Question 1

What does trade NOT achieve

Accepted Answer

A) increased competition 
B) equal gains for both countries involved 
C) some gains for both countries involved 
D) greater production efficiency 
A) increased competition 
B) equal gains for both countries involved 
C) some gains for both countries involved 
D) greater production efficiency

Question 2

What is an economy experiencing when a society cannot produce all the goods and services people wish to have

Accepted Answer

A) scarcity 
B) misallocation 
C) externalities 
D) market failure 
A) scarcity 
B) misallocation 
C) externalities 
D) market failure

Question 3

Trade with any nation can be mutually beneficial.

Accepted Answer

A) True 
 B)False

Question 4

What is the best example of a marginal change

Accepted Answer

A) College tuition rose by 1% last year. 
B) Kim gets a big promotion at work.She also gets a raise from $25,000 per year to $40,000 per year. 
C) Mark graduates from university and takes a job.His income increases from $10,000 per year to $50,000 per year. 
D) A drought hits Saskatchewan and the price of wheat increases from $4.00 per bushel to $8.00 per bushel. 
A) College tuition rose by 1% last year. 
B) Kim gets a big promotion at work.She also gets a raise from $25,000 per year to $40,000 per year. 
C) Mark graduates from university and takes a job.His income increases from $10,000 per year to $50,000 per year. 
D) A drought hits Saskatchewan and the price of wheat increases from $4.00 per bushel to $8.00 per bushel.

Question 5

How do people make decisions at the margin

Accepted Answer

A) by following the business cycle 
B) by experience 
C) by calculating dollar costs 
D) by comparing costs and benefits 
A) by following the business cycle 
B) by experience 
C) by calculating dollar costs 
D) by comparing costs and benefits

Question 6

What is the primary determinant of a country's standard of living

Accepted Answer

A) the ability to reduce foreign competition 
B) the ability to produce goods and services 
C) the total supply of money in the economy 
D) the average age of the country's labour force 
A) the ability to reduce foreign competition 
B) the ability to produce goods and services 
C) the total supply of money in the economy 
D) the average age of the country's labour force

Question 7

What might a government do to enact a policy to increase living standards

Accepted Answer

A) allow corporate tax write-offs for money spent on worker safety 
B) make it more difficult to receive unemployment benefits 
C) increase educational opportunities for workers 
D) prohibit unions from organizing 
A) allow corporate tax write-offs for money spent on worker safety 
B) make it more difficult to receive unemployment benefits 
C) increase educational opportunities for workers 
D) prohibit unions from organizing

Question 8

What is market power

Accepted Answer

A) the power of a single person or group to influence market prices 
B) the ability of a person or group of people to successfully market new products 
C) the power of the government to regulate a market 
D) the relative importance of a market to the overall economy 
A) the power of a single person or group to influence market prices 
B) the ability of a person or group of people to successfully market new products 
C) the power of the government to regulate a market 
D) the relative importance of a market to the overall economy

Question 9

What does inflation cause

Accepted Answer

A) incomes to fall 
B) productivity to increase 
C) the government to lower taxes 
D) the value of money to fall 
A) incomes to fall 
B) productivity to increase 
C) the government to lower taxes 
D) the value of money to fall

Question 10

Mike has spent $500 purchasing and repairing an old fishing boat,which he expects to sell for $800.He discovers that he needs an additional repair,which will cost $400.He can sell the boat as it is now for $300.What should he do

Accepted Answer

A) He should take the $300. 
B) He should never sell something for less than its cost. 
C) He should complete the repairs and sell the boat. 
D) It doesn't matter which action he takes; the outcome is the same either way. 
A) He should take the $300. 
B) He should never sell something for less than its cost. 
C) He should complete the repairs and sell the boat. 
D) It doesn't matter which action he takes; the outcome is the same either way.

Question 11

A worker in Bangladesh can earn $1 per day making cotton cloth on a handloom.A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages

Accepted Answer

A) Canadian textile workers belong to a union. 
B) There is little demand for cotton cloth in Bangladesh and great demand in Canada. 
C) Labour is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D) Bangladesh has a low-wage policy to make its textile industry more competitive in world markets. 
A) Canadian textile workers belong to a union. 
B) There is little demand for cotton cloth in Bangladesh and great demand in Canada. 
C) Labour is more productive making cotton cloth with a mechanical loom than with a hand loom. 
D) Bangladesh has a low-wage policy to make its textile industry more competitive in world markets.

Question 12

If France is better than Latvia at producing wine,but Latvia is better than France at producing lumber,what should happen

Accepted Answer

A) Latvia should sell lumber to France, and should buy French wine. 
B) Latvia should impose a tariff on French wine in order to protect jobs in the Latvian lumber industry. 
C) Latvia should subsidize its wine industry so that it can compete with French wine. 
D) Latvia should put a quota on the amount of French wine imported. 
A) Latvia should sell lumber to France, and should buy French wine. 
B) Latvia should impose a tariff on French wine in order to protect jobs in the Latvian lumber industry. 
C) Latvia should subsidize its wine industry so that it can compete with French wine. 
D) Latvia should put a quota on the amount of French wine imported.

Question 13

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short run.

Accepted Answer

To lower inflation,the government may ch

Question 14

What is the largest single cost of going to university

Accepted Answer

A) books 
B) room and board 
C) tuition 
D) lost wages 
A) books 
B) room and board 
C) tuition 
D) lost wages

Question 15

What is one necessary role of government in a market economy

Accepted Answer

A) to tax goods and services that are most desired by consumers 
B) to maintain subsidized housing for low-income households 
C) to provide services such as pensions 
D) to enforce property rights 
A) to tax goods and services that are most desired by consumers 
B) to maintain subsidized housing for low-income households 
C) to provide services such as pensions 
D) to enforce property rights

Question 16

What is an example of an externality

Accepted Answer

A) the impact of bad weather on the income of farmers 
B) the impact of the personal income tax on a person's ability to purchase goods and services 
C) the impact of pollution from a factory on the health of people in the vicinity of the factory 
D) the impact of increases in health care costs on the health of individuals in society 
A) the impact of bad weather on the income of farmers 
B) the impact of the personal income tax on a person's ability to purchase goods and services 
C) the impact of pollution from a factory on the health of people in the vicinity of the factory 
D) the impact of increases in health care costs on the health of individuals in society

Question 17

How does the invisible hand primarily work to promote general well-being in the economy

Accepted Answer

A) through government intervention 
B) through the political process 
C) through self-interest 
D) through altruism 
A) through government intervention 
B) through the political process 
C) through self-interest 
D) through altruism

Question 18

Which of the following is an example of a firm with market power

Accepted Answer

A) a deli in Winnipeg 
B) a bike rental company in Victoria 
C) the Science Centre in Vancouver 
D) a farmer in Quebec 
A) a deli in Winnipeg 
B) a bike rental company in Victoria 
C) the Science Centre in Vancouver 
D) a farmer in Quebec

Question 19

During the 1990s,the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation.What best explains the difference

Accepted Answer

A) The United Kingdom was more industrialized than Turkey. 
B) The United Kingdom printed money at a slower rate than Turkey. 
C) Workers in the United Kingdom were more productive than workers in Turkey. 
D) There were more cases of market failure in Turkey than in the United Kingdom. 
A) The United Kingdom was more industrialized than Turkey. 
B) The United Kingdom printed money at a slower rate than Turkey. 
C) Workers in the United Kingdom were more productive than workers in Turkey. 
D) There were more cases of market failure in Turkey than in the United Kingdom.

Question 20

If an externality is present in a market,what may enhance economic efficiency

Accepted Answer

A) government intervention 
B) increased competition 
C) better informed market participants 
D) more defined property rights 
A) government intervention 
B) increased competition 
C) better informed market participants 
D) more defined property rights

Exam 1: Ten Principles of Economics

What does trade NOT achieve

What is an economy experiencing when a society cannot produce all the goods and services people wish to have

Trade with any nation can be mutually beneficial.

What is the best example of a marginal change

How do people make decisions at the margin

What is the primary determinant of a country's standard of living

What might a government do to enact a policy to increase living standards

What is market power

What does inflation cause

Mike has spent $500 purchasing and repairing an old fishing boat,which he expects to sell for $800.He discovers that he needs an additional repair,which will cost $400.He can sell the boat as it is now for $300.What should he do

A worker in Bangladesh can earn $1 per day making cotton cloth on a handloom.A worker in Canada can earn $100 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages

If France is better than Latvia at producing wine,but Latvia is better than France at producing lumber,what should happen

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short run.

What is the largest single cost of going to university

What is one necessary role of government in a market economy

What is an example of an externality

How does the invisible hand primarily work to promote general well-being in the economy

Which of the following is an example of a firm with market power

During the 1990s,the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation.What best explains the difference

If an externality is present in a market,what may enhance economic efficiency

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

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