: Ten Principles of Economics

How does the government enforce property rights?

If Canada decides to trade with Mexico, what do we know about the probable outcome?

How do people make decisions at the margin?

What is an increase in the overall level of prices in an economy called?

How good are markets at organizing economic activity?

In economics, what is the cost of something?

Monica has spent $120,000 purchasing and repairing an old cabin, which she expects to sell for $130,000. She discovers that she needs an additional repair, which will cost $20,000. She can sell the cabin as it is now for $115,000. What should she do?

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. What best explains the difference?

Why do taxes adversely affect the allocation of resources in society?

What can cause market failure?

David receives $200 as a birthday gift. In deciding how to spend the money, he narrows his options down to four: A, B, C, and D. The price of each option is $100, but David prefers B to C, C to A, and A to D. What is the opportunity cost of option B?

A donut shop sells fresh baked donuts from 5a.m. until 3 p.m. every day but Sunday. The cost of making and selling a dozen glazed donuts is $2.00. Because this shop does not sell day-old donuts the next day, what should the manager do if she still has ten dozen left at 2:30 p.m.?

What is the best way to measure the opportunity cost of gasoline?

Suppose that the average income of a Kenyan is higher than the average income of a South African. What might you conclude?

What does efficiency mean?

Productivity is the primary determinant of a country's living standards.

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. Why has he decided to take the job?

What causes almost all variation in living standards in different countries?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters