Deck 1: What Is Economics

Question 1

Complete the following sentence. Microeconomics is

A)not concerned with factors of production.
B)concerned with normative issues only.
C)concerned with the size of the total amount of income earned by all households in an economy.
D)the branch of economics that studies the choices of individuals and businesses.
E)concerned exclusively with the role of the government in the economy.

Answer 1

D

Question 2

Which of the following newspaper headlines concerns a macroeconomic issue?

A)Why are people buying more SUVs and fewer minivans?
B)How would a tax on e-commerce affect chapters.indigo.ca?
C)How would an unexpected freeze in Oxford, Nova Scotia change the price of blueberries in the Maritimes?
D)Why is Japan's economy stagnant?
E)Why do grain producers purchase less pesticides?

Answer 2

D

Question 3

Which of the following is the best definition of economics?

A)the study of how a provincial government allocates tax dollars
B)the study of how consumers spend their income
C)the study of how producers decide what inputs to hire and what outputs to produce
D)the study of how individuals, businesses, governments, and entire societies make choices as they cope with scarcity and the incentives that influence and reconcile those choices
E)the study of how consumers and producers meet each other at the market

Answer 3

D

Question 4

Which one of the following topics does macroeconomics study?

A)decisions of individual firms
B)effects of government safety regulations on the price of cars
C)the performance of the global economy
D)prices of individual goods and services
E)effects of taxes on the price of gasoline

Question 5

The branch of economics that studies the choices of individuals and businesses is

A)macroeconomics.
B)microeconomics.
C)positive economics.
D)normative economics.
E)social economics.

Question 6

The problem of scarcity exists

A)only in economies that lack incentives.
B)only in economies that have incentives.
C)in all economies.
D)only when people are unemployed.
E)now but will be eliminated with economic growth.

Question 7

The study of how wages are set for New Brunswick teachers is classified as

A)a macroeconomic topic.
B)a microeconomic topic.
C)economics of social interest.
D)economics of private interest.
E)normative economics.

Question 8

Complete the following sentence. Macroeconomics

A)is primarily concerned with the operation of individual markets in the economy.
B)deals mainly with the economic behaviour of households.
C)is the only part of economics to deal with government decisions.
D)is primarily concerned with the behaviour of the stock market.
E)is the study of the performance national economy and the global economy.

Question 9

The fact that human wants cannot be fully satisfied with available resources is called the problem of

A)opportunity cost.
B)scarcity.
C)normative economics.
D)marginal cost.
E)the big tradeoff.

Question 10

Which one of the following topics does microeconomics study?

A)reasons for a fall in the price of orange juice
B)the effect of a rise in the Canadian dollar on Canada's exports
C)effect of interest rates on national economic growth
D)effect of the government budget deficit on employment
E)determination of total production in a country

Question 11

The problem of scarcity applies

A)to all countries, regardless of their level of development.
B)only in industrially developed countries because resources are scarce in these countries.
C)only in developing countries because resources are scarce in these countries
D)only in countries that are over-populated
E)only in countries that use natural resources in most of their production processes

Question 12

The branch of economics that studies the performance of the national economy and the global economy is

A)macroeconomics.
B)microeconomics.
C)Keynesian economics.
D)positive economics.
E)normative economics.

Question 13

Which of the following is a microeconomic topic?

A)the reasons why a consumer buys less honey
B)the reasons why the average price level in a country falls
C)the cause of increasing unemployment
D)the effect of the government budget deficit on inflation
E)the reasons why the labour force in a country decreases

Question 14

An incentive

A)could be a reward but could not be a penalty.
B)could be a penalty but could not be a reward.
C)could be either a reward or a penalty.
D)is the opposite of a tradeoff.
E)occurs in the macroeconomy but not in the microeconomy.

Question 15

Scarcity confronts

A)neither the poor nor the rich.
B)the rich but not the poor.
C)the poor but not the rich.
D)the rich and the poor.
E)families with incomes less than $25,000 a year.

Question 16

The inescapable economic fact is that

A)there are unlimited wants and limited resources.
B)there are unlimited resources, and we just have to decide how to allocate them.
C)capitalists are always exploiting the workers.
D)unions are always exploiting firms.
E)capitalists and unions cannot work together.

Question 17

Which of the following would be considered a microeconomic topic?

A)the severity of a recession
B)the cause of unemployment in the economy
C)the effect of the government budget deficit on inflation
D)the determination of aggregate income
E)the study of how wages are set for mine workers

Question 18

Each of the following would be considered a macroeconomic topic except

A)the reasons for a decrease in the unemployment rate.
B)the cause of recessions.
C)the effect of the government budget deficit on inflation.
D)the determination of aggregate income.
E)the selection of production techniques.

Question 19

The determination of prices in individual markets is primarily a concern of

A)positive economics.
B)negative economics.
C)macroeconomics.
D)microeconomics.
E)descriptive economics.

Question 20

In a world characterized by scarcity

A)all goods are free.
B)opportunity cost is zero.
C)we are not limited by time.
D)individuals need not work to obtain goods.
E)people must make choices among alternatives.

Question 21

The two big economic questions

A)summarize the scope of economics.
B)are "what goods and services are produced?" and "how are goods and services produced?"
C)have nothing to do with goods and services.
D)do not consider for whom goods and services are produced.
E)have nothing to do with the way goods and services are produced.

Question 22

When a farmer decides to harvest tomatoes using machines instead of migrant workers, the farmer is answering the ________ question.

A)"what"
B)"how"
C)"who"
D)"where"
E)"when"

Question 23

Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge. This statement means that the incentive to exercise dogs at the dog park ________.
The operators' decision is a ________.

A)remains the same; macroeconomic decision
B)changes; microeconomic decision
C)remains the same; microeconomic decision
D)changes; macroeconomic decision
E)changes; decision in the self-interest but not in the social interest

Question 24

Sue, who has a law degree, earns $200,000 a year, while Chris, a high-school dropout, earns $11.00 an hour. This is an example of an economy facing the ________ question.

A)"what"
B)"how"
C)"for whom"
D)"where"
E)"when"

Question 25

When a firm decides to produce more hybrid cars and fewer gas guzzlers, it is answering the ________ question.

A)"how"
B)"what"
C)"who"
D)"where"
E)"when"

Question 26

Which of the following statements is correct?

A)Canada produces more manufactured goods than services.
B)Canada produces more agricultural goods than services.
C)Canada produces more services than goods.
D)The percentage of the Canadian population that produces goods is greater than the percentage of the Chinese population that produces goods.
E)Canada produces more agricultural goods than manufactured goods.

Question 27

When a textile firm decides to produce more silk fabric and less cotton fabric, it is answering the ________ question.

A)"who"
B)"how"
C)"what"
D)"where"
E)"when"

Question 28

The fact that a hockey star earns $3 million a year while a teacher earns $50,000 annually is an example of an economy facing the ________ question.

A)"what"
B)"how"
C)"where"
D)"for whom"
E)"when"

Question 29

To earn income, people sell the services of the factors of production they own. Land earns ________and labour earns ________.

A)profit; wages
B)wages; interest
C)rent; wages
D)profit; interest
E)rent; minimum wage

Question 30

To meet increased demand for its good, a firm decides to hire a few high-skilled workers, rather than hire many low-skilled workers. The firm is answering the ________ question.

A)"when"
B)"what"
C)"who"
D)"where"
E)"how"

Question 31

The fact that some people can afford to live in beautiful homes while others are homeless is an example of an economy facing the ________ question.

A)"what"
B)"how"
C)"for whom"
D)"where"
E)"when"

Question 32

A star athlete can afford a garage full of exotic cars while other people can only afford to take a city bus for transportation. This is an example of an economy facing the ________ question.

A)"what"
B)"how"
C)"for whom"
D)"where"
E)"when"

Question 33

When a firm decides to produce computers using robots instead of people, it is answering the ________ question.

A)"what"
B)"where"
C)"how"
D)"who"
E)"when"

Question 34

Complete the following sentence. Entrepreneurship is

A)defined as money.
B)traded on the stock market.
C)categorized as capital.
D)the human resource that organizes labour, land and capital.
E)categorized as the factor of production labour.

Question 35

The two big economic questions

A)involve self-interest only.
B)involve only social interest.
C)involve neither self-interest nor social interest.
D)do not arise from scarcity.
E)involve both self-interest and social interest.

Question 36

Complete the following sentence. Capital is

A)money in the bank.
B)the "gifts of nature."
C)the tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services.
D)land.
E)stocks and bonds.

Question 37

Which factor of production earns the most income?

A)capital
B)land
C)labour
D)entrepreneurship
E)the stock market

Question 38

The two big economic questions include all of the following except

A)what to produce.
B)why to produce.
C)how to produce.
D)for whom to produce.
E)can choices made in the pursuit of self-interest also promote the social interest.

Question 39

An art museum decides to offer tours by having visitors listen to CDs rather than have tour guides. The museum is answering the ________ question.

A)"what"
B)"who"
C)"how"
D)"where"
E)"when"

Question 40

Complete the following sentence. Financial capital is

A)one of the "gifts of nature."
B)the tools and machines that are used to produce goods and services.
C)money, stocks, and bonds.
D)used in the production of goods and services.
E)land.

Question 41

Which one of the following is labour?

A)money
B)a carpenter's hammer
C)a shoe factory
D)a bread-slicing machine
E)a singer's voice

Question 42

Which of the following relates factors of production to the sources of income correctly?

A)Land earns interest.
B)Land earns rent.
C)Labour earns rent.
D)Capital earns profit.
E)Entrepreneurship earns rent.

Question 43

In Canada ________ percent of the adult population have completed high school and ________ percent have a college or university degree.

A)23; 93
B)93; 53
C)93; 23
D)100; 53
E)53; 23

Question 44

Which one of the following is an example of a factor of production?

A)an insurance policy
B)a donut
C)the skills of a welder
D)an IBM stock certificate
E)a computer game

Question 45

Which factor of production includes the "gifts of nature"?

A)labour
B)capital
C)human capital
D)entrepreneurship
E)land

Question 46

Which one of the following would economists classify as land?

A)an automotive plant in British Columbia
B)rich agricultural soil in Saskatchewan
C)an oil rig in the Atlantic Ocean
D)an elementary school in Nova Scotia
E)automobiles parked in a parking lot in Manitoba

Question 47

Which one of the following is an example of capital as a factor of production?

A)money held by Tim Hortons
B)a Bell Canada bond
C)an automobile factory owned by Ford
D)a high school teacher
E)natural gas

Question 48

The expansion of international trade, borrowing and lending, and investment is

A)the big tradeoff.
B)industrial revolution.
C)corporate revolution.
D)globalization.
E)antiglobalization.

Question 49

Which statement about incomes earned by factors of production is false?

A)Land earns rent.
B)Natural resources earn rent.
C)Labour earns wages.
D)Capital earns profit.
E)Entrepreneurship earns profit.

Question 50

Self-interest choices are

A)those choices which are best for the person making them.
B)never in the social interest.
C)always in the social interest.
D)those choices that are best for all residents of a region.
E)choices that are agreed to by majority vote.

Question 51

Choose the correct statement.

A)Canada produces more services than goods.
B)Canada produces more goods than services.
C)Canada produces an equal quantity of goods and services.
D)China's production of services is a greater percentage of its total production than Canada's.
E)Canada's production of manufacturing is a greater percentage of its total production than China's.

Question 52

Which of the following is not a factor of production?

A)the water used to cool a nuclear power plant
B)the effort of farmers raising cattle
C)the wages paid to workers
D)the management skill of a small business owner
E)the land used by a farmer to grow wheat

Question 53

What choices are best for the entire society?

A)self-interest choices
B)minority group choices
C)social interest choices
D)ethnic group choices
E)regional interest choices

Question 54

Which one of the following is an example of capital?

A)money
B)a carpenter
C)pasture
D)a bread-slicing machine
E)a university professor

Question 55

The creation of a successful movie illustrates choices made in self-interest that also achieve the social interest if

A)the movie has a higher attendance than any other movie produced that year.
B)the movie is produced at the lowest possible cost, and the movie gives the greatest possible benefit.
C)the movie addresses a social issue.
D)the movie is an Academy award winner because an Academy award winning movie is most popular with the movie-going public.
E)the movie is produced in a country where workers typically earn less than workers in North America.

Question 56

Which of the following is not a factor of production?

A)Timmy who is developing a production schedule for a new product
B)175 shares of Microsoft stock
C)Vans used by a bakery company for deliveries
D)Wilderness areas that have yet to be developed
E)National parks

Question 57

Which of the following would an economist classify as capital?

A)natural resources
B)a deposit of silver
C)entrepreneurship
D)a computer
E)land

Question 58

The creation of a successful movie can influence the main questions that economics seeks to answer. Choose the statement that is false.

A)The movie influences the how question because the movie can create new production techniques, which can be used in subsequent films.
B)The movie influences the for whom question because the people who earn higher incomes through the movie production buy more goods and services.
C)The movie influences the when question because movie crews work on many different films and must be available for the entire production.
D)The movie influences the what question because it can lead to spinoff goods or a new movie genre, which can result in the production of similar films.
E)The movie influences the how question because it can use unknown actors or Academy Award winners.

Question 59

Which one of the following is an example of land?

A)Bono's singing voice
B)a computer program
C)Lake Erie
D)a road
E)a dam

Question 60

A tractor is an example of which of the following factors of production?

A)capital
B)labour
C)land
D)entrepreneurship
E)energy

Question 61

When the government chooses to use resources to build a dam, those resources are no longer available to build a highway. This illustrates the concept of

A)a market.
B)macroeconomics.
C)opportunity cost.
D)a "how" tradeoff.
E)the big tradeoff.

Question 62

If you take an additional class this term, you can graduate earlier. This is an example of

A)opportunity cost.
B)total cost.
C)the pursuit of social interest.
D)marginal benefit.
E)social cost.

Question 63

Sally has to decide whether to study for her economics test or her accounting test. If she chooses to study for accounting, her opportunity cost of studying accounting is

A)studying economics.
B)less than the value of studying economics.
C)not comparable to the value of studying economics.
D)equal to the value of studying economics.
E)the future lost wages that will occur if she fails her accounting exam.

Question 64

When the government of Alberta chooses to build more roads, the required resources are no longer available to provide better healthcare facilities. This situation illustrates the concept of

A)marginal benefit.
B)monetary cost.
C)opportunity cost.
D)human capital.
E)entrepreneurship.

Question 65

Saskatchewan had more hospitals than Ontario, despite having one-tenth the population. The Saskatchewan government closed many of these hospitals in spite of widespread local protests. Which one of the following arguments is true?

A)Since hospitals have positive benefits, they should never be closed.
B)If Saskatchewan had more hospitals than Ontario, it must have had too many hospitals.
C)The Saskatchewan government must have thought the marginal benefit from one of these hospitals exceeded its marginal cost.
D)The Saskatchewan government must have thought the marginal benefit from one of these hospitals was less than its marginal cost.
E)The communities where these hospitals existed bore no costs from these decisions, because they did not pay for any of the hospital operating costs.

Question 66

According to Adam Smith

A)government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self-interest to unintentionally promote the social interest.
B)in a market transaction buyers can either get what they want for less than they would be willing to pay or sellers can make a profit, but both buyers and sellers can't gain simultaneously.
C)politicians are well-equipped to regulate corporations and intervene in markets to improve market outcomes.
D)when big corporations pursue their self-interest of maximum profit, they will inevitably conflict with social interest.
E)the self-interest and the social interest never conflict.

Question 67

To make choices, people must

A)be able to carry out complex mathematical calculations.
B)have unlimited resources.
C)be free from government constraint.
D)have unlimited access to information at no cost.
E)evaluate the values of alternative actions.

Question 68

Monika will choose to eat a seventh pizza slice if

A)the marginal benefit from the seventh slice is greater than its marginal cost.
B)the marginal benefit from the seventh slice is less than its marginal cost.
C)the total benefit from all seven slices is greater than their total cost.
D)the total benefit from all seven slices is less than their total cost.
E)she has enough money to pay for it.

Question 69

Which one of the following is a necessary consequence of scarcity?

A)no choices required
B)high profits
C)the requirement of making choices
D)all wants are satisfied
E)low profits

Question 70

Which of the following sayings best describes opportunity cost?

A)"Make hay while the sun shines."
B)"Love of money is the root of all evil."
C)"Boldly go where no one has gone before."
D)"There's no such thing as a free lunch."
E)"Baseball has been very good to me."

Question 71

The concept of opportunity cost

A)is relevant only for European countries.
B)suggests that individuals can achieve all they want.
C)suggests a major increase in public education spending means a reduced expansion in the public healthcare system.
D)is relevant only for developed countries.
E)is relevant only for developing countries.

Question 72

Complete the following sentence. Marginal cost is

A)the total cost of an activity.
B)the total cost of a decrease in an activity.
C)the opportunity cost of an increase in an activity.
D)the opportunity cost of a decrease in an activity.
E)equal to marginal benefit.

Question 73

An outcome is considered efficient if

A)it is the best available choice for an individual.
B)as many people as possible are happy about the outcome.
C)it is not possible to make someone better off without making anyone else worse off.
D)everyone makes the same income.
E)there is the smallest difference possible between the highest income earned and the lowest income earned.

Question 74

Marginal benefit is the

A)total benefit from an activity.
B)additional benefit from a decrease in an activity.
C)additional benefit from an increase in an activity.
D)opportunity cost of a decrease in an activity.
E)opportunity cost of an increase in an activity.

Question 75

Marginal benefit is

A)the cost of an increase in an activity.
B)the sum of benefit and cost that arises from an increase in an activity.
C)the cost of a decrease in an activity.
D)the benefit that arises from an increase in an activity.
E)the benefit that arises from a decrease in an activity.

Question 76

Which one of the following news headlines definitely concerns the social interest?

A)McDonald's Moves into Salads
B)Starbucks Expands in China
C)E Coli Test Results Must be Posted on Beaches
D)Microsoft to Make Windows8 Available Online
E)The Maple Leafs Win the Stanley Cup

Question 77

"There can be too much of a good thing." This statement suggests that

A)choices made in self-interest cannot be applied to many economic decisions.
B)a good may be produced to the point where its marginal cost exceeds its marginal benefit.
C)certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits.
D)a good may be produced to the point where its marginal benefit exceeds its marginal cost.
E)a good may be produced to the point where its marginal benefit is equal to its marginal cost.

Question 78

Opportunity cost is

A)the value of your favourite activity.
B)your value of leisure.
C)the money you spend on food, shelter, and clothing.
D)the marginal benefit from an activity.
E)the highest-valued alternative that we give up to get something.

Question 79

When asked in an interview what she missed the most because of the time she spent training for the Olympics, a rower, who lived on her own, answered "a normal social life." She also revealed that she had given up a job that paid $30,000 per year to train fulltime. She received a grant of $8,000 per year from Sport Canada, but this failed to cover all her training expenses. Her food and rent were $5,000 per year and training expenses were $12,000 per year. Aside from the value of a normal social life, what is the annual opportunity cost, expressed in dollars, to this rower of "Going for Gold"?

A)$25,000
B)$4,000
C)$30,000
D)$39,000
E)$34,000

Question 80

During the next hour John can choose one of the following three activities: playing basketball, watching television, or reading a book. The opportunity cost of reading a book

A)depends on how much the book cost when it was purchased.
B)is the value of playing basketball if John prefers that to watching television.
C)is the value of playing basketball and the value of watching television.
D)depends on how much John enjoys the book.
E)is the value of watching television if John prefers playing basketball to watching television.