Question 1

Which of the following would be studied in a microeconomics course?

Accepted Answer

A) how the economy's total output is measured 
B) the amount of unemployment in Canada 
C) the production decisions made by individual firms 
D) the effect of a recession on the economy 
A) how the economy's total output is measured 
B) the amount of unemployment in Canada 
C) the production decisions made by individual firms 
D) the effect of a recession on the economy

Question 2

If incentives matter,then policies can be used to discourage undesirable behaviour.Which of the following policies would NOT likely help protect wildlife?

Accepted Answer

A) a reduction in the number of park rangers and law enforcement personnel 
B) jail sentences for camping or littering in protected areas 
C) fines on hunting 
D) the provision of additional rangers and law enforcement personnel 
A) a reduction in the number of park rangers and law enforcement personnel 
B) jail sentences for camping or littering in protected areas 
C) fines on hunting 
D) the provision of additional rangers and law enforcement personnel

Question 3

Why is the ceteris paribus assumption important?

Accepted Answer

A) It allows one to separate normative economic issues from positive economic ones. 
B) It allows one to analyze the relationship between two variables apart from the influence of other variables. 
C) It allows one to hold all variables constant so the economy can be carefully observed in a suspended state. 
D) It allows one to generalize from the whole to the individual. 
A) It allows one to separate normative economic issues from positive economic ones. 
B) It allows one to analyze the relationship between two variables apart from the influence of other variables. 
C) It allows one to hold all variables constant so the economy can be carefully observed in a suspended state. 
D) It allows one to generalize from the whole to the individual.

Question 4

If Xavier gives up a job in which he earns $23 000 per year in order to go to college full time,his forgone income is part of the opportunity cost of going to college.

Accepted Answer

A) True 
 B)False

Question 5

Small,developing countries must first become self-sufficient before they can benefit from international trade.

Accepted Answer

A) True 
 B)False

Question 6

Under what circumstance does a country specialize in order to use resources more efficiently?

Accepted Answer

A) when there is comparative advantage in production 
B) when there is an absolute advantage in production 
C) when there is disincentive to trade with others 
D) when there is a higher opportunity cost to trade with others 
A) when there is comparative advantage in production 
B) when there is an absolute advantage in production 
C) when there is disincentive to trade with others 
D) when there is a higher opportunity cost to trade with others

Question 7

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 8

Which of the following statements about microeconomics is the most accurate?

Accepted Answer

A) It is a "positive" science, whereas macroeconomics is a "normative" science. 
B) It provides an overall view of the economy and how it functions. 
C) It explores the behaviour of individual consumers and firms when confronted with scarcity. 
D) It examines the aggregate behaviour of consumers and firms when confronted with scarcity. 
A) It is a "positive" science, whereas macroeconomics is a "normative" science. 
B) It provides an overall view of the economy and how it functions. 
C) It explores the behaviour of individual consumers and firms when confronted with scarcity. 
D) It examines the aggregate behaviour of consumers and firms when confronted with scarcity.

Question 9

The fallacy of composition states that even if something is true for an individual,it is not necessarily true for many individuals as a group.

Accepted Answer

A) True 
 B)False

Question 10

The main concern of economics is to study how well the stock markets are performing.

Accepted Answer

A) True 
 B)False

Question 11

Despite the warning on a package of cigarettes about the potential health hazards of smoking,a man lights up a cigarette.What would an economist conclude?

Accepted Answer

A) In the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost. 
B) In the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit. 
C) The man is behaving irrationally. 
D) The man has a positive marginal benefit. 
A) In the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost. 
B) In the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit. 
C) The man is behaving irrationally. 
D) The man has a positive marginal benefit.

Question 12

TABLE 1-5
  
-Refer to Table 1-5.What does this table demonstrate about price and quantity at each combination?

Accepted Answer

A) They are uncorrelated. 
B) They are inversely related. 
C) They have no effect on each other. 
D) They are positively related. 
A) They are uncorrelated. 
B) They are inversely related. 
C) They have no effect on each other. 
D) They are positively related.

Question 13

What does scarcity imply?

Accepted Answer

A) At current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. 
B) It is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. 
C) Consumers are too poor to afford the goods and services available. 
D) Consumers would be willing to purchase the same quantity of a good at a higher price. 
A) At current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. 
B) It is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. 
C) Consumers are too poor to afford the goods and services available. 
D) Consumers would be willing to purchase the same quantity of a good at a higher price.

Question 14

"The hotter it gets,the more water people drink." What type of relationship,if any,does this statement imply?

Accepted Answer

A) There is no relationship. 
B) There is an unequal relationship. 
C) There is a negative slope. 
D) There is a positive slope. 
A) There is no relationship. 
B) There is an unequal relationship. 
C) There is a negative slope. 
D) There is a positive slope.

Question 15

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a romantic date.Which of the following is the likely outcome of this offer?

Accepted Answer

A) It will decrease the opportunity cost of going on the date, since Lance really needs the money. 
B) It will increase the opportunity cost of going on the date. 
C) It will not affect the opportunity cost of going on the date. 
D) It will reduce the opportunity cost of going on the date because giving up the additional work dollars will make his girlfriend feel even more appreciated. 
A) It will decrease the opportunity cost of going on the date, since Lance really needs the money. 
B) It will increase the opportunity cost of going on the date. 
C) It will not affect the opportunity cost of going on the date. 
D) It will reduce the opportunity cost of going on the date because giving up the additional work dollars will make his girlfriend feel even more appreciated.

Question 16

What causes scarcity?

Accepted Answer

A) the allocation of goods by prices 
B) specialization and division of labour 
C) unlimited wants and limited resources 
D) the market mechanism 
A) the allocation of goods by prices 
B) specialization and division of labour 
C) unlimited wants and limited resources 
D) the market mechanism

Question 17

What is the term for the branch of economics that studies the economy as a whole?

Accepted Answer

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

Question 18

Identify the error in judgment in each of the following statements:
I."If you leave a concert during the encore,you will avoid traffic and get home more rapidly; therefore,everyone should leave during the encore."
II."Whenever I wear my lucky baseball cap to an exam,I receive an "A." My baseball cap must induce the teacher to give me good grades."

Accepted Answer

Statement I is an example of t

Question 19

What does scarcity result from?

Accepted Answer

A) government decision making 
B) positive economics 
C) wants that exceed the resources necessary to provide them 
D) inappropriate normative judgments 
A) government decision making 
B) positive economics 
C) wants that exceed the resources necessary to provide them 
D) inappropriate normative judgments

Question 20

Why is it important to be able to distinguish positive from normative statements about economic policy?

Accepted Answer

A) Positive statements are always true and are the basis of economic policy while normative statements are false and should never be used. 
B) Positive statements help us understand the good results of a policy change, and normative statements help us understand the negative results. 
C) Positive statements help us understand the value judgements towards a particular policy, while normative statements reflect the economy's response. 
D) Positive statements help us understand the economy's response to a particular policy, while normative statements reflect value judgments. 
A) Positive statements are always true and are the basis of economic policy while normative statements are false and should never be used. 
B) Positive statements help us understand the good results of a policy change, and normative statements help us understand the negative results. 
C) Positive statements help us understand the value judgements towards a particular policy, while normative statements reflect the economy's response. 
D) Positive statements help us understand the economy's response to a particular policy, while normative statements reflect value judgments.

Which of the following would be studied in a microeconomics course?

If incentives matter,then policies can be used to discourage undesirable behaviour.Which of the following policies would NOT likely help protect wildlife?

Why is the ceteris paribus assumption important?

If Xavier gives up a job in which he earns $23 000 per year in order to go to college full time,his forgone income is part of the opportunity cost of going to college.

Small,developing countries must first become self-sufficient before they can benefit from international trade.

Under what circumstance does a country specialize in order to use resources more efficiently?

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

Which of the following statements about microeconomics is the most accurate?

The fallacy of composition states that even if something is true for an individual,it is not necessarily true for many individuals as a group.

The main concern of economics is to study how well the stock markets are performing.

Despite the warning on a package of cigarettes about the potential health hazards of smoking,a man lights up a cigarette.What would an economist conclude?

TABLE 1-5 -Refer to Table 1-5.What does this table demonstrate about price and quantity at each combination?

What does scarcity imply?

"The hotter it gets,the more water people drink." What type of relationship,if any,does this statement imply?

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a romantic date.Which of the following is the likely outcome of this offer?

What causes scarcity?

What is the term for the branch of economics that studies the economy as a whole?

What does scarcity result from?

Why is it important to be able to distinguish positive from normative statements about economic policy?

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 would be studied in a microeconomics course?

If incentives matter,then policies can be used to discourage undesirable behaviour.Which of the following policies would NOT likely help protect wildlife?

Why is the ceteris paribus assumption important?

If Xavier gives up a job in which he earns $23 000 per year in order to go to college full time,his forgone income is part of the opportunity cost of going to college.

Small,developing countries must first become self-sufficient before they can benefit from international trade.

Under what circumstance does a country specialize in order to use resources more efficiently?

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

Which of the following statements about microeconomics is the most accurate?

The fallacy of composition states that even if something is true for an individual,it is not necessarily true for many individuals as a group.

The main concern of economics is to study how well the stock markets are performing.

Despite the warning on a package of cigarettes about the potential health hazards of smoking,a man lights up a cigarette.What would an economist conclude?

TABLE 1-5 -Refer to Table 1-5.What does this table demonstrate about price and quantity at each combination?

What does scarcity imply?

"The hotter it gets,the more water people drink." What type of relationship,if any,does this statement imply?

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a romantic date.Which of the following is the likely outcome of this offer?

What causes scarcity?

What is the term for the branch of economics that studies the economy as a whole?

What does scarcity result from?

Why is it important to be able to distinguish positive from normative statements about economic policy?

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