Question 1

Which of the following statements is true about profit?

Accepted Answer

A) Profit refers to the revenue received from the sale of a quantity of goods. 
B) Profit is calculated by multiplying price and quantity sold. 
C) The terms "accounting profit" and "economic profit" can be used interchangeably. 
D) Profit is the difference between revenue and cost. 
A) Profit refers to the revenue received from the sale of a quantity of goods. 
B) Profit is calculated by multiplying price and quantity sold. 
C) The terms "accounting profit" and "economic profit" can be used interchangeably. 
D) Profit is the difference between revenue and cost. D

Question 2

Which of the following generates productive efficiency?

Accepted Answer

A) competition among sellers 
B) competition among buyers 
C) government inspectors 
D) government production rules and regulations 
A) competition among sellers 
B) competition among buyers 
C) government inspectors 
D) government production rules and regulations A

Question 3

Making "how much" decisions involve

Accepted Answer

A) calculating the total benefits of the activity and determining if you are satisfied with that amount. 
B) calculating the total costs of the activity and determining if you can afford to incur that expenditure. 
C) calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. 
D) determining the additional benefits and the additional costs of that activity. 
A) calculating the total benefits of the activity and determining if you are satisfied with that amount. 
B) calculating the total costs of the activity and determining if you can afford to incur that expenditure. 
C) calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. 
D) determining the additional benefits and the additional costs of that activity. D

Question 4

Allocative efficiency is achieved when firms produce goods and services

Accepted Answer

A) at the lowest possible cost. 
B) that consumers value most. 
C) at the lowest opportunity cost. 
D) at a marginal cost of zero. 
A) at the lowest possible cost. 
B) that consumers value most. 
C) at the lowest opportunity cost. 
D) at a marginal cost of zero.

Question 5

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 6

You explain to your roommate Surya, who makes beaded headbands, about an economic theory which asserts that consumers will purchase more of a product at lower prices than they will at higher prices.She contends that the theory is incorrect because over the past two years she has lowered the price of her headbands and yet has seen a decrease in sales.How would you respond to Surya?

Accepted Answer

A) Surya is right; she has evidence to back her claim.The theory must be erroneous. 
B) Surya is making the mistake of assuming that correlation implies causation. 
C) I will explain to her that she is making the error of reverse causality: it is the decrease in demand that has caused her to lower her prices. 
D) I will explain to her that there are some omitted variables that have contributed to a decrease in her sales such as changes in income. 
A) Surya is right; she has evidence to back her claim.The theory must be erroneous. 
B) Surya is making the mistake of assuming that correlation implies causation. 
C) I will explain to her that she is making the error of reverse causality: it is the decrease in demand that has caused her to lower her prices. 
D) I will explain to her that there are some omitted variables that have contributed to a decrease in her sales such as changes in income.

Question 7

The government makes all economic decisions in a mixed economy.

Accepted Answer

A) True 
 B)False

Question 8

________ is a situation in which a good or service is produced at the lowest possible cost.

Accepted Answer

A) Allocative efficiency 
B) Productive efficiency 
C) Equity 
D) Optimal marginalism 
A) Allocative efficiency 
B) Productive efficiency 
C) Equity 
D) Optimal marginalism

Question 9

When voluntary exchange takes place, both parties gain from the exchange.

Accepted Answer

A) True 
 B)False

Question 10

The machines workers have to work with are considered

Accepted Answer

A) human capital. 
B) physical capital. 
C) entrepreneurship. 
D) financial capital. 
A) human capital. 
B) physical capital. 
C) entrepreneurship. 
D) financial capital.

Question 11

Explain the economic assumption that "people are rational."

Accepted Answer

"People are rational" means that economi

Question 12

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Accepted Answer

A) zero, since she will no longer be earning a salary 
B) It depends on the "going rate" for home-care providers. 
C) at least $125,000 
D) the value she attributes to the satisfaction she receives from taking care of her parents 
A) zero, since she will no longer be earning a salary 
B) It depends on the "going rate" for home-care providers. 
C) at least $125,000 
D) the value she attributes to the satisfaction she receives from taking care of her parents

Question 13

Which of the following is motivated by an efficiency concern?

Accepted Answer

A) In 2013 the Alberta government handed out pre-paid credit and debit cards to flood victims. 
B) The right to purchase tickets to the Grey Cup is decided by a lottery. 
C) Organ transplant waiting lists rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The federal government Equilization program which makes larger transfers to poor provinces than to wealthy ones. 
A) In 2013 the Alberta government handed out pre-paid credit and debit cards to flood victims. 
B) The right to purchase tickets to the Grey Cup is decided by a lottery. 
C) Organ transplant waiting lists rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The federal government Equilization program which makes larger transfers to poor provinces than to wealthy ones.

Question 14

Which of the following is not an example of an economic trade-off that a firm has to make?

Accepted Answer

A) whether it is cheaper to produce with more machines or with more workers 
B) whether it is to outsource the production of a good or service 
C) whether or not consumers will buy its products 
D) whether it should produce more of its product 
A) whether it is cheaper to produce with more machines or with more workers 
B) whether it is to outsource the production of a good or service 
C) whether or not consumers will buy its products 
D) whether it should produce more of its product

Question 15

What is opportunity cost?

Accepted Answer

Opportunity cost refers to the highest-v

Question 16

Macroeconomics is the study of

Accepted Answer

A) how households make choices. 
B) how firms make choices. 
C) how households and firms make choices. 
D) the economy as a whole. 
A) how households make choices. 
B) how firms make choices. 
C) how households and firms make choices. 
D) the economy as a whole.

Question 17

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Accepted Answer

A) They are both automatically achieved in a free market economy. 
B) They always call for opposite outcomes. 
C) There is no conflict between the two goals. 
D) There is often a trade-off between the two. 
A) They are both automatically achieved in a free market economy. 
B) They always call for opposite outcomes. 
C) There is no conflict between the two goals. 
D) There is often a trade-off between the two.

Question 18

Suppose the extra cost of producing an extra million kilograms of french fries is $1 million.Then, McCain Foods Ltd.should make the extra french fries if they generate additional revenue of $1 million.

Accepted Answer

A) True 
 B)False

Question 19

Productive efficiency is achieved when

Accepted Answer

A) firms add a low profit margin to the goods and services they produce. 
B) firms produce the goods and services that consumers value most. 
C) firms produce goods and services at the lowest cost. 
D) there are no shortages or surpluses in the market. 
A) firms add a low profit margin to the goods and services they produce. 
B) firms produce the goods and services that consumers value most. 
C) firms produce goods and services at the lowest cost. 
D) there are no shortages or surpluses in the market.

Question 20

Markets promote

Accepted Answer

A) equity and competition. 
B) voluntary exchange and equality. 
C) equity and equality. 
D) competition and voluntary exchange. 
A) equity and competition. 
B) voluntary exchange and equality. 
C) equity and equality. 
D) competition and voluntary exchange.

Which of the following statements is true about profit?

Which of the following generates productive efficiency?

Making "how much" decisions involve

Allocative efficiency is achieved when firms produce goods and services

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.

The government makes all economic decisions in a mixed economy.

________ is a situation in which a good or service is produced at the lowest possible cost.

When voluntary exchange takes place, both parties gain from the exchange.

The machines workers have to work with are considered

Explain the economic assumption that "people are rational."

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Which of the following is motivated by an efficiency concern?

Which of the following is not an example of an economic trade-off that a firm has to make?

What is opportunity cost?

Macroeconomics is the study of

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Suppose the extra cost of producing an extra million kilograms of french fries is $1 million.Then, McCain Foods Ltd.should make the extra french fries if they generate additional revenue of $1 million.

Productive efficiency is achieved when

Markets promote

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 1: Economics: Foundations and Models

Which of the following statements is true about profit?

Which of the following generates productive efficiency?

Making "how much" decisions involve

Allocative efficiency is achieved when firms produce goods and services

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.

The government makes all economic decisions in a mixed economy.

________ is a situation in which a good or service is produced at the lowest possible cost.

When voluntary exchange takes place, both parties gain from the exchange.

The machines workers have to work with are considered

Explain the economic assumption that "people are rational."

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Which of the following is motivated by an efficiency concern?

Which of the following is not an example of an economic trade-off that a firm has to make?

What is opportunity cost?

Macroeconomics is the study of

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Suppose the extra cost of producing an extra million kilograms of french fries is $1 million.Then, McCain Foods Ltd.should make the extra french fries if they generate additional revenue of $1 million.

Productive efficiency is achieved when

Markets promote

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters