Question 1

We have to make choices because:

Accepted Answer

A)  we have unlimited income. 
B)  resources are scarce. 
C)  resources are infinite. 
D)  with good planning,trade-offs can be avoided. 
A)  we have unlimited income. 
B)  resources are scarce. 
C)  resources are infinite. 
D)  with good planning,trade-offs can be avoided. B

Question 2

When we are forced to make choices,we are facing the concept of:

Accepted Answer

A)  human capital. 
B)  inflation. 
C)  scarcity. 
D)  market failure. 
A)  human capital. 
B)  inflation. 
C)  scarcity. 
D)  market failure. C

Question 3

Equity means that:

Accepted Answer

A)  everyone gets an efficient share of the goods and services produced. 
B)  everyone gets his or her fair share of the goods and services produced. 
C)  more of some goods and services can be produced only if the production of others is reduced. 
D)  more of all goods and services may be produced. 
A)  everyone gets an efficient share of the goods and services produced. 
B)  everyone gets his or her fair share of the goods and services produced. 
C)  more of some goods and services can be produced only if the production of others is reduced. 
D)  more of all goods and services may be produced. B

Question 4

Mr.Freezee operates a fleet of ice cream trucks that drive around neighbourhoods selling ice cream.He is trying to decide whether he should buy another ice cream truck to add to his fleet.He determines that one more truck will add $750 to his revenue but that the truck will also increase his costs by $1 000.Based on marginal analysis,Mr.Freezee decides:

Accepted Answer

A)  that he should not purchase the truck since the costs outweigh the benefits. 
B)  that he should purchase the truck since the benefits outweigh the costs. 
C)  that he should purchase the truck since his profits will rise by $250. 
D)  to purchase several trucks with the same costs and benefits. 
A)  that he should not purchase the truck since the costs outweigh the benefits. 
B)  that he should purchase the truck since the benefits outweigh the costs. 
C)  that he should purchase the truck since his profits will rise by $250. 
D)  to purchase several trucks with the same costs and benefits.

Question 5

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities.As a result,many of these spaces are vacant quite often when they could be used by able-bodied individuals.Such a situation illustrates the:

Accepted Answer

A)  trade-off between efficiency and equity. 
B)  trade-off between efficiency and specialization. 
C)  ability of markets to provide efficient and equitable outcomes. 
D)  power of the market to provide for equilibrium outcomes. 
A)  trade-off between efficiency and equity. 
B)  trade-off between efficiency and specialization. 
C)  ability of markets to provide efficient and equitable outcomes. 
D)  power of the market to provide for equilibrium outcomes.

Question 6

To encourage people to retire later,given that people usually exploit opportunities to make themselves better off,the government could:

Accepted Answer

A)  reduce retirement benefits. 
B)  raise the tax rate on older,unretired individuals. 
C)  provide free housing to all retirees 
D)  increase retirement benefits. 
A)  reduce retirement benefits. 
B)  raise the tax rate on older,unretired individuals. 
C)  provide free housing to all retirees 
D)  increase retirement benefits.

Question 7

If a market is in disequilibrium:

Accepted Answer

A)  it will continue unless there is government intervention. 
B)  no individual will be better off doing something different. 
C)  there are opportunities for some people to make themselves better off. 
D)  it must be because the government has intervened in the market,resulting in the market's failure to reach equilibrium. 
A)  it will continue unless there is government intervention. 
B)  no individual will be better off doing something different. 
C)  there are opportunities for some people to make themselves better off. 
D)  it must be because the government has intervened in the market,resulting in the market's failure to reach equilibrium.

Question 8

In Saskatchewan,there has been a drought,and rural communities are fighting with urban areas over water.Which economic concept does this statement BEST represent?

Accepted Answer

A)  Scarcity 
B)  Specialization 
C)  Incentive 
D)  Equilibrium 
A)  Scarcity 
B)  Specialization 
C)  Incentive 
D)  Equilibrium

Question 9

Your health club is offering a free 1-year membership for the person who attends the most yoga classes in March.This results in more people attending yoga.Which economic principle does this statement BEST represent?

Accepted Answer

A)  The true cost of something is its opportunity cost. 
B)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
C)  There are gains from trade. 
D)  Markets move toward equilibrium. 
A)  The true cost of something is its opportunity cost. 
B)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
C)  There are gains from trade. 
D)  Markets move toward equilibrium.

Question 10

If the value of beach-front property in Vancouver decreases,the people of Vancouver will likely spend _____,causing incomes in Vancouver to _____.

Accepted Answer

A)  more;increase 
B)  more;decrease 
C)  less;increase 
D)  less;decrease 
A)  more;increase 
B)  more;decrease 
C)  less;increase 
D)  less;decrease

Question 11

While buying refreshments for an upcoming party,you notice that a six-pack of Canadian Beer costs $2 and a six-pack of Bavarian Beer costs $4.You buy the six-pack of Bavarian Beer,although you wonder if maybe two six-packs of Canadian Beer would have been a better choice.The opportunity cost of the Bavarian Beer is:

Accepted Answer

A)  $4. 
B)  the six-pack of Canadian Beer. 
C)  two six-packs of Canadian Beer. 
D)  $4 and the six-pack of Canadian Beer. 
A)  $4. 
B)  the six-pack of Canadian Beer. 
C)  two six-packs of Canadian Beer. 
D)  $4 and the six-pack of Canadian Beer.

Question 12

I know when I shop at the local grocery store,I am helping my community.Which economic principle does this statement BEST represent?

Accepted Answer

A)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  One person's spending is another person's income. 
D)  Overall spending sometimes gets out of line with the economy's productive capacity. 
A)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
B)  There are gains from trade. 
C)  One person's spending is another person's income. 
D)  Overall spending sometimes gets out of line with the economy's productive capacity.

Question 13

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted.This means that:

Accepted Answer

A)  people usually are not selfish enough to exploit opportunities to make themselves better off. 
B)  markets move toward equilibrium. 
C)  resources should be used as efficiently as possible to achieve society's goals. 
D)  markets usually lead to efficiency. 
A)  people usually are not selfish enough to exploit opportunities to make themselves better off. 
B)  markets move toward equilibrium. 
C)  resources should be used as efficiently as possible to achieve society's goals. 
D)  markets usually lead to efficiency.

Question 14

For an economist,the cost of something is:

Accepted Answer

A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it. 
A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it.

Question 15

Beth promises to do Alice's taxes,and in exchange,Alice will set up several spreadsheets for Beth's household budget.This trade will MOST likely:

Accepted Answer

A)  be beneficial to both individuals. 
B)  hurt both individuals. 
C)  help Beth but hurt Alice. 
D)  help Alice but hurt Beth. 
A)  be beneficial to both individuals. 
B)  hurt both individuals. 
C)  help Beth but hurt Alice. 
D)  help Alice but hurt Beth.

Question 16

Specialization and trade should NOT lead to:

Accepted Answer

A)  individuals learning specific skills and earning a salary. 
B)  a decrease in total economic output. 
C)  higher living standards. 
D)  the exchange of goods and services in markets. 
A)  individuals learning specific skills and earning a salary. 
B)  a decrease in total economic output. 
C)  higher living standards. 
D)  the exchange of goods and services in markets.

Question 17

Which statement is NOT one of the five principles for understanding how individual choices interact?

Accepted Answer

A)  There are gains from trade. 
B)  Markets move toward equilibrium. 
C)  Resources should be used as efficiently as possible to achieve society's goals. 
D)  Overall spending sometimes gets out of line with the economy's productive capability. 
A)  There are gains from trade. 
B)  Markets move toward equilibrium. 
C)  Resources should be used as efficiently as possible to achieve society's goals. 
D)  Overall spending sometimes gets out of line with the economy's productive capability.

Question 18

Suppose the Ontario government offered cash bonuses to students who complete their degree in the minimum 4 years.The cash bonuses are motivated by which economic principle?

Accepted Answer

A)  Choices are necessary because resources are scarce. 
B)  The true cost of something is its opportunity cost. 
C)  "How much" is a decision at the margin. 
D)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
A)  Choices are necessary because resources are scarce. 
B)  The true cost of something is its opportunity cost. 
C)  "How much" is a decision at the margin. 
D)  People usually respond to incentives,exploiting opportunities to make themselves better off.

Question 19

Which statement is NOT true according to standard economic theory?

Accepted Answer

A)  Resources are scarce when they can satisfy everyone's wants. 
B)  The true cost of a choice is what you must give up to enjoy that choice. 
C)  People typically make choices that will make them better off. 
D)  Rational people use marginal analysis when making "how much" decisions. 
A)  Resources are scarce when they can satisfy everyone's wants. 
B)  The true cost of a choice is what you must give up to enjoy that choice. 
C)  People typically make choices that will make them better off. 
D)  Rational people use marginal analysis when making "how much" decisions.

Question 20

Which statement is NOT true?

Accepted Answer

A)  Resource scarcity is a major economic concern in the rich countries of the world. 
B)  Most opportunity costs are zero. 
C)  An economic situation is in equilibrium when no individual would be better off taking a different action. 
D)  Very talented individuals,who can do most things better than most people,may still benefit greatly from specializing in doing one thing. 
A)  Resource scarcity is a major economic concern in the rich countries of the world. 
B)  Most opportunity costs are zero. 
C)  An economic situation is in equilibrium when no individual would be better off taking a different action. 
D)  Very talented individuals,who can do most things better than most people,may still benefit greatly from specializing in doing one thing.

Exam 1: First Principles

We have to make choices because:

When we are forced to make choices,we are facing the concept of:

Equity means that:

The provision of disabled-parking passes to those with disabilities often requires that more than enough spaces be available for those with disabilities.As a result,many of these spaces are vacant quite often when they could be used by able-bodied individuals.Such a situation illustrates the:

To encourage people to retire later,given that people usually exploit opportunities to make themselves better off,the government could:

If a market is in disequilibrium:

In Saskatchewan,there has been a drought,and rural communities are fighting with urban areas over water.Which economic concept does this statement BEST represent?

Your health club is offering a free 1-year membership for the person who attends the most yoga classes in March.This results in more people attending yoga.Which economic principle does this statement BEST represent?

If the value of beach-front property in Vancouver decreases,the people of Vancouver will likely spend _____,causing incomes in Vancouver to _____.

I know when I shop at the local grocery store,I am helping my community.Which economic principle does this statement BEST represent?

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted.This means that:

For an economist,the cost of something is:

Beth promises to do Alice's taxes,and in exchange,Alice will set up several spreadsheets for Beth's household budget.This trade will MOST likely:

Specialization and trade should NOT lead to:

Which statement is NOT one of the five principles for understanding how individual choices interact?

Suppose the Ontario government offered cash bonuses to students who complete their degree in the minimum 4 years.The cash bonuses are motivated by which economic principle?

Which statement is NOT true according to standard economic theory?

Which statement is NOT true?

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

If the value of beach-front property in Vancouver decreases,the people of Vancouver will likely spend _,causing incomes in Vancouver to _.