Question 1

Because people usually exploit opportunities to make themselves better off,which method of reducing pollution is likely to be MOST effective?

Accepted Answer

A)  appealing to the polluter to be a good citizen 
B)  asking citizens to voluntarily reduce pollution 
C)  imposing a tax per unit of pollution generated 
D)  advertising the negative impact of pollution 
A)  appealing to the polluter to be a good citizen 
B)  asking citizens to voluntarily reduce pollution 
C)  imposing a tax per unit of pollution generated 
D)  advertising the negative impact of pollution

Question 2

Scarcity in economics means that:

Accepted Answer

A)  we often do not have sufficient resources to achieve our objectives. 
B)  the wants of people are limited. 
C)  there must be poor people in rich countries. 
D)  shortages exist in nearly all markets. 
A)  we often do not have sufficient resources to achieve our objectives. 
B)  the wants of people are limited. 
C)  there must be poor people in rich countries. 
D)  shortages exist in nearly all markets.

Question 3

Because one person's spending is another person's income:

Accepted Answer

A)  if one group in the economy spends more,the incomes of other groups will decrease. 
B)  if one group in the economy spends less,the incomes of other groups will increase. 
C)  if one group in the economy spends more,the incomes of other groups will increase. 
D)  spending by one group does not influence the income of any other group. 
A)  if one group in the economy spends more,the incomes of other groups will decrease. 
B)  if one group in the economy spends less,the incomes of other groups will increase. 
C)  if one group in the economy spends more,the incomes of other groups will increase. 
D)  spending by one group does not influence the income of any other group.

Question 4

Which decision is an example of marginal analysis?

Accepted Answer

A)  ordering a pizza,rather than eating leftover meatloaf 
B)  deciding whether to eat one more slice of pizza 
C)  using a coupon to save $2 on a pizza 
D)  writing a check to pay for the pizza,rather than using a credit card 
A)  ordering a pizza,rather than eating leftover meatloaf 
B)  deciding whether to eat one more slice of pizza 
C)  using a coupon to save $2 on a pizza 
D)  writing a check to pay for the pizza,rather than using a credit card

Question 5

Sometimes the government varies its spending,depending on the needs of the country.Which economic principle does this statement BEST represent?

Accepted Answer

A)  Resources should be used efficiently to achieve society's goals. 
B)  When markets don't achieve efficiency,government intervention can improve society's welfare. 
C)  The true cost of something is its opportunity cost. 
D)  Government policies can change spending. 
A)  Resources should be used efficiently to achieve society's goals. 
B)  When markets don't achieve efficiency,government intervention can improve society's welfare. 
C)  The true cost of something is its opportunity cost. 
D)  Government policies can change spending.

Question 6

An economy is efficient when:

Accepted Answer

A)  the problem of scarcity is eliminated. 
B)  output is distributed equitably. 
C)  all opportunities to make some people better off without making other people worse off have been taken. 
D)  all opportunities to make some people worse off without making other people better off have been taken. 
A)  the problem of scarcity is eliminated. 
B)  output is distributed equitably. 
C)  all opportunities to make some people better off without making other people worse off have been taken. 
D)  all opportunities to make some people worse off without making other people better off have been taken.

Question 7

The opportunity cost of something is:

Accepted Answer

A)  larger during periods of rising prices. 
B)  equal to the monetary cost. 
C)  smaller during periods of falling prices. 
D)  what is given up to acquire it. 
A)  larger during periods of rising prices. 
B)  equal to the monetary cost. 
C)  smaller during periods of falling prices. 
D)  what is given up to acquire it.

Question 8

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

Accepted Answer

A) True 
 B)False

Question 9

Because people usually exploit opportunities to make themselves better off,to encourage young people to go to university in their home province,provincial governments can:

Accepted Answer

A)  charge higher tuition to out-of-province students. 
B)  award special scholarships to out-of-province students. 
C)  offer less student loans to provincial resident students. 
D)  offer lower tuition to provincial resident students. 
A)  charge higher tuition to out-of-province students. 
B)  award special scholarships to out-of-province students. 
C)  offer less student loans to provincial resident students. 
D)  offer lower tuition to provincial resident students.

Question 10

Opportunity cost is:

Accepted Answer

A)  about half of the monetary cost of a product. 
B)  the dollar payment for a product. 
C)  the benefit derived from a product. 
D)  the value of the best alternative forgone in making any choice. 
A)  about half of the monetary cost of a product. 
B)  the dollar payment for a product. 
C)  the benefit derived from a product. 
D)  the value of the best alternative forgone in making any choice.

Question 11

You are analyzing a trade-off when you compare the _____ and _____ of doing something.

Accepted Answer

A)  direct costs;opportunity costs 
B)  marginal benefits;total benefits 
C)  costs;benefits 
D)  direct costs;total costs 
A)  direct costs;opportunity costs 
B)  marginal benefits;total benefits 
C)  costs;benefits 
D)  direct costs;total costs

Question 12

Equilibrium exists when:

Accepted Answer

A)  output is distributed equitably. 
B)  scarcity is eliminated. 
C)  an individual would be better off taking a different action. 
D)  no individual has an incentive to change his or her behaviour. 
A)  output is distributed equitably. 
B)  scarcity is eliminated. 
C)  an individual would be better off taking a different action. 
D)  no individual has an incentive to change his or her behaviour.

Question 13

People who live in large cities decide to spend less in their day-to-day activities.This will MOST likely lead to:

Accepted Answer

A)  less income for other people 
B)  more income for other people. 
C)  no impact on other people. 
D)  inflation. 
A)  less income for other people 
B)  more income for other people. 
C)  no impact on other people. 
D)  inflation.

Question 14

Because people usually exploit opportunities to make themselves better off,if the price of gasoline falls and stays low for an extended period,we expect people to:

Accepted Answer

A)  reduce their reliance on gasoline-powered cars. 
B)  buy larger and less fuel-efficient cars. 
C)  use more public transportation. 
D)  ride bicycles. 
A)  reduce their reliance on gasoline-powered cars. 
B)  buy larger and less fuel-efficient cars. 
C)  use more public transportation. 
D)  ride bicycles.

Question 15

The university recently inherited a large mansion from a wealthy alumnus.The university plans to use the mansion for faculty parties and to house distinguished guests.The opportunity cost of the mansion to the university is:

Accepted Answer

A)  zero because it was a gift. 
B)  the original cost of building the mansion. 
C)  the amount the university would receive if it sold the mansion. 
D)  the cost of catering the parties at the mansion. 
A)  zero because it was a gift. 
B)  the original cost of building the mansion. 
C)  the amount the university would receive if it sold the mansion. 
D)  the cost of catering the parties at the mansion.

Question 16

For which decision would marginal analysis be MOST relevant?

Accepted Answer

A)  Should I go to university or work after graduating from high school? 
B)  Should I eat another doughnut? 
C)  Should I use $20 000 as a down payment on a house or to buy a car? 
D)  Should I get married? 
A)  Should I go to university or work after graduating from high school? 
B)  Should I eat another doughnut? 
C)  Should I use $20 000 as a down payment on a house or to buy a car? 
D)  Should I get married?

Question 17

If an economy is efficient:

Accepted Answer

A)  all goods are produced at their maximum quantity. 
B)  all opportunities to make people better off without making other people worse off have been taken. 
C)  more resources have been used to produce specific consumer goods than producer goods. 
D)  prices are the lowest they can possibly be. 
A)  all goods are produced at their maximum quantity. 
B)  all opportunities to make people better off without making other people worse off have been taken. 
C)  more resources have been used to produce specific consumer goods than producer goods. 
D)  prices are the lowest they can possibly be.

Question 18

A popular train station has free parking for commuters who take the train.This often results in many people being unable to find a parking spot and missing their train.To solve this problem,all commuters should be:

Accepted Answer

A)  given a parking pass along with their ticket. 
B)  required to pay for parking. 
C)  barred from parking at the station. 
D)  exempt from parking lot fees. 
A)  given a parking pass along with their ticket. 
B)  required to pay for parking. 
C)  barred from parking at the station. 
D)  exempt from parking lot fees.

Question 19

In most cases,economic efficiency is achieved through:

Accepted Answer

A)  incentives built into a market economy. 
B)  reducing regulation. 
C)  individuals seeking out opportunities that involve no risk. 
D)  maximizing equity. 
A)  incentives built into a market economy. 
B)  reducing regulation. 
C)  individuals seeking out opportunities that involve no risk. 
D)  maximizing equity.

Question 20

An economy is efficient if it is:

Accepted Answer

A)  possible to produce more of all goods and services. 
B)  possible to produce more of one good without producing less of another. 
C)  not possible to produce more of one good without producing less of another good. 
D)  producing a combination of goods. 
A)  possible to produce more of all goods and services. 
B)  possible to produce more of one good without producing less of another. 
C)  not possible to produce more of one good without producing less of another good. 
D)  producing a combination of goods.

Exam 1: First Principles

Because people usually exploit opportunities to make themselves better off,which method of reducing pollution is likely to be MOST effective?

Scarcity in economics means that:

Because one person's spending is another person's income:

Which decision is an example of marginal analysis?

Sometimes the government varies its spending,depending on the needs of the country.Which economic principle does this statement BEST represent?

An economy is efficient when:

The opportunity cost of something is:

An economy is efficient if one person can be made better off by reallocating resources without making anyone else worse off.

Because people usually exploit opportunities to make themselves better off,to encourage young people to go to university in their home province,provincial governments can:

Opportunity cost is:

You are analyzing a trade-off when you compare the _____ and _____ of doing something.

Equilibrium exists when:

People who live in large cities decide to spend less in their day-to-day activities.This will MOST likely lead to:

Because people usually exploit opportunities to make themselves better off,if the price of gasoline falls and stays low for an extended period,we expect people to:

The university recently inherited a large mansion from a wealthy alumnus.The university plans to use the mansion for faculty parties and to house distinguished guests.The opportunity cost of the mansion to the university is:

For which decision would marginal analysis be MOST relevant?

If an economy is efficient:

A popular train station has free parking for commuters who take the train.This often results in many people being unable to find a parking spot and missing their train.To solve this problem,all commuters should be:

In most cases,economic efficiency is achieved through:

An economy is efficient if it is:

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

You are analyzing a trade-off when you compare the _ and _ of doing something.