Question 1

The cost of spending an evening partying instead of studying economics is

Accepted Answer

A)  the resulting decrease in the test score in Economics. 
B)  the time spent at the party. 
C)  the score of the test. 
D)  the cost of the textbook. 
E)  university tuition. 
A)  the resulting decrease in the test score in Economics. 
B)  the time spent at the party. 
C)  the score of the test. 
D)  the cost of the textbook. 
E)  university tuition.

Question 2

Welfare economics reflects

Accepted Answer

A)  society's ethical standards. 
B)  economic analysis based on facts. 
C)  society's ethical standards and economic analysis based on facts. 
D)  value-free observations on economic relationships. 
E)  subjective values. 
A)  society's ethical standards. 
B)  economic analysis based on facts. 
C)  society's ethical standards and economic analysis based on facts. 
D)  value-free observations on economic relationships. 
E)  subjective values.

Question 3

The cost-benefit principle states that a consumer will be better off to follow a particular course of action,only if the

Accepted Answer

A)  total benefits increase. 
B)  total costs decrease. 
C)  total costs remain unchanged. 
D)  extra benefits from taking the action are at least equal to the extra costs. 
E)  total benefits do not decreasE. 
A)  total benefits increase. 
B)  total costs decrease. 
C)  total costs remain unchanged. 
D)  extra benefits from taking the action are at least equal to the extra costs. 
E)  total benefits do not decreasE.

Question 4

If you make an interest-free loan of $10,000 to a friend to help her get started in her new business and the interest rate charged by banks on similarly-risky loans is 15%,then the opportunity cost of the loan is equal to

Accepted Answer

A)  $10,000. 
B)  $1,500. 
C)  $11,500. 
D)  $0. 
E)  $8,500. 
A)  $10,000. 
B)  $1,500. 
C)  $11,500. 
D)  $0. 
E)  $8,500.

Question 5

The reason sunk costs are irrelevant to decision making is that

Accepted Answer

A)  they are fixed. 
B)  they are non-monetary. 
C)  they will be borne no matter which particular action is chosen. 
D)  they tend to be forgotten. 
E)  they result from poor decision making. 
A)  they are fixed. 
B)  they are non-monetary. 
C)  they will be borne no matter which particular action is chosen. 
D)  they tend to be forgotten. 
E)  they result from poor decision making.

Question 6

Jackson just took out a $1,000 loan to buy a 1979 Corvette and he needs to travel to Vancouver this summer.He can either drive his car or take a bus.In order to make a rational decision,he decides to calculate the costs of driving the car on the trip.He estimates the cost of gas at 10 cents per kilometre,the car repair shop estimates maintenance at 3 cents per kilometre,his car insurance costs $600 for 6 months,and from a Web site,he determines that depreciation is about $1 per kilometre.
-Which of the above costs are sunk cost and,therefore,should NOT be included in his analysis?

Accepted Answer

A)  Maintenance,depreciation,insurance and loan payment costs. 
B)  Maintenance,depreciation and insurance costs. 
C)  Depreciation,insurance and loan payment costs. 
D)  Insurance and loan payment costs. 
E)  The cost of the car. 
A)  Maintenance,depreciation,insurance and loan payment costs. 
B)  Maintenance,depreciation and insurance costs. 
C)  Depreciation,insurance and loan payment costs. 
D)  Insurance and loan payment costs. 
E)  The cost of the car.

Question 7

Economists argue that

Accepted Answer

A)  there is an opportunity cost associated with all decisions. 
B)  there is an opportunity cost associated only with decisions involving money. 
C)  economic decisions have opportunity costs but other decisions do not. 
D)  decisions do not have opportunity costs. 
E)  there is an opportunity cost for some economic decisions. 
A)  there is an opportunity cost associated with all decisions. 
B)  there is an opportunity cost associated only with decisions involving money. 
C)  economic decisions have opportunity costs but other decisions do not. 
D)  decisions do not have opportunity costs. 
E)  there is an opportunity cost for some economic decisions.

Question 8

Tony notes that an electronics store is offering a flat $20 off all prices in the store.Tony reasons that,if he wants to buy something with a price of $50,it is a good offer,but if he wants to buy something with a price of $500,it is not a good offer.This is an example of

Accepted Answer

A)  inconsistent reasoning;saving $20 is saving $20. 
B)  the proper application of the cost-benefit principle. 
C)  rational choice because,in the first case,he saves 40% and,in the second case,he saves 4%. 
D)  "marginal cost equals marginal benefit" thinking. 
E)  opportunity costs. 
A)  inconsistent reasoning;saving $20 is saving $20. 
B)  the proper application of the cost-benefit principle. 
C)  rational choice because,in the first case,he saves 40% and,in the second case,he saves 4%. 
D)  "marginal cost equals marginal benefit" thinking. 
E)  opportunity costs.

Question 9

Sharon,a marketing major,has her first economics test and her first finance test to take tomorrow and she has four hours tonight to allocate to studying the two subjects.The data below show her scores on the two tests based on the time spent studying.(Hint: Studying economics for 0 hours means studying finance for 4 hours. )
  
-The sequence of marginal costs from the 1st to the 4th hour of economics studying is

Accepted Answer

A)  30,29,27,20. 
B)  79,77,70,50. 
C)  1,2,7,20. 
D)  -1,-2,-7,-20. 
E)  1,3,10,30. 
A)  30,29,27,20. 
B)  79,77,70,50. 
C)  1,2,7,20. 
D)  -1,-2,-7,-20. 
E)  1,3,10,30.

Question 10

Which of the following is a microeconomic statement?

Accepted Answer

A)  Tariff barriers hurt all Canadians. 
B)  Inflation will remain low for the next two years. 
C)  Inflation and unemployment will remain low for the next two years. 
D)  Increased gasoline prices have raised taxi fares by 10%. 
E)  National output remained constant last year. 
A)  Tariff barriers hurt all Canadians. 
B)  Inflation will remain low for the next two years. 
C)  Inflation and unemployment will remain low for the next two years. 
D)  Increased gasoline prices have raised taxi fares by 10%. 
E)  National output remained constant last year.

Question 11

Which of the following is a macroeconomic statement?

Accepted Answer

A)  Unionized workers for Ford went on strike for higher wages. 
B)  The price of wheat doubled in the past month. 
C)  Forest fires destroyed thousands of hectares in Western Canada. 
D)  The demand for smart phones increased by 10% this year 
E)  National output fell by 1% last year. 
A)  Unionized workers for Ford went on strike for higher wages. 
B)  The price of wheat doubled in the past month. 
C)  Forest fires destroyed thousands of hectares in Western Canada. 
D)  The demand for smart phones increased by 10% this year 
E)  National output fell by 1% last year.

Question 12

The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home.
  
-If the marginal cost is constant at $250,what is the optimal number of rooms to paint?

Accepted Answer

A)  0. 
B)  1. 
C)  2. 
D)  3. 
E)  4. 
A)  0. 
B)  1. 
C)  2. 
D)  3. 
E)  4.

Question 13

"The Canadian government should not interfere with the free market system at all.Individuals should be allowed to fend for themselves." This statement is an example of

Accepted Answer

A)  cost-benefit analysis. 
B)  an economic model. 
C)  spurious correlation. 
D)  positive economic analysis. 
E)  normative economic analysis. 
A)  cost-benefit analysis. 
B)  an economic model. 
C)  spurious correlation. 
D)  positive economic analysis. 
E)  normative economic analysis.

Question 14

Sharon,a marketing major,has her first economics test and her first finance test to take tomorrow and she has four hours tonight to allocate to studying the two subjects.The data below show her scores on the two tests based on the time spent studying.(Hint: Studying economics for 0 hours means studying finance for 4 hours. )
  
-Spending 3 hours on economics and 1 hour on finance would be __________ because __________.

Accepted Answer

A)  the best use of resources;the economics score is higher. 
B)  not the best use of resources;the improvement in economics is 3 points but the decline in finances is 7 points 
C)  the best use of resources;the finance score is still passing. 
D)  not the best use of resources;the economics score exceeds the finance score. 
E)  the best use of resources;she really understands economics. 
A)  the best use of resources;the economics score is higher. 
B)  not the best use of resources;the improvement in economics is 3 points but the decline in finances is 7 points 
C)  the best use of resources;the finance score is still passing. 
D)  not the best use of resources;the economics score exceeds the finance score. 
E)  the best use of resources;she really understands economics.

Question 15

Which of the following is an example of the fallacy of composition?

Accepted Answer

A)  If one bar offers cheaper drinks,it will increase its revenue;therefore,if all bars offer cheaper drinks,all bars will increase their revenue. 
B)  If one shop hires more employees,it will provide better service;therefore,if all shops hire more employees,all shops will provide better service. 
C)  If one bookstore stocks more books,it will have a better selection;therefore,if all bookstores stock more books,all bookstores will have a better selection. 
D)  If one TV station cuts down on commercials,it can provide more programming;therefore,if all TV stations cut down on commercials,all TV stations can provide more programming. 
E)  If one factory buys more equipment,it can produce more;therefore,if all factories buy more equipment,all factories can produce morE. 
A)  If one bar offers cheaper drinks,it will increase its revenue;therefore,if all bars offer cheaper drinks,all bars will increase their revenue. 
B)  If one shop hires more employees,it will provide better service;therefore,if all shops hire more employees,all shops will provide better service. 
C)  If one bookstore stocks more books,it will have a better selection;therefore,if all bookstores stock more books,all bookstores will have a better selection. 
D)  If one TV station cuts down on commercials,it can provide more programming;therefore,if all TV stations cut down on commercials,all TV stations can provide more programming. 
E)  If one factory buys more equipment,it can produce more;therefore,if all factories buy more equipment,all factories can produce morE.

Question 16

Sunk costs are different from other concepts of costs in that they

Accepted Answer

A)  can be either variable or fixed. 
B)  cannot be lessened by choosing any particular course of action. 
C)  influence the decision of which activity to do or not do. 
D)  rise as the level of the activity rises. 
E)  must be included for an accurate cost-benefit analysis. 
A)  can be either variable or fixed. 
B)  cannot be lessened by choosing any particular course of action. 
C)  influence the decision of which activity to do or not do. 
D)  rise as the level of the activity rises. 
E)  must be included for an accurate cost-benefit analysis.

Question 17

Which of the following is a microeconomic statement?

Accepted Answer

A)  Interest rates in Canada are directly linked to interest rates in the United States. 
B)  The Competition Bureau accuses oil companies of illegally fixing gas prices. 
C)  The government negotiated a trade agreement with the European Union. 
D)  The unemployment rate increased by 1.5% this year. 
E)  National output fell by 1% last year. 
A)  Interest rates in Canada are directly linked to interest rates in the United States. 
B)  The Competition Bureau accuses oil companies of illegally fixing gas prices. 
C)  The government negotiated a trade agreement with the European Union. 
D)  The unemployment rate increased by 1.5% this year. 
E)  National output fell by 1% last year.

Question 18

Forest is a mountain man living in complete isolation in northern British Columbia.He is completely self-sufficient through hunting,fishing,and farming.He has not been in the city to buy anything in five years.One can infer

Accepted Answer

A)  the scarcity problem does not apply to Forest. 
B)  Forest is not required to make choices. 
C)  the scarcity problem still applies because more hunting means less fishing and so on. 
D)  Forest is very satisfied. 
E)  Forest knew the Prime Minister. 
A)  the scarcity problem does not apply to Forest. 
B)  Forest is not required to make choices. 
C)  the scarcity problem still applies because more hunting means less fishing and so on. 
D)  Forest is very satisfied. 
E)  Forest knew the Prime Minister.

Question 19

In applying the cost-benefit principle,one should calculate the

Accepted Answer

A)  total cost and total benefit,and choose that quantity of an activity where they are equal. 
B)  average cost and average benefit,and choose that quantity of an activity where the average benefit exceeds the average cost by the greatest amount. 
C)  total cost and total benefit,and choose that quantity of an activity where the total cost exceeds the total benefit by the greatest amount. 
D)  marginal cost and marginal benefit,and choose that quantity of an activity where the marginal benefit at least equals the marginal cost. 
E)  marginal cost,total cost,marginal benefit,and marginal cost,and choose that quantity of an activity where the marginal cost equals the total cost and the marginal benefit equals the total benefit. 
A)  total cost and total benefit,and choose that quantity of an activity where they are equal. 
B)  average cost and average benefit,and choose that quantity of an activity where the average benefit exceeds the average cost by the greatest amount. 
C)  total cost and total benefit,and choose that quantity of an activity where the total cost exceeds the total benefit by the greatest amount. 
D)  marginal cost and marginal benefit,and choose that quantity of an activity where the marginal benefit at least equals the marginal cost. 
E)  marginal cost,total cost,marginal benefit,and marginal cost,and choose that quantity of an activity where the marginal cost equals the total cost and the marginal benefit equals the total benefit.

Question 20

The marginal benefit of an activity is the

Accepted Answer

A)  same as the total benefits of the activity. 
B)  total benefit divided by the level of the activity. 
C)  change in the activity divided by the change in benefits. 
D)  extra benefit associated with an extra unit of the activity. 
E)  total benefit divided by the change in the level of the activity. 
A)  same as the total benefits of the activity. 
B)  total benefit divided by the level of the activity. 
C)  change in the activity divided by the change in benefits. 
D)  extra benefit associated with an extra unit of the activity. 
E)  total benefit divided by the change in the level of the activity.

The cost of spending an evening partying instead of studying economics is

Welfare economics reflects

The cost-benefit principle states that a consumer will be better off to follow a particular course of action,only if the

If you make an interest-free loan of $10,000 to a friend to help her get started in her new business and the interest rate charged by banks on similarly-risky loans is 15%,then the opportunity cost of the loan is equal to

The reason sunk costs are irrelevant to decision making is that

Economists argue that

Tony notes that an electronics store is offering a flat $20 off all prices in the store.Tony reasons that,if he wants to buy something with a price of $50,it is a good offer,but if he wants to buy something with a price of $500,it is not a good offer.This is an example of

Which of the following is a microeconomic statement?

Which of the following is a macroeconomic statement?

The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home. -If the marginal cost is constant at $250,what is the optimal number of rooms to paint?

"The Canadian government should not interfere with the free market system at all.Individuals should be allowed to fend for themselves." This statement is an example of

Which of the following is an example of the fallacy of composition?

Sunk costs are different from other concepts of costs in that they

Which of the following is a microeconomic statement?

Forest is a mountain man living in complete isolation in northern British Columbia.He is completely self-sufficient through hunting,fishing,and farming.He has not been in the city to buy anything in five years.One can infer

In applying the cost-benefit principle,one should calculate the

The marginal benefit of an activity is the

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

Exam 1: Measuring Macroeconomic Performance: Output and Prices

The cost of spending an evening partying instead of studying economics is

Welfare economics reflects

The cost-benefit principle states that a consumer will be better off to follow a particular course of action,only if the

If you make an interest-free loan of $10,000 to a friend to help her get started in her new business and the interest rate charged by banks on similarly-risky loans is 15%,then the opportunity cost of the loan is equal to

The reason sunk costs are irrelevant to decision making is that

Economists argue that

Tony notes that an electronics store is offering a flat $20 off all prices in the store.Tony reasons that,if he wants to buy something with a price of $50,it is a good offer,but if he wants to buy something with a price of $500,it is not a good offer.This is an example of

Which of the following is a microeconomic statement?

Which of the following is a macroeconomic statement?

The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home. -If the marginal cost is constant at $250,what is the optimal number of rooms to paint?

"The Canadian government should not interfere with the free market system at all.Individuals should be allowed to fend for themselves." This statement is an example of

Which of the following is an example of the fallacy of composition?

Sunk costs are different from other concepts of costs in that they

Which of the following is a microeconomic statement?

Forest is a mountain man living in complete isolation in northern British Columbia.He is completely self-sufficient through hunting,fishing,and farming.He has not been in the city to buy anything in five years.One can infer

In applying the cost-benefit principle,one should calculate the

The marginal benefit of an activity is the

Measuring Macroeconomic Performance: Saving and Wealth

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters