Question 1

Which of the following statements best describes the problem of scarcity?

Accepted Answer

A) Scarcity means that shortages occur at the existing market price. 
B) It is impossible to satisfy unlimited human wants with limited resources. 
C) When there is scarcity, individuals do not face trade-offs. 
D) As a result of scarcity, individuals do not have the ability to make choices. 
A) Scarcity means that shortages occur at the existing market price. 
B) It is impossible to satisfy unlimited human wants with limited resources. 
C) When there is scarcity, individuals do not face trade-offs. 
D) As a result of scarcity, individuals do not have the ability to make choices.

Question 2

A student football team manager examined variables influencing the team's record and concluded that the best scores resulted when the "third-string" team played the most minutes.Therefore he recommended that the third-string team become the first team.Why is this conclusion probably erroneous?

Accepted Answer

A) He failed to recognize that correlation is not causation. 
B) He did not review the entire game strategy carefully enough. 
C) He committed the fallacy of composition. 
D) He confused positive and normative analysis. 
A) He failed to recognize that correlation is not causation. 
B) He did not review the entire game strategy carefully enough. 
C) He committed the fallacy of composition. 
D) He confused positive and normative analysis.

Question 3

What is the term for the branch of economics that studies the decisions made by individual firms and consumers?

Accepted Answer

A) microeconomics 
B) normative economics 
C) macroeconomics 
D) positive economics 
A) microeconomics 
B) normative economics 
C) macroeconomics 
D) positive economics

Question 4

"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 5

TABLE 1-3
  
-Refer to Table 1-3.If the price of a DVD rental is $4,how many DVDs will a consumer following the rule of rational choice rent per month?

Accepted Answer

A) 2 DVDs 
B) 3 DVDs 
C) 4 DVDs 
D) 5 DVDs 
A) 2 DVDs 
B) 3 DVDs 
C) 4 DVDs 
D) 5 DVDs

Question 6

Which of the following statements about rational choices is the most accurate?

Accepted Answer

A) They can only be made by comparing opportunity cost with the marginal cost. 
B) They are made based on expectations of the additional benefits and additional costs involved. 
C) They are based on a comparison of total benefits and total costs. 
D) They measure benefits based on the past. 
A) They can only be made by comparing opportunity cost with the marginal cost. 
B) They are made based on expectations of the additional benefits and additional costs involved. 
C) They are based on a comparison of total benefits and total costs. 
D) They measure benefits based on the past.

Question 7

What do all economic problems arise from?

Accepted Answer

A) scarcity 
B) too little currency available in circulation 
C) high unemployment rates 
D) competition 
A) scarcity 
B) too little currency available in circulation 
C) high unemployment rates 
D) competition

Question 8

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

Accepted Answer

A) It is identical for all passengers and equal to the number of hours a particular flight takes. 
B) It differs across passengers to the extent that both the airfare paid and the highest valued use of travel time vary. 
C) It is equal to the cost of a bus ticket, the next best form of alternative transportation to flying. 
D) It differs across passengers only to the extent that each traveller pays a different airfare. 
A) It is identical for all passengers and equal to the number of hours a particular flight takes. 
B) It differs across passengers to the extent that both the airfare paid and the highest valued use of travel time vary. 
C) It is equal to the cost of a bus ticket, the next best form of alternative transportation to flying. 
D) It differs across passengers only to the extent that each traveller pays a different airfare.

Question 9

Which of the following statements about positive incentives is the most accurate?

Accepted Answer

A) They create additional taxes on behaviours. 
B) They increase benefits and increase costs 
C) They increase benefits or reduce costs. 
D) They decrease benefits or increase costs. 
A) They create additional taxes on behaviours. 
B) They increase benefits and increase costs 
C) They increase benefits or reduce costs. 
D) They decrease benefits or increase costs.

Question 10

"To do well and be at the top 10 percent of the class,one should study more.If everyone studies more then they all can do well and finish at the top of the class." What is the problem with the logic in this statement?

Accepted Answer

A) There is causation but no correlation. 
B) There is correlation but no causation. 
C) It is a normative statement and should be a positive statement. 
D) There is a fallacy of composition. 
A) There is causation but no correlation. 
B) There is correlation but no causation. 
C) It is a normative statement and should be a positive statement. 
D) There is a fallacy of composition.

Question 11

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.According to economic thinking,what would be the result of this type of legislation?

Accepted Answer

A) It would exert no impact on either the cost of raising children or the birth rate since parenting children is a noneconomic activity. 
B) It would reduce the after-tax cost of raising children and therefore increase the birth rate. 
C) It would make it more expensive for parents to provide for their children. 
D) It would reduce the value of children to their parents and therefore lead to a reduction in the birth rate. 
A) It would exert no impact on either the cost of raising children or the birth rate since parenting children is a noneconomic activity. 
B) It would reduce the after-tax cost of raising children and therefore increase the birth rate. 
C) It would make it more expensive for parents to provide for their children. 
D) It would reduce the value of children to their parents and therefore lead to a reduction in the birth rate.

Question 12

Which of the following statements describing the relationship between theory and hypothesis is most accurate?

Accepted Answer

A) A hypothesis is a theory whose formulation relies on mathematics. 
B) A theory may result from a tested and confirmed hypothesis. 
C) "Theory" and "hypothesis" are interchangeable terms meaning the same thing. 
D) A hypothesis may result from a tested and confirmed theory. 
A) A hypothesis is a theory whose formulation relies on mathematics. 
B) A theory may result from a tested and confirmed hypothesis. 
C) "Theory" and "hypothesis" are interchangeable terms meaning the same thing. 
D) A hypothesis may result from a tested and confirmed theory.

Question 13

What occurs when a person possesses a comparative advantage in the production of one good or service?

Accepted Answer

A) It promotes greater self-sufficiency. 
B) It permits gains from trade to be realized due to a more efficient use of resources. 
C) It discourages specialization. 
D) The person's opportunity cost becomes higher than for that of other goods. 
A) It promotes greater self-sufficiency. 
B) It permits gains from trade to be realized due to a more efficient use of resources. 
C) It discourages specialization. 
D) The person's opportunity cost becomes higher than for that of other goods.

Question 14

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Based on the theory of specialization,why doesn't Sergei make his own clothes?

Accepted Answer

A) Sergei has a comparative advantage in tailoring clothes. 
B) The opportunity cost to him of making his own clothes is very low because it takes away from his lucrative hockey career. 
C) The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
D) Sergei does not face an opportunity cost in this situation since he is good at both activities. 
A) Sergei has a comparative advantage in tailoring clothes. 
B) The opportunity cost to him of making his own clothes is very low because it takes away from his lucrative hockey career. 
C) The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. 
D) Sergei does not face an opportunity cost in this situation since he is good at both activities.

Question 15

How do we measure the slope of a linear curve?

Accepted Answer

A straight-line curve is called a linear

Question 16

A testable proposition that predicts how people will react to changed circumstances is called a hypothesis.

Accepted Answer

A) True 
 B)False

Question 17

Since it is possible to grow coffee in the greenhouses in Canada,we should clearly create a Canadian coffee industry and no longer import coffee from Brazil.

Accepted Answer

A) True 
 B)False

Question 18

"A tax cut will lead to higher inflation" is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 19

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 20

What is included in the opportunity cost of going to college?

Accepted Answer

A) both tuition and the value of the student's time 
B) tuition, but not the value of the student's time, which is a cash cost 
C) tuition, but not the value of the student's time, which is a monetary cost 
D) neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future 
A) both tuition and the value of the student's time 
B) tuition, but not the value of the student's time, which is a cash cost 
C) tuition, but not the value of the student's time, which is a monetary cost 
D) neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future

Which of the following statements best describes the problem of scarcity?

A student football team manager examined variables influencing the team's record and concluded that the best scores resulted when the "third-string" team played the most minutes.Therefore he recommended that the third-string team become the first team.Why is this conclusion probably erroneous?

What is the term for the branch of economics that studies the decisions made by individual firms and consumers?

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

TABLE 1-3 -Refer to Table 1-3.If the price of a DVD rental is $4,how many DVDs will a consumer following the rule of rational choice rent per month?

Which of the following statements about rational choices is the most accurate?

What do all economic problems arise from?

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

Which of the following statements about positive incentives is the most accurate?

"To do well and be at the top 10 percent of the class,one should study more.If everyone studies more then they all can do well and finish at the top of the class." What is the problem with the logic in this statement?

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.According to economic thinking,what would be the result of this type of legislation?

Which of the following statements describing the relationship between theory and hypothesis is most accurate?

What occurs when a person possesses a comparative advantage in the production of one good or service?

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Based on the theory of specialization,why doesn't Sergei make his own clothes?

How do we measure the slope of a linear curve?

A testable proposition that predicts how people will react to changed circumstances is called a hypothesis.

Since it is possible to grow coffee in the greenhouses in Canada,we should clearly create a Canadian coffee industry and no longer import coffee from Brazil.

"A tax cut will lead to higher inflation" is an example of a positive economic statement.

Which description of positive statements is the most accurate?

What is included in the opportunity cost of going to college?

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters

Exam 1: The Role and Method of Economics

Which of the following statements best describes the problem of scarcity?

A student football team manager examined variables influencing the team's record and concluded that the best scores resulted when the "third-string" team played the most minutes.Therefore he recommended that the third-string team become the first team.Why is this conclusion probably erroneous?

What is the term for the branch of economics that studies the decisions made by individual firms and consumers?

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

TABLE 1-3 -Refer to Table 1-3.If the price of a DVD rental is $4,how many DVDs will a consumer following the rule of rational choice rent per month?

Which of the following statements about rational choices is the most accurate?

What do all economic problems arise from?

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

Which of the following statements about positive incentives is the most accurate?

"To do well and be at the top 10 percent of the class,one should study more.If everyone studies more then they all can do well and finish at the top of the class." What is the problem with the logic in this statement?

Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent.According to economic thinking,what would be the result of this type of legislation?

Which of the following statements describing the relationship between theory and hypothesis is most accurate?

What occurs when a person possesses a comparative advantage in the production of one good or service?

Sergei makes millions of dollars a year playing hockey.Sergei is also the best tailor in his hometown in Russia.Based on the theory of specialization,why doesn't Sergei make his own clothes?

How do we measure the slope of a linear curve?

A testable proposition that predicts how people will react to changed circumstances is called a hypothesis.

Since it is possible to grow coffee in the greenhouses in Canada,we should clearly create a Canadian coffee industry and no longer import coffee from Brazil.

"A tax cut will lead to higher inflation" is an example of a positive economic statement.

Which description of positive statements is the most accurate?

What is included in the opportunity cost of going to college?

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters