Question 1

A country that uses all its resources efficiently is presently producing 150 cars and 500 telephones. If it switches to producing 250 cars and 200 telephones, then the opportunity cost of the extra 100 cars produced is:

Accepted Answer

A)  impossible to determine from the information given. 
B)  300 telephones. 
C)  200 telephones. 
D)  500 telephones.

Question 2

The opportunity cost associated with the money spent on a domed stadium for Toronto is:

Accepted Answer

A)  the dollar value of the cost of construction. 
B)  other goods and services that must be sacrificed in order to build the stadium. 
C)  the loss of government revenue used for the stadium. 
D)  not relevant since the stadium will bring in tourist dollars to the City of Toronto.

Question 3

Which of the following Canadian political parties is most closely associated with the command approach to economic decision-making?

Accepted Answer

A)  the Liberal party 
B)  the Progressive Conservative party 
C)  the New Democratic Party 
D)  the Canadian Alliance

Question 4

Economics deals primarily with the problems created by:

Accepted Answer

A)  the balancing of direct and opportunity costs. 
B)  the free market system of individual initiative. 
C)  the law of diminishing returns. 
D)  limited productive resources.

Question 5

When comparing the economic systems of Canada to those of the United States, it can be seen that:

Accepted Answer

A)  Canada is a mixed economy and the United States is not. 
B)  the free market system is more predominant in the United States. 
C)  the United States is a mixed economy and Canada is not. 
D)  the free market system is more predominant in Canada.

Question 6

Thomas Robert Malthus is best associated with the:

Accepted Answer

A)  law of diminishing returns. 
B)  advantages of a free market system. 
C)  law of comparative advantage. 
D)  concept of opportunity cost.

Question 7

If you were unemployed and decided to return to college:

Accepted Answer

A)  there would be an opportunity cost associated with the money you spent on books. 
B)  the opportunity costs associated with both your time and your money must be calculated separately. 
C)  there would be an opportunity cost associated with the use of your time. 
D)  all of the above are correct

Question 8

Your opportunity of taking an economics course is:

Accepted Answer

A)  the net benefit of going skiing instead of taking the course. 
B)  the net benefit of taking the course. 
C)  the tuition paid for the course. 
D)  the cost of going skiing instead of taking the course.

Question 9

The major difference between the sciences that study human behaviour and those that study the physical relationships in the universe is:

Accepted Answer

A)  the fact that the study of economics does not use experiments. 
B)  the fact that the environment in the study of physical sciences cannot be controlled. 
C)  the fact that the physical sciences categorize facts as either good or bad. 
D)  the fact that individuals are not preprogrammed.

Question 10

An example of a capital resource is:

Accepted Answer

A)  a nuclear-power plant. 
B)  a truck. 
C)  a screwdriver. 
D)  all of the above

Question 11

If Canada's population were to decline:

Accepted Answer

A)  the production-possibilities curve for Canada would shift to the right. 
B)  Canada would need to shift production to another point on its production-possibilities curve. 
C)  the production-possibilities curve for Canada would shift to the left. 
D)  there would be an increase in unemployment.

Question 12

The fundamental concept in the study of economics is:

Accepted Answer

A)  scarcity. 
B)  political decision-making. 
C)  our natural resources. 
D)  human wants and desires.

Question 13

The opportunity cost of attending college:

Accepted Answer

A)  depends on the course that an individual is enrolled in. 
B)  is impossible to measure in dollar terms. 
C)  can never be greater than the direct costs of going to college. 
D)  is the most valuable alternative sacrificed in order to attend college.

Question 14

The proportion of Canada's land mass covered in trees is approximately:

Accepted Answer

A)  15 percent. 
B)  35 percent. 
C)  25 percent. 
D)  45 percent.

Question 15

If a country is operating at a point on its production-possibilities curve, more of one good can be produced only if less of another good is produced because:

Accepted Answer

A)  the resources used to produce each good are not identical. 
B)  resources are available only in limited amounts. 
C)  of the law of diminishing returns. 
D)  most resources are specialized and can only be used to produce certain goods.

Question 16

Given a production possibilities curve for consumer goods (on the x-axis) and capital goods (on the y-axis), the opportunity cost of increasing the production of consumer goods is greatest
When the slope of the production possibilities curve is:

Accepted Answer

A)  3 
B)  5/2 
C)  -5/2 
D)  -3

Question 17

A straight-line production-possibilities curve:

Accepted Answer

A)  shows increasing opportunity costs as the production of one commodity increases. 
B)  is impossible in the real world. 
C)  assumes that the law of diminishing returns does not apply in this case. 
D)  is drawn when identical products are labeled on each axis.

Question 18

The Canadian economy can be best described as:

Accepted Answer

A)  a decentralized economy. 
B)  a command economy. 
C)  a mixed economy. 
D)  a free market economy.

Question 19

In order to draw a production-possibilities curve, we need to assume:

Accepted Answer

A)  full employment of resources. 
B)  that only goods and not services are produced. 
C)  a free market economic system. 
D)  full employment, but not necessarily efficient use, of resources.

Question 20

A production-possibilities curve is an example of:

Accepted Answer

A)  a convex relationship. 
B)  direct or positive relationship. 
C)  a linear relationship. 
D)  indirect or negative relationship.

Exam 1: Introductory Concepts