Question 1

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 2

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

Accepted Answer

Productive efficiency is an efficiency c

Question 3

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

Accepted Answer

A) marginal revenue 
B) gross earnings 
C) pure profit 
D) marginal costs 
A) marginal revenue 
B) gross earnings 
C) pure profit 
D) marginal costs

Question 4

An economic ________ is a simplified version of some aspect of economic life used to analyse an economic issue.

Accepted Answer

A) market 
B) trade-off 
C) variable 
D) model 
A) market 
B) trade-off 
C) variable 
D) model

Question 5

Which of the following is a normative economic statement?

Accepted Answer

A) Rising corn prices have increased the price of corn-based ethanol. 
B) With rising home prices and falling mortgage interest rates,the amount of home foreclosures has decreased. 
C) The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. 
D) Farmers should not be allowed to grow and sell genetically-modified crops. 
A) Rising corn prices have increased the price of corn-based ethanol. 
B) With rising home prices and falling mortgage interest rates,the amount of home foreclosures has decreased. 
C) The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. 
D) Farmers should not be allowed to grow and sell genetically-modified crops.

Question 6

In economics,choices must be made because we live in a world of

Accepted Answer

A) unemployment. 
B) scarcity. 
C) greed. 
D) unlimited resources. 
A) unemployment. 
B) scarcity. 
C) greed. 
D) unlimited resources.

Question 7

Making 'how much' decisions involves

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.

Question 8

When production reflects consumer preferences,________ occurs.

Accepted Answer

A) allocative efficiency 
B) productive efficiency 
C) equity 
D) efficient central planning 
A) allocative efficiency 
B) productive efficiency 
C) equity 
D) efficient central planning

Question 9

What is a marginal benefit?

Accepted Answer

Marginal benefit is

Question 10

Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic 1-colour pinstriping job is $35,and she charges $95 for this service.For a total price of $175,Allison will apply a fancier 3-colour pinstripe application to an automobile,a service that adds an additional $40 to the total cost of the package.Should Allison continue to offer the 3-colour pinstripe application?

Accepted Answer

A) Yes,she still makes a profit by selling the 3-colour application. 
B) Yes,but only if she lowers the price of the 1-colour application. 
C) No,her marginal benefit is less than her marginal cost. 
D) More information is needed for Allison to make this decision. 
A) Yes,she still makes a profit by selling the 3-colour application. 
B) Yes,but only if she lowers the price of the 1-colour application. 
C) No,her marginal benefit is less than her marginal cost. 
D) More information is needed for Allison to make this decision.

Question 11

Jewelry manufacturers produce a range of products such as rings,necklaces,bracelets,and brooches.What fundamental economic question are they addressing by offering this range of items?

Accepted Answer

A) How to produce goods that consumers want? 
B) Why produce a variety of items? 
C) What to produce? 
D) Who to produce the items for? 
A) How to produce goods that consumers want? 
B) Why produce a variety of items? 
C) What to produce? 
D) Who to produce the items for?

Question 12

Consider the following statements:
A.Car owners purchase more petrol from a petrol station that sells petrol at a lower price than other rival petrol 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) b only 
B) c only 
C) a and b 
D) a,b,and c 
A) b only 
B) c only 
C) a and b 
D) a,b,and c

Question 13

If a graph has a line that shows the amount of outsourcing in the last ten 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 14

The three fundamental questions that any economy must address are

Accepted Answer

A) What will be the prices of goods and services;how will these goods and services be produced;and who will receive them? 
B) What goods and services will be produced;how will these goods and services be produced;and who receives them? 
C) Who gets jobs;what wages do workers earn;and who owns what property? 
D) How much will be saved;what will be produced;and how can these goods and services be fairly distributed? 
A) What will be the prices of goods and services;how will these goods and services be produced;and who will receive them? 
B) What goods and services will be produced;how will these goods and services be produced;and who receives them? 
C) Who gets jobs;what wages do workers earn;and who owns what property? 
D) How much will be saved;what will be produced;and how can these goods and services be fairly distributed?

Question 15

What is voluntary exchange?

Accepted Answer

Voluntary exchange is a situat

Question 16

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 17

Figure 1-1  
-Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2007 and 2011.

Accepted Answer

A) 30% 
B) 50% 
C) 66.7% 
D) 100% 
A) 30% 
B) 50% 
C) 66.7% 
D) 100%

Question 18

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets,and therefore choose to invest in foreign markets.By using all available information as they act to achieve their goals,these investors are exemplifying the economic idea that

Accepted Answer

A) people are rational. 
B) people respond to economic incentives. 
C) optimal decisions are made at the margin. 
D) equity is more important than efficiency. 
A) people are rational. 
B) people respond to economic incentives. 
C) optimal decisions are made at the margin. 
D) equity is more important than efficiency.

Question 19

Which of the following is a result of a market economy?

Accepted Answer

A) environmental protection 
B) an equal income distribution 
C) agreement on equity 
D) voluntary exchange 
A) environmental protection 
B) an equal income distribution 
C) agreement on equity 
D) voluntary exchange

Question 20

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 cheaper 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 cheaper 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

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

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

An economic ________ is a simplified version of some aspect of economic life used to analyse an economic issue.

Which of the following is a normative economic statement?

In economics,choices must be made because we live in a world of

Making 'how much' decisions involves

When production reflects consumer preferences,________ occurs.

What is a marginal benefit?

Jewelry manufacturers produce a range of products such as rings,necklaces,bracelets,and brooches.What fundamental economic question are they addressing by offering this range of items?

If a graph has a line that shows the amount of outsourcing in the last ten years,it is known as

The three fundamental questions that any economy must address are

What is voluntary exchange?

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

Figure 1-1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2007 and 2011.

Which of the following is a result of a market economy?

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

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 1: Economics: Foundations and Models

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

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

An economic ________ is a simplified version of some aspect of economic life used to analyse an economic issue.

Which of the following is a normative economic statement?

In economics,choices must be made because we live in a world of

Making 'how much' decisions involves

When production reflects consumer preferences,________ occurs.

What is a marginal benefit?

Jewelry manufacturers produce a range of products such as rings,necklaces,bracelets,and brooches.What fundamental economic question are they addressing by offering this range of items?

If a graph has a line that shows the amount of outsourcing in the last ten years,it is known as

The three fundamental questions that any economy must address are

What is voluntary exchange?

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

Figure 1-1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2007 and 2011.

Which of the following is a result of a market economy?

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

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters