Question 1

What do economists study

Accepted Answer

A) how people make decisions 
B) how governments interact with one another 
C) the forces and trends that affect only the economy as a whole 
D) how societies change over time 
A) how people make decisions 
B) how governments interact with one another 
C) the forces and trends that affect only the economy as a whole 
D) how societies change over time

Question 2

Which of the following would NOT be a result of laws that require firms to reduce pollution

Accepted Answer

A) lower spending by government 
B) higher prices to consumers 
C) lower wages to workers 
D) smaller profit to firms 
A) lower spending by government 
B) higher prices to consumers 
C) lower wages to workers 
D) smaller profit to firms

Question 3

What happened when the German government increased the quantity of money in the German economy in the 1920s

Accepted Answer

A) Germany experienced hyperinflation. 
B) More people in Germany could afford luxury goods. 
C) Unemployment increased. 
D) Germany was able to repay all its foreign debts. 
A) Germany experienced hyperinflation. 
B) More people in Germany could afford luxury goods. 
C) Unemployment increased. 
D) Germany was able to repay all its foreign debts.

Question 4

What is an increase in the overall level of prices in an economy called

Accepted Answer

A) economic growth 
B) inflation 
C) monetary policy 
D) rate of return 
A) economic growth 
B) inflation 
C) monetary policy 
D) rate of return

Question 5

What is an externality

Accepted Answer

A) the impact of one person's actions on the well-being of a bystander 
B) the impact of a person's actions on that person's well-being 
C) the impact of society's decisions on the well-being of another society 
D) the impact of society's decisions on the well-being of one person in the society 
A) the impact of one person's actions on the well-being of a bystander 
B) the impact of a person's actions on that person's well-being 
C) the impact of society's decisions on the well-being of another society 
D) the impact of society's decisions on the well-being of one person in the society

Question 6

David receives $200 as a birthday gift. In deciding how to spend the money, he narrows his options down to four: A, B, C, and D. The price of each option is $100, but David prefers B to C, C to A, and A to D. What is the opportunity cost of option B?

Accepted Answer

A) It is David's valuation of C. 
B) It is David's valuation of A, C, and D together. 
C) It is $200. 
D) It is $100. 
A) It is David's valuation of C. 
B) It is David's valuation of A, C, and D together. 
C) It is $200. 
D) It is $100.

Question 7

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

A) True 
 B)False

Question 8

The cost of an action is measured in terms of foregone opportunities.

Accepted Answer

A) True 
 B)False

Question 9

What is almost always the cause of large or persistent inflation

Accepted Answer

A) an increase in demand for domestic production 
B) growth in the quantity of money 
C) foreign competition 
D) higher worker productivity 
A) an increase in demand for domestic production 
B) growth in the quantity of money 
C) foreign competition 
D) higher worker productivity

Question 10

What is likely to occur when the government implements programs such as progressive income tax rates

Accepted Answer

A) Equity and efficiency is increased. 
B) Equity is increased and efficiency is decreased. 
C) Equity is decreased, and efficiency is increased. 
D) Equity is decreased, and efficiency is decreased. 
A) Equity and efficiency is increased. 
B) Equity is increased and efficiency is decreased. 
C) Equity is decreased, and efficiency is increased. 
D) Equity is decreased, and efficiency is decreased.

Question 11

A rational decision maker takes an action if and only if the marginal cost exceeds the marginal benefit.

Accepted Answer

A) True 
 B)False

Question 12

What happens when government policies are being designed

Accepted Answer

A) There is usually a tradeoff between equity and efficiency. 
B) Equity and efficiency goals are usually independent of each other. 
C) Equity can usually be achieved without an efficiency loss. 
D) Increasing efficiency usually results in more equity. 
A) There is usually a tradeoff between equity and efficiency. 
B) Equity and efficiency goals are usually independent of each other. 
C) Equity can usually be achieved without an efficiency loss. 
D) Increasing efficiency usually results in more equity.

Question 13

Over the past century,how much has the average income in Canada risen by

Accepted Answer

A) twofold 
B) fivefold 
C) eightfold 
D) tenfold 
A) twofold 
B) fivefold 
C) eightfold 
D) tenfold

Question 14

If the average cost of transporting a passenger on the train from Brockville to Toronto is $75,it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

A) True 
 B)False

Question 15

Which word comes from the Greek word for "one who manages a household"

Accepted Answer

A) market 
B) consumer 
C) producer 
D) economy 
A) market 
B) consumer 
C) producer 
D) economy

Question 16

Why do taxes adversely affect the allocation of resources in society

Accepted Answer

A) because they do not always fall more heavily on the rich 
B) because the taxes collected are not enough to finance government spending 
C) because not everyone pays taxes 
D) because they distort prices and thus the decisions of households and firms 
A) because they do not always fall more heavily on the rich 
B) because the taxes collected are not enough to finance government spending 
C) because not everyone pays taxes 
D) because they distort prices and thus the decisions of households and firms

Question 17

When was Adam Smith's book The Wealth of Nations published

Accepted Answer

A) 1692 
B) 1776 
C) 1816 
D) 1936 
A) 1692 
B) 1776 
C) 1816 
D) 1936

Question 18

What do households and economies have in common

Accepted Answer

A) They both must allocate scarce resources. 
B) They both face difficulties saving money. 
C) They both must sell the goods and services they produce. 
D) They both must have a central decision maker. 
A) They both must allocate scarce resources. 
B) They both face difficulties saving money. 
C) They both must sell the goods and services they produce. 
D) They both must have a central decision maker.

Question 19

To increase living standards,what should public policy do

Accepted Answer

A) ensure that workers are well educated and have the necessary tools and technology 
B) make unemployment benefits easier to obtain 
C) move workers into jobs directly from high school 
D) ensure that workers have access to union membership and benefits 
A) ensure that workers are well educated and have the necessary tools and technology 
B) make unemployment benefits easier to obtain 
C) move workers into jobs directly from high school 
D) ensure that workers have access to union membership and benefits

Question 20

What is an example of a monopoly

Accepted Answer

A) a jewellery store in Burnaby, British Columbia 
B) a souvenir shop in Cancun, Mexico 
C) an electric company in Outlook, Saskatchewan 
D) a doctor in St.John's, New Brunswick 
A) a jewellery store in Burnaby, British Columbia 
B) a souvenir shop in Cancun, Mexico 
C) an electric company in Outlook, Saskatchewan 
D) a doctor in St.John's, New Brunswick

Exam 1: Ten Principles of Economics

What do economists study

Which of the following would NOT be a result of laws that require firms to reduce pollution

What happened when the German government increased the quantity of money in the German economy in the 1920s

What is an increase in the overall level of prices in an economy called

What is an externality

David receives $200 as a birthday gift. In deciding how to spend the money, he narrows his options down to four: A, B, C, and D. The price of each option is $100, but David prefers B to C, C to A, and A to D. What is the opportunity cost of option B?

Scarcity means that there is less of a good or resource available than people wish to have.

The cost of an action is measured in terms of foregone opportunities.

What is almost always the cause of large or persistent inflation

What is likely to occur when the government implements programs such as progressive income tax rates

A rational decision maker takes an action if and only if the marginal cost exceeds the marginal benefit.

What happens when government policies are being designed

Over the past century,how much has the average income in Canada risen by

If the average cost of transporting a passenger on the train from Brockville to Toronto is $75,it would be irrational for the railroad to allow any passenger to ride for less than $75.

Which word comes from the Greek word for "one who manages a household"

Why do taxes adversely affect the allocation of resources in society

When was Adam Smith's book The Wealth of Nations published

What do households and economies have in common

To increase living standards,what should public policy do

What is an example of a monopoly

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters