Question 1

The basic economic problem of scarcity

Accepted Answer

A) has always existed and will continue to exist. 
B) will eventually disappear as technology continues to advance. 
C) is a problem only in developing economies. 
D) does not apply to the wealthy in society. 
A) has always existed and will continue to exist. 
B) will eventually disappear as technology continues to advance. 
C) is a problem only in developing economies. 
D) does not apply to the wealthy in society.

Question 2

Which of the following is a positive economic statement?

Accepted Answer

A) People should not buy imported fruits and vegetables. 
B) The government should subsidize solar power for homeowners. 
C) The minimum wage law causes unemployment. 
D) The number of work visas should not be limited by the government. 
A) People should not buy imported fruits and vegetables. 
B) The government should subsidize solar power for homeowners. 
C) The minimum wage law causes unemployment. 
D) The number of work visas should not be limited by the government.

Question 3

How are the fundamental economic decisions determined in Canada?

Accepted Answer

A) Individuals, firms, and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because Canada is a centrally planned economy. 
D) The United Nations decides because Canada is a developing economy. 
A) Individuals, firms, and the government interact in a market to make these economic decisions. 
B) These decisions are made by the country's elders who have had much experience in answering these questions. 
C) The government decides because Canada is a centrally planned economy. 
D) The United Nations decides because Canada is a developing economy.

Question 4

Households ________ factors of production and ________ goods and services.

Accepted Answer

A) supply; demand 
B) supply; supply 
C) demand; supply 
D) demand; demand 
A) supply; demand 
B) supply; supply 
C) demand; supply 
D) demand; demand

Question 5

Marginal analysis involves undertaking an activity

Accepted Answer

A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits. 
A) until its marginal costs start declining. 
B) only when its marginal benefits are positive. 
C) until its marginal benefits equal marginal costs. 
D) only if its marginal costs are greater than its marginal benefits.

Question 6

Which of the following is an example of a "how much" decision?

Accepted Answer

A) Dinah's Diner is only open for breakfast and lunch.Dinah is trying to decide whether to open for dinner as well.. 
B) Zander has torn up his front yard and is debating whether to plant grass or install a rock garden.. 
C) You received a nice birthday check from your grandmother and are deciding on whether to spend it on a trip to New York or a trip to San Francisco. 
D) Sergio quit his job to go back to school full time. 
A) Dinah's Diner is only open for breakfast and lunch.Dinah is trying to decide whether to open for dinner as well.. 
B) Zander has torn up his front yard and is debating whether to plant grass or install a rock garden.. 
C) You received a nice birthday check from your grandmother and are deciding on whether to spend it on a trip to New York or a trip to San Francisco. 
D) Sergio quit his job to go back to school full time.

Question 7

Marginal cost is the ________ associated with undertaking an activity.

Accepted Answer

A) total cost 
B) extra cost. 
C) opportunity cost. 
D) foregone cost. 
A) total cost 
B) extra cost. 
C) opportunity cost. 
D) foregone cost.

Question 8

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Accepted Answer

A) True 
 B)False

Question 9

Pookie's Pinball Palace restores old Pinball machines.Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration.After having spent $300,Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration.Alternatively,he can sell the machine "as is" now for $1,000.What should he do?

Accepted Answer

A) He should sell the machine now to make the most profit. 
B) It does not matter what he does; he is going to take a loss on his project. 
C) He should rewire the machine, complete the task and then sell the machine. 
D) He should have never purchased the machine because he has already spent too much time on it and has not been paid for that time. 
A) He should sell the machine now to make the most profit. 
B) It does not matter what he does; he is going to take a loss on his project. 
C) He should rewire the machine, complete the task and then sell the machine. 
D) He should have never purchased the machine because he has already spent too much time on it and has not been paid for that time.

Question 10

Which of the following statements is true about competition in a market?

Accepted Answer

A) Competition forces firms to outsource the production of their labor-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production. 
A) Competition forces firms to outsource the production of their labor-intensive products. 
B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. 
C) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. 
D) Competition forces firms to add only low profit margins to their costs of production.

Question 11

Table 1-2
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Hours } \
\text { Open }
\end{array} & \begin{array} { c } 
\text { Tatal } \
\text { Revenue } \
\text { (dallars) }
\end{array} \
\hline 1 & \$ 25 \
\hline 2 & 45 \
\hline 3 & 70 \
\hline 4 & 90 \
\hline 5 & 105 \
\hline 6 & 110 \
\hline
\end{array}$$ 
Thuy Anh runs a small flower shop in the town of Florabunda.She is debating whether she should extend her hours of operation.Thuy Anh figures that her sales revenue will depend on the number of hours the flower shop is open as shown in the table above.She would have to hire a worker for those hours at a wage rate of $16 per hour.
-Refer to Table 1-2.Using marginal analysis,how many hours should Thuy Anh extend her flower shop's hours of operations?

Accepted Answer

A) 2 hours 
B) 3 hours 
C) 4 hours 
D) 5 hours 
E) 6 hours 
A) 2 hours 
B) 3 hours 
C) 4 hours 
D) 5 hours 
E) 6 hours

Question 12

Which of the following statements is false?

Accepted Answer

A) Anytime you have to decide which action to take you are facing an economic trade-off. 
B) Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale. 
C) Every individual, no matter how rich or poor, is faced with making trade-offs. 
D) Economics is a social science that studies the trade-offs we are forced to make because of scarcity. 
A) Anytime you have to decide which action to take you are facing an economic trade-off. 
B) Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale. 
C) Every individual, no matter how rich or poor, is faced with making trade-offs. 
D) Economics is a social science that studies the trade-offs we are forced to make because of scarcity.

Question 13

One example of human capital is the amount of skills that you have.

Accepted Answer

A) True 
 B)False

Question 14

Voluntary exchange increases economic efficiency

Accepted Answer

A) because neither the buyer nor the seller would agree to a trade unless they both benefit. 
B) because voluntary exchange only takes place with government permission. 
C) because it is free and consequently does not cost anything. 
D) because it allows wealthy individuals to act altruistically and give to the poor. 
A) because neither the buyer nor the seller would agree to a trade unless they both benefit. 
B) because voluntary exchange only takes place with government permission. 
C) because it is free and consequently does not cost anything. 
D) because it allows wealthy individuals to act altruistically and give to the poor.

Question 15

Scenario 1-3
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts."
-Refer to Scenario 1-3.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 400 t-shirts?

Accepted Answer

A) gross earnings 
B) marginal revenue 
C) sales revenue 
D) gross profit 
A) gross earnings 
B) marginal revenue 
C) sales revenue 
D) gross profit

Question 16

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

Accepted Answer

A) a pie chart. 
B) a time-series graph. 
C) a demand curve for outsourcing. 
D) a supply curve of outsourcing. 
A) a pie chart. 
B) a time-series graph. 
C) a demand curve for outsourcing. 
D) a supply curve of outsourcing.

Question 17

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Accepted Answer

A) people with health insurance will be less likely to be overweight than people without health insurance. 
B) people with health insurance will be more likely to be overweight than people without health insurance. 
C) people with health insurance will be equally likely to be overweight as people without health insurance. 
D) there is no correlation between having health insurance and being overweight. 
A) people with health insurance will be less likely to be overweight than people without health insurance. 
B) people with health insurance will be more likely to be overweight than people without health insurance. 
C) people with health insurance will be equally likely to be overweight as people without health insurance. 
D) there is no correlation between having health insurance and being overweight.

Question 18

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics?
a.gasoline prices
b.unemployment
c.inflation
d.health care costs
e.air pollution
f.economic growth

Accepted Answer

b,c,and f are primar

Question 19

One example of physical capital is the amount of savings that you have.

Accepted Answer

A) True 
 B)False

Question 20

If the price of pineapple juice was $4.50 a gallon and it is now $5.75 a gallon,what is the percentage change in price?

Accepted Answer

A) 7)8 percent 
B) 12.5 percent 
C) 27.7 percent 
D) 57.5 percent 
A) 7)8 percent 
B) 12.5 percent 
C) 27.7 percent 
D) 57.5 percent

The basic economic problem of scarcity

Which of the following is a positive economic statement?

How are the fundamental economic decisions determined in Canada?

Households factors of production and goods and services.

Marginal analysis involves undertaking an activity

Which of the following is an example of a "how much" decision?

Marginal cost is the ________ associated with undertaking an activity.

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Which of the following statements is true about competition in a market?

Which of the following statements is false?

One example of human capital is the amount of skills that you have.

Voluntary exchange increases economic efficiency

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.gasoline prices b.unemployment c.inflation d.health care costs e.air pollution f.economic growth

One example of physical capital is the amount of savings that you have.

If the price of pineapple juice was $4.50 a gallon and it is now $5.75 a gallon,what is the percentage change in price?

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 1: Economics: Foundations and Models

The basic economic problem of scarcity

Which of the following is a positive economic statement?

How are the fundamental economic decisions determined in Canada?

Households ________ factors of production and ________ goods and services.

Marginal analysis involves undertaking an activity

Which of the following is an example of a "how much" decision?

Marginal cost is the ________ associated with undertaking an activity.

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Which of the following statements is true about competition in a market?

Which of the following statements is false?

One example of human capital is the amount of skills that you have.

Voluntary exchange increases economic efficiency

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.gasoline prices b.unemployment c.inflation d.health care costs e.air pollution f.economic growth

One example of physical capital is the amount of savings that you have.

If the price of pineapple juice was $4.50 a gallon and it is now $5.75 a gallon,what is the percentage change in price?

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Households factors of production and goods and services.