Question 1

Who coined the term "invisible hand"

Accepted Answer

A) Adam Smith 
B) David Ricardo 
C) John Maynard Keynes 
D) Milton Friedman 
A) Adam Smith 
B) David Ricardo 
C) John Maynard Keynes 
D) Milton Friedman

Question 2

How does the invisible hand direct economic activity

Accepted Answer

A) through advertising 
B) through prices 
C) through central planning 
D) through government regulations 
A) through advertising 
B) through prices 
C) through central planning 
D) through government regulations

Question 3

What happens when society requires that firms reduce pollution

Accepted Answer

A) There is a tradeoff because of reduced incomes to the firms' owners, workers, and customers. 
B) There is no tradeoff, since everyone benefits from reduced pollution. 
C) There is no tradeoff for society as a whole because the cost of reducing pollution falls only on the firms affected by the requirements. 
D) There is a tradeoff only if some firms are forced to close. 
A) There is a tradeoff because of reduced incomes to the firms' owners, workers, and customers. 
B) There is no tradeoff, since everyone benefits from reduced pollution. 
C) There is no tradeoff for society as a whole because the cost of reducing pollution falls only on the firms affected by the requirements. 
D) There is a tradeoff only if some firms are forced to close.

Question 4

Which statement best describes the relationship between inflation and unemployment

Accepted Answer

A) In the short run, reducing inflation is associated with falling unemployment. 
B) In the short run, reducing inflation is associated with rising unemployment. 
C) In the long run, reducing inflation is associated with falling unemployment. 
D) In the long run, reducing inflation is associated with rising unemployment. 
A) In the short run, reducing inflation is associated with falling unemployment. 
B) In the short run, reducing inflation is associated with rising unemployment. 
C) In the long run, reducing inflation is associated with falling unemployment. 
D) In the long run, reducing inflation is associated with rising unemployment.

Question 5

The government can potentially improve market outcomes if market inequalities or market failure exist.

Accepted Answer

A) True 
 B)False

Question 6

Equity refers to how the pie is divided,and efficiency refers to the size of the economic pie.

Accepted Answer

A) True 
 B)False

Question 7

What is the income of a typical worker in a country most closely linked to

Accepted Answer

A) population 
B) productivity 
C) the number of labour unions 
D) government policies 
A) population 
B) productivity 
C) the number of labour unions 
D) government policies

Question 8

Which situation best illustrates a marginal change

Accepted Answer

A) Nancy retires and takes a part-time job.She was working 40 hours per week, but now works 10 hours per week. 
B) Provincial University has announced that due to provincial budget deficits, tuition must rise by 25% next year. 
C) Adam moved from Edmonton to Toronto and now pays 40% more for rent than before. 
D) Banff, which usually receives 600 cm of snow per year, received 620cm last year. 
A) Nancy retires and takes a part-time job.She was working 40 hours per week, but now works 10 hours per week. 
B) Provincial University has announced that due to provincial budget deficits, tuition must rise by 25% next year. 
C) Adam moved from Edmonton to Toronto and now pays 40% more for rent than before. 
D) Banff, which usually receives 600 cm of snow per year, received 620cm last year.

Question 9

Tim has spent $2500 purchasing and repairing a Hummer,which he expects to sell for $3500.He discovers that he needs an additional repair,which will cost $1100.He can sell the Hummer as it is now for $900.What should he do

Accepted Answer

A) He should take the $900. 
B) He should never sell something for less than it cost. 
C) He should complete the repairs and sell the Hummer. 
D) It doesn't matter which action he takes; the outcome is the same either way. 
A) He should take the $900. 
B) He should never sell something for less than it cost. 
C) He should complete the repairs and sell the Hummer. 
D) It doesn't matter which action he takes; the outcome is the same either way.

Question 10

Which policy target will NOT affect the combination of inflation and unemployment the economy experiences

Accepted Answer

A) taxes 
B) government spending 
C) the money supply 
D) market prices 
A) taxes 
B) government spending 
C) the money supply 
D) market prices

Question 11

Market failure refers to a situation in which the market does not allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 12

In 2014,what was the average Canadian income

Accepted Answer

A) $25,368 
B) $29,000 
C) $36,800 
D) $49,000 
A) $25,368 
B) $29,000 
C) $36,800 
D) $49,000

Question 13

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided to take the job

Accepted Answer

A) The marginal cost of leaving was greater than the marginal benefit. 
B) The marginal benefit of leaving was greater than the marginal cost. 
C) The marginal benefit of teaching was greater than the marginal cost. 
D) The marginal cost of teaching was greater than the marginal benefit. 
A) The marginal cost of leaving was greater than the marginal benefit. 
B) The marginal benefit of leaving was greater than the marginal cost. 
C) The marginal benefit of teaching was greater than the marginal cost. 
D) The marginal cost of teaching was greater than the marginal benefit.

Question 14

What is the best example of a marginal change

Accepted Answer

A) After graduating from university, Audrey's income increases from $500 per month to $3000 per month. 
B) In 2015 minimum wage in Saskatchewan increased from $10 per hour to $10.20. 
C) Housing prices in an area increase by 40% when a new highway is built in a small town. 
D) A hard freeze wipes out half of the tobacco crop in Ontario and the price of cigarettes doubles. 
A) After graduating from university, Audrey's income increases from $500 per month to $3000 per month. 
B) In 2015 minimum wage in Saskatchewan increased from $10 per hour to $10.20. 
C) Housing prices in an area increase by 40% when a new highway is built in a small town. 
D) A hard freeze wipes out half of the tobacco crop in Ontario and the price of cigarettes doubles.

Question 15

Murray receives $100 as a birthday gift.In deciding how to spend the money,he narrows his options down to four choices: A,B,C,and D.Each option costs $100,but Murray values each option differently.Finally,he decides on C.What is the opportunity cost of C

Accepted Answer

A) the value to him of the option he would have chosen if C was not available 
B) the value to him of options A, B, and D combined 
C) $300 
D) $100 
A) the value to him of the option he would have chosen if C was not available 
B) the value to him of options A, B, and D combined 
C) $300 
D) $100

Question 16

What would happen if the world's resources were to suddenly double

Accepted Answer

A) The scarcity principle would still apply. 
B) The scarcity principle would not be relevant. 
C) Everyone's wants would be met. 
D) No tradeoffs would be needed. 
A) The scarcity principle would still apply. 
B) The scarcity principle would not be relevant. 
C) Everyone's wants would be met. 
D) No tradeoffs would be needed.

Question 17

Mallory decides to spend three hours working overtime rather than watching Netflix with her friends.She earns $9 an hour.What is her opportunity cost of working

Accepted Answer

A) the $27 she earns working 
B) the $27 minus the enjoyment she would have received from watching Netflix 
C) the enjoyment she would have received had she watched Netflix 
D) nothing, because she would have received less than $27 of enjoyment from Netflix 
A) the $27 she earns working 
B) the $27 minus the enjoyment she would have received from watching Netflix 
C) the enjoyment she would have received had she watched Netflix 
D) nothing, because she would have received less than $27 of enjoyment from Netflix

Question 18

In Canada,incomes have historically grown about 2% per year.At this rate,how long will it take for incomes to double

Accepted Answer

A) 10 years 
B) 25 years 
C) 35 years 
D) 50 years 
A) 10 years 
B) 25 years 
C) 35 years 
D) 50 years

Question 19

What is the business cycle

Accepted Answer

A) the relationship between unemployment and inflation 
B) the irregular fluctuations in economic activity 
C) the positive relationship between the quantity of money in an economy and inflation 
D) the negative relationship between imports and net exports 
A) the relationship between unemployment and inflation 
B) the irregular fluctuations in economic activity 
C) the positive relationship between the quantity of money in an economy and inflation 
D) the negative relationship between imports and net exports

Question 20

When policymakers make policies that change the costs and benefits that people face,what is the result for society

Accepted Answer

A) people's behaviours are altered 
B) people ignore incentives 
C) inflation occurs 
D) government revenue is reduced 
A) people's behaviours are altered 
B) people ignore incentives 
C) inflation occurs 
D) government revenue is reduced

Exam 1: Ten Principles of Economics

Who coined the term "invisible hand"

How does the invisible hand direct economic activity

What happens when society requires that firms reduce pollution

Which statement best describes the relationship between inflation and unemployment

The government can potentially improve market outcomes if market inequalities or market failure exist.

Equity refers to how the pie is divided,and efficiency refers to the size of the economic pie.

What is the income of a typical worker in a country most closely linked to

Which situation best illustrates a marginal change

Tim has spent $2500 purchasing and repairing a Hummer,which he expects to sell for $3500.He discovers that he needs an additional repair,which will cost $1100.He can sell the Hummer as it is now for $900.What should he do

Which policy target will NOT affect the combination of inflation and unemployment the economy experiences

Market failure refers to a situation in which the market does not allocate resources efficiently.

In 2014,what was the average Canadian income

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided to take the job

What is the best example of a marginal change

Murray receives $100 as a birthday gift.In deciding how to spend the money,he narrows his options down to four choices: A,B,C,and D.Each option costs $100,but Murray values each option differently.Finally,he decides on C.What is the opportunity cost of C

What would happen if the world's resources were to suddenly double

Mallory decides to spend three hours working overtime rather than watching Netflix with her friends.She earns $9 an hour.What is her opportunity cost of working

In Canada,incomes have historically grown about 2% per year.At this rate,how long will it take for incomes to double

What is the business cycle

When policymakers make policies that change the costs and benefits that people face,what is the result for society

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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