Question 1

Which of the following is a positive economic statement?

Accepted Answer

A) People should not buy SUVs. 
B) The government should mandate electric automobiles. 
C) Scarcity necessitates that people make trade-offs. 
D) Foreign workers should not be allowed to work for lower wages than the citizens of a country. 
A) People should not buy SUVs. 
B) The government should mandate electric automobiles. 
C) Scarcity necessitates that people make trade-offs. 
D) Foreign workers should not be allowed to work for lower wages than the citizens of a country.

Question 2

Assume an economics instructor want to promote equity in their classroom. To do this, announce that all students will receive a final grade equal to the class average. Based on the equity-efficiency tradeoff, what is a likely outcome?

Accepted Answer

A) Most students will spend their time on other courses, resulting in little learning and a low class average. 
B) Freed from competition, students will fully apply themselves to an economics course causing the class average to rise. 
C) Student behaviour will not change, but everyone in the class will have the same mark. 
D) Students will put extra effort into this economics course solely to help other students do well. 
A) Most students will spend their time on other courses, resulting in little learning and a low class average. 
B) Freed from competition, students will fully apply themselves to an economics course causing the class average to rise. 
C) Student behaviour will not change, but everyone in the class will have the same mark. 
D) Students will put extra effort into this economics course solely to help other students do well.

Question 3

DeShawn's Detailing is a service that details cars at the customers' homes or places of work.DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service.For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package.What is DeShawn's marginal benefit if he sells a basic detailing package?

Accepted Answer

A) $35 
B) $75 
C) He makes a marginal loss of $15, not a marginal benefit. 
D) The marginal benefit cannot be determined. 
A) $35 
B) $75 
C) He makes a marginal loss of $15, not a marginal benefit. 
D) The marginal benefit cannot be determined.

Question 4

Which of the following is a macroeconomics question?

Accepted Answer

A) What determines the inflation rate? 
B) What determines the size of the film industry in Canada? 
C) What factors determine the price of carrots? 
D) What determines the wage of auto workers? 
A) What determines the inflation rate? 
B) What determines the size of the film industry in Canada? 
C) What factors determine the price of carrots? 
D) What determines the wage of auto workers?

Question 5

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

Accepted Answer

A) Provincial health programs are not cost effective.Instead of focusing on universal access to the health care system, money should be spent on programs that prevent disease first and treating disease second. 
B) Concerned about the falling birth rate, the French government has pledged more money for families with three children, in an effort to encourage working women to have more babies. 
C) Some Canadian universities are actively recruiting foreign students for their technology-based programs. 
D) Municipal sports programs must charge all participants the same price, even when participants don't live in the municipality. 
A) Provincial health programs are not cost effective.Instead of focusing on universal access to the health care system, money should be spent on programs that prevent disease first and treating disease second. 
B) Concerned about the falling birth rate, the French government has pledged more money for families with three children, in an effort to encourage working women to have more babies. 
C) Some Canadian universities are actively recruiting foreign students for their technology-based programs. 
D) Municipal sports programs must charge all participants the same price, even when participants don't live in the municipality.

Question 6

What is the difference between an invention and an innovation?

Accepted Answer

An invention is the development of a new

Question 7

Economists assume that individuals

Accepted Answer

A) behave in unpredictable ways. 
B) will never take actions to help others. 
C) prefer to live in a society that values fairness above all else. 
D) are rational and respond to incentives. 
A) behave in unpredictable ways. 
B) will never take actions to help others. 
C) prefer to live in a society that values fairness above all else. 
D) are rational and respond to incentives.

Question 8

Figure 1.3   Alt text for Figure 1.3: In figure 1.3, a graph to calculate the area of the trapezoid X is shown.
Long description for Figure 1.3: The x-axis is labelled, quantity, with 0 at the vertex and points 150 and 210 marked.The y-axis is labelled price, with points 12 and 15 marked.The points (150, 15)and (210, 12)are plotted on the graph and joined to the respective axes using dotted lines.A line labelled, Demand.slopes downward from near the top of the y-axis and passes through these plotted points, down toward the bottom right corner.The area formed by these two plotted points with the x-axis and the demand curve is in the shape of a trapezoid shaded and labelled as X.
-Refer to Figure 1.3.Calculate the area of the trapezoid X.

Accepted Answer

A) $270 
B) $720 
C) $810 
D) $2,520 
A) $270 
B) $720 
C) $810 
D) $2,520

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

How are the fundamental economic questions answered in a market economy?

Accepted Answer

A) The government alone decides the answers. 
B) Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C) Households and firms interact in markets to decide the answers to these questions. 
D) Large corporations alone decide the answers. 
A) The government alone decides the answers. 
B) Individuals, firms, and the government interact in markets to decide the answers to these questions. 
C) Households and firms interact in markets to decide the answers to these questions. 
D) Large corporations alone decide the answers.

Question 11

Consider the following statements:
a- Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.
b- Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
c- Firms produce more of a particular DVD when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?

Accepted Answer

A)  A only. 
B)  B only. 
C)  C only. 
D)  A and b. 
E)  a, b, and c. 
A)  A only. 
B)  B only. 
C)  C only. 
D)  A and b. 
E)  a, b, and c.

Question 12

What are some of the reasons given for the the increase in coffee prices?

Accepted Answer

The reasons include

Question 13

The basic economic problem of ________ has always existed and will continue to exist.

Accepted Answer

A) scarcity 
B) efficiency 
C) inflation 
D) recession 
A) scarcity 
B) efficiency 
C) inflation 
D) recession

Question 14

Which of the following is a problem inherent in centrally planned economies?

Accepted Answer

A) Households and firms make poor decisions in choosing how resources are allocated. 
B) There is too little production of low-cost, high-quality goods and services. 
C) Production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D) Exports tend to exceed imports. 
A) Households and firms make poor decisions in choosing how resources are allocated. 
B) There is too little production of low-cost, high-quality goods and services. 
C) Production managers are more concerned with satisfying consumer wants than with satisfying government's orders. 
D) Exports tend to exceed imports.

Question 15

Explain why economics is considered a social science.

Accepted Answer

Economics is a social science

Question 16

Economists assume that rational behavior is useful in explaining choices people make

Accepted Answer

A) because irrational people do not make economic choices. 
B) even though people may not behave rationally all the time. 
C) because individuals act rationally all the time in all circumstances. 
D) even though people rarely, if ever, behave in a rational manner. 
A) because irrational people do not make economic choices. 
B) even though people may not behave rationally all the time. 
C) because individuals act rationally all the time in all circumstances. 
D) even though people rarely, if ever, behave in a rational manner.

Question 17

Which of the following statements is true?

Accepted Answer

A) Anytime you have to decide which action to take you are experiencing economic equity. 
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 resources are unlimited. 
A) Anytime you have to decide which action to take you are experiencing economic equity. 
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 resources are unlimited.

Question 18

Technology is defined as

Accepted Answer

A) the process of developing and revising models. 
B) new innovations and creations. 
C) the processes used to produce goods and services. 
D) the process of recycling products. 
A) the process of developing and revising models. 
B) new innovations and creations. 
C) the processes used to produce goods and services. 
D) the process of recycling products.

Question 19

DeShawn's Detailing is a service that details cars at the customers' homes or places of work.DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service.For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package.What is the marginal cost of adding the engine detailing to the basic detailing package?

Accepted Answer

A) $20 
B) $30 
C) $60 
D) $60 plus the value of his time 
A) $20 
B) $30 
C) $60 
D) $60 plus the value of his time

Question 20

All of the following are part of an economic model except

Accepted Answer

A) assumptions. 
B) hypotheses. 
C) data. 
D) opinions. 
A) assumptions. 
B) hypotheses. 
C) data. 
D) opinions.

Which of the following is a positive economic statement?

Assume an economics instructor want to promote equity in their classroom. To do this, announce that all students will receive a final grade equal to the class average. Based on the equity-efficiency tradeoff, what is a likely outcome?

Which of the following is a macroeconomics question?

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

What is the difference between an invention and an innovation?

Economists assume that individuals

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

How are the fundamental economic questions answered in a market economy?

What are some of the reasons given for the the increase in coffee prices?

The basic economic problem of ________ has always existed and will continue to exist.

Which of the following is a problem inherent in centrally planned economies?

Explain why economics is considered a social science.

Economists assume that rational behavior is useful in explaining choices people make

Which of the following statements is true?

Technology is defined as

All of the following are part of an economic model except

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 is a positive economic statement?

Assume an economics instructor want to promote equity in their classroom. To do this, announce that all students will receive a final grade equal to the class average. Based on the equity-efficiency tradeoff, what is a likely outcome?

Which of the following is a macroeconomics question?

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

What is the difference between an invention and an innovation?

Economists assume that individuals

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

How are the fundamental economic questions answered in a market economy?

What are some of the reasons given for the the increase in coffee prices?

The basic economic problem of ________ has always existed and will continue to exist.

Which of the following is a problem inherent in centrally planned economies?

Explain why economics is considered a social science.

Economists assume that rational behavior is useful in explaining choices people make

Which of the following statements is true?

Technology is defined as

All of the following are part of an economic model except

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