Question 1

Comparison of economic systems indicates that

Accepted Answer

A) most nations have either a purely socialist economy or a purely capitalist economy. 
B) most countries have mixed economies. 
C) socialist economies are clearly superior in producing consumer goods. 
D) capitalist economies are clearly superior in distributing income. 
E) all countries have largely traditional economies. 
A) most nations have either a purely socialist economy or a purely capitalist economy. 
B) most countries have mixed economies. 
C) socialist economies are clearly superior in producing consumer goods. 
D) capitalist economies are clearly superior in distributing income. 
E) all countries have largely traditional economies.

Question 2

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month.   FIGURE 1-3
-Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is

Accepted Answer

A) 1/4 of a regular coffee. 
B) 1/4 of a latte. 
C) 8 regular coffees. 
D) 80 regular coffees. 
E) 4 regular coffees. 
A) 1/4 of a regular coffee. 
B) 1/4 of a latte. 
C) 8 regular coffees. 
D) 80 regular coffees. 
E) 4 regular coffees.

Question 3

When discussing types of economic systems the Canadian economy is best described as

Accepted Answer

A) primarily a public ownership economy. 
B) primarily free-market decision making. 
C) traditional. 
D) a command economy. 
E) a mixed economic system. 
A) primarily a public ownership economy. 
B) primarily free-market decision making. 
C) traditional. 
D) a command economy. 
E) a mixed economic system.

Question 4

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 1-6
-Refer to Figure 1-6.If the government's spending on health and education is given by point B,a move to point A must involve

Accepted Answer

A) less spending on health. 
B) zero opportunity cost. 
C) less spending on education. 
D) less spending in total. 
E) more spending on education. 
A) less spending on health. 
B) zero opportunity cost. 
C) less spending on education. 
D) less spending in total. 
E) more spending on education.

Question 5

A small landscaping firm purchases a tractor that,in one day,is capable of drilling 60 fence-post holes or removing 12 tree stumps (or some intermediate combination).For this landscaper,what is the opportunity cost of removing one extra tree stump?

Accepted Answer

A) 1/12th of the cost of the tractor 
B) 1/5 of the cost of the tractor 
C) drilling 12 fence-post holes 
D) drilling 5 fence-post holes 
E) there is no opportunity cost 
A) 1/12th of the cost of the tractor 
B) 1/5 of the cost of the tractor 
C) drilling 12 fence-post holes 
D) drilling 5 fence-post holes 
E) there is no opportunity cost

Question 6

The diagram below shows two production possibilities boundaries for Country X.   FIGURE 1-4
-Refer to Figure 1-4.Growth in the country's productive capacity is illustrated by

Accepted Answer

A) a point like D outside the boundary. 
B) a movement from a point inside the boundary such as C to the boundary. 
C) the movement between points on a given boundary. 
D) a single point such as A on the boundary. 
E) an outward shift of the boundary,for example from PPB1 to PPB2. 
A) a point like D outside the boundary. 
B) a movement from a point inside the boundary such as C to the boundary. 
C) the movement between points on a given boundary. 
D) a single point such as A on the boundary. 
E) an outward shift of the boundary,for example from PPB1 to PPB2.

Question 7

Which of the following statements best describes the underlying feature in most economic problems?

Accepted Answer

A) People have unlimited wants in the face of limited resources. 
B) There are unlimited resources. 
C) Our country is rich; we just don't realize it. 
D) People have limited wants in the face of limited 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) There are unlimited resources. 
C) Our country is rich; we just don't realize it. 
D) People have limited wants in the face of limited resources. 
E) Governments should never interfere in the workings of a market economy.

Question 8

The barter system of exchange is inefficient because

Accepted Answer

A) "fair" values cannot be defined without the use of money. 
B) bargaining power is unequal between rich and poor. 
C) the double coincidence of wants may not exist. 
D) markets do not exist. 
E) exchange partners need to know each other. 
A) "fair" values cannot be defined without the use of money. 
B) bargaining power is unequal between rich and poor. 
C) the double coincidence of wants may not exist. 
D) markets do not exist. 
E) exchange partners need to know each other.

Question 9

The opportunity cost of going to college or university for four years is

Accepted Answer

A) equal to the wage rate a person will earn after graduation. 
B) the least valued alternative one forfeits to attend. 
C) the cost of tuition and books and four years of lost wages from employment. 
D) the cost of tuition,residence fees and books. 
E) zero. 
A) equal to the wage rate a person will earn after graduation. 
B) the least valued alternative one forfeits to attend. 
C) the cost of tuition and books and four years of lost wages from employment. 
D) the cost of tuition,residence fees and books. 
E) zero.

Question 10

If some income earned by households is not spent on output,or if some income earned by firms is not spent on factor services,the circular flow of income will

Accepted Answer

A) stop. 
B) run over. 
C) expand. 
D) contract. 
E) explode. 
A) stop. 
B) run over. 
C) expand. 
D) contract. 
E) explode.

Question 11

Suppose Andrea has a job that pays her $25 000 per year (after taxes).She is considering quitting her job and going to university full time for four years.Tuition fees and books will cost $12 000 per year.Living expenses in either situation will cost $10 000 per year.What is the opportunity cost of Andrea's four-year university degree?

Accepted Answer

A) $88 000 
B) $100 000 
C) $120 000 
D) $148 000 
E) $188 000 
A) $88 000 
B) $100 000 
C) $120 000 
D) $148 000 
E) $188 000

Question 12

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.   FIGURE 1-1
-Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is

Accepted Answer

A) 0 kilometres of highway repair. 
B) 50 kilometres of highway repair. 
C) 100 kilometres of highway repair. 
D) 150 kilometres of highway repair. 
E) 200 kilometres of highway repair. 
A) 0 kilometres of highway repair. 
B) 50 kilometres of highway repair. 
C) 100 kilometres of highway repair. 
D) 150 kilometres of highway repair. 
E) 200 kilometres of highway repair.

Question 13

Income redistribution in a mixed economy

Accepted Answer

A) is supported by all individuals. 
B) rarely occurs. 
C) is only accomplished through government intervention. 
D) risks reducing individual incentives to work and produce. 
E) is not allowed. 
A) is supported by all individuals. 
B) rarely occurs. 
C) is only accomplished through government intervention. 
D) risks reducing individual incentives to work and produce. 
E) is not allowed.

Question 14

During economic recessions,the opportunity cost of going to university ________ because the wages a student can expect to earn working in the best alternative ________.

Accepted Answer

A) increases; decrease 
B) decreases; increase 
C) increases; increase 
D) decreases; decrease 
E) remains the same; remain the same 
A) increases; decrease 
B) decreases; increase 
C) increases; increase 
D) decreases; decrease 
E) remains the same; remain the same

Question 15

Which of the following statements provides the best definition of economics?

Accepted Answer

A) The study of the most equitable distribution of scarce resources. 
B) The study of the use of scarce resources to satisfy unlimited human wants. 
C) The study of the production of goods and services. 
D) The study of the productive capacity of a nation's factors of production. 
E) The study of production and increasing its efficiency. 
A) The study of the most equitable distribution of scarce resources. 
B) The study of the use of scarce resources to satisfy unlimited human wants. 
C) The study of the production of goods and services. 
D) The study of the productive capacity of a nation's factors of production. 
E) The study of production and increasing its efficiency.

Question 16

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 1-6
-Refer to Figure 1-6.The levels of health and education expenditures at point C

Accepted Answer

A) are less than at point D. 
B) are equal to those of point A and point B. 
C) are more cost-effective than those at points A,B,and D. 
D) could be achieved if the prices of health and/or education increased. 
E) are not attainable with the government's current budget. 
A) are less than at point D. 
B) are equal to those of point A and point B. 
C) are more cost-effective than those at points A,B,and D. 
D) could be achieved if the prices of health and/or education increased. 
E) are not attainable with the government's current budget.

Question 17

Many economies in central and Eastern Europe,including the countries of the former Soviet Union,are still in the process of moving from a command economy to a market economy.In the first years of this transition,most of these countries experienced sharp drops in output and reductions in living standards.Economists generally see this as

Accepted Answer

A) the failure of the market system. 
B) the triumph of capitalism over communism. 
C) an indication of the extreme difficulty of transition from one type of economic system to another. 
D) an indication that these economies should return to being command economies. 
E) the difficulty of corruption in non-market economies. 
A) the failure of the market system. 
B) the triumph of capitalism over communism. 
C) an indication of the extreme difficulty of transition from one type of economic system to another. 
D) an indication that these economies should return to being command economies. 
E) the difficulty of corruption in non-market economies.

Question 18

Consider the following list: a worker with training in video gaming technology,10 hectares of arable land in southern Ontario,a fishing trawler in Nova Scotia,an ice-cream truck at a park in Quebec.Each of these is an example of

Accepted Answer

A) a factor of production. 
B) a capital resource. 
C) a commodity. 
D) goods and services. 
E) an economic service. 
A) a factor of production. 
B) a capital resource. 
C) a commodity. 
D) goods and services. 
E) an economic service.

Question 19

Which of the following best describes the study of economics?

Accepted Answer

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

Question 20

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month.   FIGURE 1-3
-Refer to Figure 1-3.What is the price of a coffee latte in this example?

Accepted Answer

A) $0.80 
B) $1.00 
C) $1.25 
D) $2.00 
E) $5.00 
A) $0.80 
B) $1.00 
C) $1.25 
D) $2.00 
E) $5.00

Exam 1: Economic Issues and Concepts

Comparison of economic systems indicates that

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3 -Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is

When discussing types of economic systems the Canadian economy is best described as

A small landscaping firm purchases a tractor that,in one day,is capable of drilling 60 fence-post holes or removing 12 tree stumps (or some intermediate combination).For this landscaper,what is the opportunity cost of removing one extra tree stump?

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 -Refer to Figure 1-4.Growth in the country's productive capacity is illustrated by

Which of the following statements best describes the underlying feature in most economic problems?

The barter system of exchange is inefficient because

The opportunity cost of going to college or university for four years is

If some income earned by households is not spent on output,or if some income earned by firms is not spent on factor services,the circular flow of income will

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1 -Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is

Income redistribution in a mixed economy

During economic recessions,the opportunity cost of going to university ________ because the wages a student can expect to earn working in the best alternative ________.

Which of the following statements provides the best definition of economics?

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 1-6 -Refer to Figure 1-6.The levels of health and education expenditures at point C

Consider the following list: a worker with training in video gaming technology,10 hectares of arable land in southern Ontario,a fishing trawler in Nova Scotia,an ice-cream truck at a park in Quebec.Each of these is an example of

Which of the following best describes the study of economics?

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3 -Refer to Figure 1-3.What is the price of a coffee latte in this example?

Economic Theories,Data,and Graphs

Demand, Supply, and Price

Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets and Income Inequality

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: The Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, Interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

During economic recessions,the opportunity cost of going to university because the wages a student can expect to earn working in the best alternative .