Question 1

Litres of milk at a local grocery store are priced at one for $2 or two for $3. What is the marginal cost of buying a second litre of milk?

Accepted Answer

A)  $0 
B)  $1 
C)  $2 
D)  $3 
A)  $0 
B)  $1 
C)  $2 
D)  $3

Question 2

Trent decides to spend an hour playing basketball rather than studying. What is his opportunity cost?

Accepted Answer

A)  The increase in skill he obtains from playing basketball for that hour. 
B)  Nothing, because he had a free pass into the sports complex to play basketball. 
C)  The benefit to his grades from studying for an hour. 
D)  Nothing, because he enjoys playing basketball more than studying. 
A)  The increase in skill he obtains from playing basketball for that hour. 
B)  Nothing, because he had a free pass into the sports complex to play basketball. 
C)  The benefit to his grades from studying for an hour. 
D)  Nothing, because he enjoys playing basketball more than studying.

Question 3

Which of the following statements about testing an economic hypothesis is the most accurate?

Accepted Answer

A)  It can be tested using empirical analysis. 
B)  It can be tested using normative analysis. 
C)  It cannot be tested since it is normative in nature. 
D)  It cannot be tested since it is a positive economic statement. 
A)  It can be tested using empirical analysis. 
B)  It can be tested using normative analysis. 
C)  It cannot be tested since it is normative in nature. 
D)  It cannot be tested since it is a positive economic statement.

Question 4

A good economic theory should capture as many details about real-world behaviour as possible.

Accepted Answer

A) True 
 B)False

Question 5

Which topic does macroeconomics NOT generally include?

Accepted Answer

A)  government spending and taxation 
B)  aggregate demand 
C)  the production decisions of individual firms 
D)  inflation 
A)  government spending and taxation 
B)  aggregate demand 
C)  the production decisions of individual firms 
D)  inflation

Question 6

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Accepted Answer

A) True 
 B)False

Question 7

Which description of positive statements is the most accurate?

Accepted Answer

A)  They are optimistic, putting the best possible interpretation on things. 
B)  They are descriptive, making claims about how the world is. 
C)  They are prescriptive, making claims about how the world ought to be. 
D)  They are affirmative, justifying existing economic policy. 
A)  They are optimistic, putting the best possible interpretation on things. 
B)  They are descriptive, making claims about how the world is. 
C)  They are prescriptive, making claims about how the world ought to be. 
D)  They are affirmative, justifying existing economic policy.

Question 8

An economist at the University of Alberta in Edmonton has been asked to explain why the price of Albertan crude oil has fallen recently. Which steps should the professor take in order to assemble a scholarly answer?

Accepted Answer

A)  Develop a hypothesis, test the proposition by engaging in empirical analysis, and examine the data to see if it fits with the facts. 
B)  Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations. 
C)  The oil industry is controlled by a cartel and the economist should gather data from other similarly structured industries to determine a theory. 
D)  Use a questionnaire to determine why residents of Alberta are not purchasing oil and create a theory based on this data. 
A)  Develop a hypothesis, test the proposition by engaging in empirical analysis, and examine the data to see if it fits with the facts. 
B)  Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations. 
C)  The oil industry is controlled by a cartel and the economist should gather data from other similarly structured industries to determine a theory. 
D)  Use a questionnaire to determine why residents of Alberta are not purchasing oil and create a theory based on this data.

Question 9

Which of the following is NOT a function of an entrepreneur?

Accepted Answer

A)  bear the business risks 
B)  make the good 
C)  organize the other factors of production 
D)  innovate 
A)  bear the business risks 
B)  make the good 
C)  organize the other factors of production 
D)  innovate

Question 10

Which of the following most accurately describes a "scarce" good?

Accepted Answer

A)  a good for which available resources are insufficient to satisfy unlimited human desires for it 
B)  a good that is always in demand at any price 
C)  a good for which there is a shortage at the current market price 
D)  a good for which it is impossible to increase production any further given the available resources and technology 
A)  a good for which available resources are insufficient to satisfy unlimited human desires for it 
B)  a good that is always in demand at any price 
C)  a good for which there is a shortage at the current market price 
D)  a good for which it is impossible to increase production any further given the available resources and technology

Question 11

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Accepted Answer

Since it is a testable proposi

Question 12

Who makes economic decisions?

Accepted Answer

A)  They are only made by government leaders. 
B)  They are made in both the private and public sectors. 
C)  They are only made where monetary exchanges take place. 
D)  They are only made at the management level of corporations. 
A)  They are only made by government leaders. 
B)  They are made in both the private and public sectors. 
C)  They are only made where monetary exchanges take place. 
D)  They are only made at the management level of corporations.

Question 13

Which of the following is NOT an example of a factor of production?

Accepted Answer

A)  the land ploughed by a farmer in order to grow corn 
B)  the chief executive officer of a large corporation 
C)  an office building 
D)  a product's price 
A)  the land ploughed by a farmer in order to grow corn 
B)  the chief executive officer of a large corporation 
C)  an office building 
D)  a product's price

Question 14

According to the rule of rational choice, what must occur for an individual to be willing undertake an activity?

Accepted Answer

A)  The expected marginal benefits must be less than the expected marginal costs. 
B)  The total costs must exceed total benefits. 
C)  The expected marginal benefits must be greater than the expected marginal costs. 
D)  The expected marginal benefit must equal the expected marginal cost. 
A)  The expected marginal benefits must be less than the expected marginal costs. 
B)  The total costs must exceed total benefits. 
C)  The expected marginal benefits must be greater than the expected marginal costs. 
D)  The expected marginal benefit must equal the expected marginal cost.

Question 15

Your mother tells you, "Watching ten hours of TV per day will make you stupid." Why is this a positive statement?

Accepted Answer

A)  Your mother is concerned with your well being. 
B)  You should be studying instead of watching TV. 
C)  It is a proposition that can be tested. 
D)  It is your mother's opinion. 
A)  Your mother is concerned with your well being. 
B)  You should be studying instead of watching TV. 
C)  It is a proposition that can be tested. 
D)  It is your mother's opinion.

Question 16

If a student enrols in an additional course at the university, what would an economist conclude?

Accepted Answer

A)  The total benefit that the student expects to receive as a result of completing her university degree exceeds the total cost of her university education. 
B)  The student is not following the rule of rational choice. 
C)  The student is not looking at the opportunity costs. 
D)  The expected marginal benefit of an additional course must exceed the expected marginal cost of the course. 
A)  The total benefit that the student expects to receive as a result of completing her university degree exceeds the total cost of her university education. 
B)  The student is not following the rule of rational choice. 
C)  The student is not looking at the opportunity costs. 
D)  The expected marginal benefit of an additional course must exceed the expected marginal cost of the course.

Question 17

A theory asserts that manufacturers are less willing to sell units of output as the price of goods decreases. However, as the price of computers fell throughout the 1990s, more computers were sold. Which of the following explanations of the apparent conflict between theory and data is most accurate?

Accepted Answer

A)  It is likely that variables other than the price and quantity of computers sold were changing. 
B)  The theory must be invalid. 
C)  The theory rests on assumptions that are too simplistic. 
D)  All variables other than the price and quantity of computers sold were unchanged. 
A)  It is likely that variables other than the price and quantity of computers sold were changing. 
B)  The theory must be invalid. 
C)  The theory rests on assumptions that are too simplistic. 
D)  All variables other than the price and quantity of computers sold were unchanged.

Question 18

When U.S. President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand . . . and on the other hand . . ." he recognized that the advice of economists is often ambiguous. Why is their advice often ambiguous?

Accepted Answer

A)  Economists are often unable to identify the critical questions involved in policy issues. 
B)  Economists are aware that trade-offs are involved in most policy questions. 
C)  Economists have difficulty seeing the fallacy of composition. 
D)  Economists disagree a lot over positive statements. 
A)  Economists are often unable to identify the critical questions involved in policy issues. 
B)  Economists are aware that trade-offs are involved in most policy questions. 
C)  Economists have difficulty seeing the fallacy of composition. 
D)  Economists disagree a lot over positive statements.

Question 19

Farmer Ed could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on a hectare of his land. The price of wheat is $2.00 per bushel and the price of barley $0.80. Show the benefits to Ed from specialization. What should he specialize in?

Accepted Answer

Farmer Ed could make $150 if he grew onl

Question 20

What do economists use the term "ceteris paribus" to indicate?

Accepted Answer

A)  Supply and demand are in balance. 
B)  Their conclusions are based on normative rather than positive economic analysis. 
C)  Other things are assumed to remain constant. 
D)  The analysis is True for the individual but not for the economy as a whole. 
A)  Supply and demand are in balance. 
B)  Their conclusions are based on normative rather than positive economic analysis. 
C)  Other things are assumed to remain constant. 
D)  The analysis is True for the individual but not for the economy as a whole.

Litres of milk at a local grocery store are priced at one for $2 or two for $3. What is the marginal cost of buying a second litre of milk?

Trent decides to spend an hour playing basketball rather than studying. What is his opportunity cost?

Which of the following statements about testing an economic hypothesis is the most accurate?

A good economic theory should capture as many details about real-world behaviour as possible.

Which topic does macroeconomics NOT generally include?

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Which description of positive statements is the most accurate?

An economist at the University of Alberta in Edmonton has been asked to explain why the price of Albertan crude oil has fallen recently. Which steps should the professor take in order to assemble a scholarly answer?

Which of the following is NOT a function of an entrepreneur?

Which of the following most accurately describes a "scarce" good?

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Who makes economic decisions?

Which of the following is NOT an example of a factor of production?

According to the rule of rational choice, what must occur for an individual to be willing undertake an activity?

Your mother tells you, "Watching ten hours of TV per day will make you stupid." Why is this a positive statement?

If a student enrols in an additional course at the university, what would an economist conclude?

A theory asserts that manufacturers are less willing to sell units of output as the price of goods decreases. However, as the price of computers fell throughout the 1990s, more computers were sold. Which of the following explanations of the apparent conflict between theory and data is most accurate?

When U.S. President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand . . . and on the other hand . . ." he recognized that the advice of economists is often ambiguous. Why is their advice often ambiguous?

Farmer Ed could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on a hectare of his land. The price of wheat is $2.00 per bushel and the price of barley $0.80. Show the benefits to Ed from specialization. What should he specialize in?

What do economists use the term "ceteris paribus" to indicate?

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

Litres of milk at a local grocery store are priced at one for $2 or two for $3. What is the marginal cost of buying a second litre of milk?

Trent decides to spend an hour playing basketball rather than studying. What is his opportunity cost?

Which of the following statements about testing an economic hypothesis is the most accurate?

A good economic theory should capture as many details about real-world behaviour as possible.

Which topic does macroeconomics NOT generally include?

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Which description of positive statements is the most accurate?

An economist at the University of Alberta in Edmonton has been asked to explain why the price of Albertan crude oil has fallen recently. Which steps should the professor take in order to assemble a scholarly answer?

Which of the following is NOT a function of an entrepreneur?

Which of the following most accurately describes a "scarce" good?

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Who makes economic decisions?

Which of the following is NOT an example of a factor of production?

According to the rule of rational choice, what must occur for an individual to be willing undertake an activity?

Your mother tells you, "Watching ten hours of TV per day will make you stupid." Why is this a positive statement?

If a student enrols in an additional course at the university, what would an economist conclude?

When U.S. President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand . . . and on the other hand . . ." he recognized that the advice of economists is often ambiguous. Why is their advice often ambiguous?

Farmer Ed could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on a hectare of his land. The price of wheat is $2.00 per bushel and the price of barley $0.80. Show the benefits to Ed from specialization. What should he specialize in?

What do economists use the term "ceteris paribus" to indicate?

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