Question 1

What does economics primarily explore?

Accepted Answer

A)  how the government allocates its budget among competing political interests 
B)  how stock and bond prices fluctuate when there are changes in demand or supply 
C)  how goods and services are produced and distributed in a world with limited resources 
D)  how businesses market products under competitive conditions 
A)  how the government allocates its budget among competing political interests 
B)  how stock and bond prices fluctuate when there are changes in demand or supply 
C)  how goods and services are produced and distributed in a world with limited resources 
D)  how businesses market products under competitive conditions

Question 2

A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices. However, when the average price of cars increased throughout the 1990s, more cars were purchased. Which of the following explanations of the apparent conflict between theory and data is most accurate?

Accepted Answer

A)  The price and quantity data gathered by researchers was clearly measured incorrectly. 
B)  It is likely that variables other than the price and quantity of cars demanded were changing. 
C)  The ceteris paribus assumption is valid. 
D)  The theory must be invalid. 
A)  The price and quantity data gathered by researchers was clearly measured incorrectly. 
B)  It is likely that variables other than the price and quantity of cars demanded were changing. 
C)  The ceteris paribus assumption is valid. 
D)  The theory must be invalid.

Question 3

Which of the following processes does marginal analysis involve?

Accepted Answer

A)  comparing the additional benefit from an action to the additional cost 
B)  comparing the total benefits of all actions to the total costs incurred as a result of those actions 
C)  abstract thinking, which is never actually utilized by consumers when making purchasing decisions 
D)  holding all other variables constant when isolating the relationship between two variables 
A)  comparing the additional benefit from an action to the additional cost 
B)  comparing the total benefits of all actions to the total costs incurred as a result of those actions 
C)  abstract thinking, which is never actually utilized by consumers when making purchasing decisions 
D)  holding all other variables constant when isolating the relationship between two variables

Question 4

Which of the following represents a normative statement?

Accepted Answer

A)  The temperature outside is 32 degrees Celsius. 
B)  The study of economics is more important than the study of history. 
C)  A decrease in price leads to an increase in quantity demanded. 
D)  People will buy less butter at $6.00 per kilogram than they will at $5.00 per kilogram. 
A)  The temperature outside is 32 degrees Celsius. 
B)  The study of economics is more important than the study of history. 
C)  A decrease in price leads to an increase in quantity demanded. 
D)  People will buy less butter at $6.00 per kilogram than they will at $5.00 per kilogram.

Question 5

Implementing a stricter smog control program after determining that the benefits of increased air quality outweigh the costs of pollution reduction is consistent with the rule of rational choice.

Accepted Answer

A) True 
 B)False

Question 6

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements about specialization is the most accurate?

Accepted Answer

A)  It leads to greater self-sufficiency. 
B)  It allows workers to develop skills by working on a large number of tasks. 
C)  It is always the result of an inefficient use of resources. 
D)  It can lead to an increase in overall production. 
A)  It leads to greater self-sufficiency. 
B)  It allows workers to develop skills by working on a large number of tasks. 
C)  It is always the result of an inefficient use of resources. 
D)  It can lead to an increase in overall production.

Question 8

Which of the following is an example of a capital resource?

Accepted Answer

A)  a dump truck 
B)  a bond issued by a company selling electric generators 
C)  the funds in a savings account at a bank 
D)  stock in a computer software company 
A)  a dump truck 
B)  a bond issued by a company selling electric generators 
C)  the funds in a savings account at a bank 
D)  stock in a computer software company

Question 9

What is the term for the highest valued alternative sacrificed as a result of a choice?

Accepted Answer

A)  the explicit cost, which can be objectively measured by anyone 
B)  the explicit cost, which can be subjectively measured only by the individual who chooses 
C)  the opportunity cost, which can be subjectively measured only by the individual who chooses 
D)  the opportunity cost, which can be objectively measured by anyone 
A)  the explicit cost, which can be objectively measured by anyone 
B)  the explicit cost, which can be subjectively measured only by the individual who chooses 
C)  the opportunity cost, which can be subjectively measured only by the individual who chooses 
D)  the opportunity cost, which can be objectively measured by anyone

Question 10

If Xavier gives up a job in which he earns $23 000 per year in order to go to college full time, his forgone income is part of the opportunity cost of going to college.

Accepted Answer

A) True 
 B)False

Question 11

Pollution damages the environment we live in. When would an economist advise that we reduce air pollution?

Accepted Answer

A)  when air pollution is in excess of the levels experienced in the 1950s, when air was much cleaner near big cities 
B)  when the total benefit from air pollution reduction just equals the total cost of pollution reduction 
C)  when air pollution levels are above near-zero levels 
D)  when the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction 
A)  when air pollution is in excess of the levels experienced in the 1950s, when air was much cleaner near big cities 
B)  when the total benefit from air pollution reduction just equals the total cost of pollution reduction 
C)  when air pollution levels are above near-zero levels 
D)  when the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction

Question 12

Which of the following statements about the opportunity cost of an action is the most accurate?

Accepted Answer

A)  It can be objectively determined only by economists. 
B)  It can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. 
C)  It is a subjective valuation that can be determined only by the individual who chooses the action. 
D)  It can be determined by adding up the bills incurred as a result of the action. 
A)  It can be objectively determined only by economists. 
B)  It can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. 
C)  It is a subjective valuation that can be determined only by the individual who chooses the action. 
D)  It can be determined by adding up the bills incurred as a result of the action.

Question 13

Raylene works at an accounting firm. What type of resource is she considered to be?

Accepted Answer

A)  an entrepreneur 
B)  management 
C)  capital 
D)  labour 
A)  an entrepreneur 
B)  management 
C)  capital 
D)  labour

Question 14

Explain the difference between poverty and scarcity.

Accepted Answer

People living in poverty have access to

Question 15

Which of the following best describes scarcity?

Accepted Answer

A)  Human desires are limited. 
B)  All but the very wealthy must face choices. 
C)  Resources are insufficient to satisfy all human desires. 
D)  Choices are unnecessary. 
A)  Human desires are limited. 
B)  All but the very wealthy must face choices. 
C)  Resources are insufficient to satisfy all human desires. 
D)  Choices are unnecessary.

Question 16

What does economics primarily study?

Accepted Answer

A)  how to interpret corporate balance sheets and income statements 
B)  how choices are made because of scarcity 
C)  how to make money in the stock market 
D)  how to operate a business 
A)  how to interpret corporate balance sheets and income statements 
B)  how choices are made because of scarcity 
C)  how to make money in the stock market 
D)  how to operate a business

Question 17

Which of the following would be studied in a microeconomics course?

Accepted Answer

A)  how the economy's total output is measured 
B)  the amount of unemployment in Canada 
C)  the production decisions made by individual firms 
D)  the effect of a recession on the economy 
A)  how the economy's total output is measured 
B)  the amount of unemployment in Canada 
C)  the production decisions made by individual firms 
D)  the effect of a recession on the economy

Question 18

"The minimum wage should be increased so that low-income workers can afford to feed their families." What is this statement an example of?

Accepted Answer

A)  a positive economic statement 
B)  a negative economic statement 
C)  a normative economic statement 
D)  the fallacy of composition 
A)  a positive economic statement 
B)  a negative economic statement 
C)  a normative economic statement 
D)  the fallacy of composition

Question 19

What causes scarcity?

Accepted Answer

A)  the allocation of goods by prices 
B)  specialization and division of labour 
C)  unlimited wants and limited resources 
D)  the market mechanism 
A)  the allocation of goods by prices 
B)  specialization and division of labour 
C)  unlimited wants and limited resources 
D)  the market mechanism

Question 20

An economic study concludes that an investment tax credit would increase business investment next year. What is this conclusion an example of?

Accepted Answer

A)  positive analysis 
B)  the fallacy of composition 
C)  normative analysis 
D)  negative economic analysis 
A)  positive analysis 
B)  the fallacy of composition 
C)  normative analysis 
D)  negative economic analysis

What does economics primarily explore?

Which of the following processes does marginal analysis involve?

Which of the following represents a normative statement?

Implementing a stricter smog control program after determining that the benefits of increased air quality outweigh the costs of pollution reduction is consistent with the rule of rational choice.

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Which of the following statements about specialization is the most accurate?

Which of the following is an example of a capital resource?

What is the term for the highest valued alternative sacrificed as a result of a choice?

If Xavier gives up a job in which he earns $23 000 per year in order to go to college full time, his forgone income is part of the opportunity cost of going to college.

Pollution damages the environment we live in. When would an economist advise that we reduce air pollution?

Which of the following statements about the opportunity cost of an action is the most accurate?

Raylene works at an accounting firm. What type of resource is she considered to be?

Explain the difference between poverty and scarcity.

Which of the following best describes scarcity?

What does economics primarily study?

Which of the following would be studied in a microeconomics course?

"The minimum wage should be increased so that low-income workers can afford to feed their families." What is this statement an example of?

What causes scarcity?

An economic study concludes that an investment tax credit would increase business investment next year. What is this conclusion an example of?

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters

Exam 1: The Role and Method of Economics

What does economics primarily explore?

Which of the following processes does marginal analysis involve?

Which of the following represents a normative statement?

Implementing a stricter smog control program after determining that the benefits of increased air quality outweigh the costs of pollution reduction is consistent with the rule of rational choice.

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Which of the following statements about specialization is the most accurate?

Which of the following is an example of a capital resource?

What is the term for the highest valued alternative sacrificed as a result of a choice?

If Xavier gives up a job in which he earns $23 000 per year in order to go to college full time, his forgone income is part of the opportunity cost of going to college.

Pollution damages the environment we live in. When would an economist advise that we reduce air pollution?

Which of the following statements about the opportunity cost of an action is the most accurate?

Raylene works at an accounting firm. What type of resource is she considered to be?

Explain the difference between poverty and scarcity.

Which of the following best describes scarcity?

What does economics primarily study?

Which of the following would be studied in a microeconomics course?

"The minimum wage should be increased so that low-income workers can afford to feed their families." What is this statement an example of?

What causes scarcity?

An economic study concludes that an investment tax credit would increase business investment next year. What is this conclusion an example of?

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

The Environment

Filters