Question 1

Marginal analysis studies how individuals decide:

Accepted Answer

A)  whether to live on the margin of society. 
B)  whether to do a bit more of an activity versus a bit less of it. 
C)  whether to go to university. 
D)  how much down payment to make when buying stocks. 
A)  whether to live on the margin of society. 
B)  whether to do a bit more of an activity versus a bit less of it. 
C)  whether to go to university. 
D)  how much down payment to make when buying stocks.

Question 2

Which statement is TRUE?

Accepted Answer

A)  The concept of equilibrium requires that all individuals have an equal amount of income. 
B)  If a market is in equilibrium,the price in that market will not fluctuate by more than 5%. 
C)  If a market is in equilibrium,there will be no remaining opportunities for individuals to make themselves better off. 
D)  A market is in equilibrium when the number of buyers is equal to the number of sellers. 
A)  The concept of equilibrium requires that all individuals have an equal amount of income. 
B)  If a market is in equilibrium,the price in that market will not fluctuate by more than 5%. 
C)  If a market is in equilibrium,there will be no remaining opportunities for individuals to make themselves better off. 
D)  A market is in equilibrium when the number of buyers is equal to the number of sellers.

Question 3

Specialization and trade usually lead to:

Accepted Answer

A)  lower economic growth. 
B)  the exchange of goods and services in markets. 
C)  lower living standards. 
D)  higher prices. 
A)  lower economic growth. 
B)  the exchange of goods and services in markets. 
C)  lower living standards. 
D)  higher prices.

Question 4

After eating three slices of pizza,you decide to eat one more piece.Your decision is an example of the economic concept called:

Accepted Answer

A)  opportunity cost decision. 
B)  people responding to incentives. 
C)  equity decision. 
D)  marginal decision-making. 
A)  opportunity cost decision. 
B)  people responding to incentives. 
C)  equity decision. 
D)  marginal decision-making.

Question 5

If equilibrium exists:

Accepted Answer

A)  all individuals must have an equal amount of income. 
B)  the price in that market will not fluctuate by more than 5%. 
C)  there will be no remaining opportunities for individuals to make themselves better off. 
D)  the number of buyers will equal the number of sellers. 
A)  all individuals must have an equal amount of income. 
B)  the price in that market will not fluctuate by more than 5%. 
C)  there will be no remaining opportunities for individuals to make themselves better off. 
D)  the number of buyers will equal the number of sellers.

Question 6

You decide whether to eat one more slice of pizza based on how hungry you feel.Which economic principle does this statement BEST represent?

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)  There are gains from trade. 
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)  There are gains from trade.

Question 7

When the Calgary city manager faces a complaint that the city council chamber podium is not accessible to individuals with disabilities,he responds that the $1 million improvement will not happen because "that money could be spent building 70 curb ramps." Which economic principle does this statement BEST represent?

Accepted Answer

A)  Markets move toward equilibrium. 
B)  The true cost of something is its opportunity cost. 
C)  "How much" is a decision at the margin. 
D)  When markets don't achieve efficiency,government intervention can improve society's welfare. 
A)  Markets move toward equilibrium. 
B)  The true cost of something is its opportunity cost. 
C)  "How much" is a decision at the margin. 
D)  When markets don't achieve efficiency,government intervention can improve society's welfare.

Question 8

Because of the opportunity cost,if Canada spends $87 billion in the rebuilding of Haiti after a Hurricane,it has to forgo the opportunity to spend $87 billion on some other programme.

Accepted Answer

A) True 
 B)False

Question 9

A dozen friends got together to celebrate a birthday.If the birthday cake is cut into 12 pieces of the same size and each of the 12 partygoers gets a slice,this cake distribution is:

Accepted Answer

A)  efficient but not equitable. 
B)  equitable but not efficient. 
C)  efficient and equitable. 
D)  equitable. 
A)  efficient but not equitable. 
B)  equitable but not efficient. 
C)  efficient and equitable. 
D)  equitable.

Question 10

Specialization in production was the starting point for:

Accepted Answer

A)  The Wealth of Nations,by Adam Smith. 
B)  The General Theory,by John Maynard Keynes. 
C)  Das Kapital,by Karl Marx. 
D)  Free to Choose,by Milton Friedman. 
A)  The Wealth of Nations,by Adam Smith. 
B)  The General Theory,by John Maynard Keynes. 
C)  Das Kapital,by Karl Marx. 
D)  Free to Choose,by Milton Friedman.

Question 11

You have $1 to spend on a vending machine snack.A bag of chips will cost you $1 and a candy bar will also cost you $1.If you choose the bag of chips,the opportunity cost of buying the chips would be:

Accepted Answer

A)  $1 plus the enjoyment you would have received from the candy bar. 
B)  $2 minus the enjoyment you would have received from the bag of chips. 
C)  $1. 
D)  the enjoyment you would have received from the candy bar. 
A)  $1 plus the enjoyment you would have received from the candy bar. 
B)  $2 minus the enjoyment you would have received from the bag of chips. 
C)  $1. 
D)  the enjoyment you would have received from the candy bar.

Question 12

You decide to join the economics club,but this means you can't join the accounting club because it meets at the same time.Which economic principle does this statement BEST represent?

Accepted Answer

A)  The true cost of something is its opportunity cost. 
B)  "How much" is a decision at the margin. 
C)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
D)  There are gains from trade. 
A)  The true cost of something is its opportunity cost. 
B)  "How much" is a decision at the margin. 
C)  People usually respond to incentives,exploiting opportunities to make themselves better off. 
D)  There are gains from trade.

Question 13

The study of economics arises because of the necessity of choice,and the necessity of choice arises because of the fundamental problem of scarcity of resources.

Accepted Answer

A) True 
 B)False

Question 14

Margo spends $30 000 on 1 year's university tuition.The opportunity cost of spending 1 year in university for Margo is:

Accepted Answer

A)  $30 000. 
B)  whatever she would have purchased with the $30 000 instead. 
C)  whatever she would have earned had she not been in university. 
D)  whatever she would have purchased with the $30 000 plus whatever she would have earned had she not been in university. 
A)  $30 000. 
B)  whatever she would have purchased with the $30 000 instead. 
C)  whatever she would have earned had she not been in university. 
D)  whatever she would have purchased with the $30 000 plus whatever she would have earned had she not been in university.

Question 15

Katherine has a physics exam tomorrow.However,a free lecture by one of her favorite authors is taking place this evening.Katherine decides to attend the lecture instead of studying for her exam.Katherine's opportunity cost of attending the lecture is:

Accepted Answer

A)  the time spent listening to the lecture. 
B)  not relevant since no money is involved. 
C)  the transportation and time cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight. 
D)  the time spent getting to the lecture. 
A)  the time spent listening to the lecture. 
B)  not relevant since no money is involved. 
C)  the transportation and time cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight. 
D)  the time spent getting to the lecture.

Question 16

A new fast-food restaurant offered a prize-a free meal (valued at $5)each week for a year-to its first 100 customers.Ramona camped out for 48 hours before the opening to be one of the first 100 customers,and she successfully obtained the prize.The cost to Ramona of obtaining the "free meal a week for a year" prize was:

Accepted Answer

A)  zero. 
B)  $260. 
C)  whatever else she would have done with the 48 hours. 
D)  The cost is impossible to determine. 
A)  zero. 
B)  $260. 
C)  whatever else she would have done with the 48 hours. 
D)  The cost is impossible to determine.

Question 17

If in Equitania,20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income,Equitania's economy:

Accepted Answer

A)  is efficient. 
B)  cannot be efficient since efficiency requires a more nearly equal distribution of income. 
C)  may be efficient. 
D)  is neither efficient nor equitable. 
A)  is efficient. 
B)  cannot be efficient since efficiency requires a more nearly equal distribution of income. 
C)  may be efficient. 
D)  is neither efficient nor equitable.

Question 18

Corner offices in high-rise office buildings usually cost more to rent than other offices.This BEST illustrates the economic concept of:

Accepted Answer

A)  specialization. 
B)  scarcity. 
C)  equilibrium. 
D)  opportunity costs. 
A)  specialization. 
B)  scarcity. 
C)  equilibrium. 
D)  opportunity costs.

Question 19

The problem of scarcity is confronted by:

Accepted Answer

A)  industrialized societies only. 
B)  preindustrial societies only. 
C)  societies governed by communist philosophies only. 
D)  all societies. 
A)  industrialized societies only. 
B)  preindustrial societies only. 
C)  societies governed by communist philosophies only. 
D)  all societies.

Question 20

Scarcity exists when:

Accepted Answer

A)  making choices among two or more alternatives is not necessary. 
B)  individuals can have more of any good without giving up anything. 
C)  individuals can have more of one good but only by giving up something else. 
D)  resources are unlimited. 
A)  making choices among two or more alternatives is not necessary. 
B)  individuals can have more of any good without giving up anything. 
C)  individuals can have more of one good but only by giving up something else. 
D)  resources are unlimited.

Exam 1: First Principles

Marginal analysis studies how individuals decide:

Which statement is TRUE?

Specialization and trade usually lead to:

After eating three slices of pizza,you decide to eat one more piece.Your decision is an example of the economic concept called:

If equilibrium exists:

You decide whether to eat one more slice of pizza based on how hungry you feel.Which economic principle does this statement BEST represent?

Because of the opportunity cost,if Canada spends $87 billion in the rebuilding of Haiti after a Hurricane,it has to forgo the opportunity to spend $87 billion on some other programme.

A dozen friends got together to celebrate a birthday.If the birthday cake is cut into 12 pieces of the same size and each of the 12 partygoers gets a slice,this cake distribution is:

Specialization in production was the starting point for:

You have $1 to spend on a vending machine snack.A bag of chips will cost you $1 and a candy bar will also cost you $1.If you choose the bag of chips,the opportunity cost of buying the chips would be:

You decide to join the economics club,but this means you can't join the accounting club because it meets at the same time.Which economic principle does this statement BEST represent?

The study of economics arises because of the necessity of choice,and the necessity of choice arises because of the fundamental problem of scarcity of resources.

Margo spends $30 000 on 1 year's university tuition.The opportunity cost of spending 1 year in university for Margo is:

Katherine has a physics exam tomorrow.However,a free lecture by one of her favorite authors is taking place this evening.Katherine decides to attend the lecture instead of studying for her exam.Katherine's opportunity cost of attending the lecture is:

If in Equitania,20% of the population receive 80% of the income and the remaining 80% of the population receive 20% of the income,Equitania's economy:

Corner offices in high-rise office buildings usually cost more to rent than other offices.This BEST illustrates the economic concept of:

The problem of scarcity is confronted by:

Scarcity exists when:

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

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