Question 1

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 2

Economics is the study of how fairly goods and services are distributed within society.

Accepted Answer

A) True 
 B)False

Question 3

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Accepted Answer

A) Equity is increased 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 is increased 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 4

Mike has spent $800 purchasing and repairing an old motorcycle, which he expects to sell for $1200 once the repairs are complete. He discovers that he needs an additional repair, which will cost $200, in order to complete the repairs. He can sell the motorcycle as it is now for $400. What should he do?

Accepted Answer

A) He should cut his losses and take the $400. 
B) He should never sell something for less than it cost. 
C) He should complete the repairs and sell the motorcycle. 
D) It doesn't matter which action he takes; the outcome is the same either way. 
A) He should cut his losses and take the $400. 
B) He should never sell something for less than it cost. 
C) He should complete the repairs and sell the motorcycle. 
D) It doesn't matter which action he takes; the outcome is the same either way.

Question 5

Which of the following is NOT a major area of study for economists?

Accepted Answer

A) how people make decisions 
B) how countries choose national leaders 
C) how people interact with each other 
D) how forces and trends affect the overall economy 
A) how people make decisions 
B) how countries choose national leaders 
C) how people interact with each other 
D) how forces and trends affect the overall economy

Question 6

What has been the result of laws requiring that drivers wear seat belts?

Accepted Answer

A) a reduction in both driver deaths and pedestrian deaths 
B) fewer accidents and fewer deaths per accident 
C) fewer driver deaths, fewer accidents, and fewer pedestrian deaths 
D) little change in the number of driver deaths, but more accidents and more pedestrian deaths 
A) a reduction in both driver deaths and pedestrian deaths 
B) fewer accidents and fewer deaths per accident 
C) fewer driver deaths, fewer accidents, and fewer pedestrian deaths 
D) little change in the number of driver deaths, but more accidents and more pedestrian deaths

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

In a market economy, what do prices reflect?

Accepted Answer

A) the popularity of a good in society 
B) the cost to society of making the good 
C) the quantity society will ultimately choose to produce 
D) the level of wealth in society 
A) the popularity of a good in society 
B) the cost to society of making the good 
C) the quantity society will ultimately choose to produce 
D) the level of wealth in society

Question 9

When the government redistributes income from the rich to the poor, what is the result?

Accepted Answer

A) Efficiency is improved, but equity is not. 
B) Both rich people and poor people benefit directly. 
C) People work less and produce fewer goods and services. 
D) Rich people consume fewer goods, but poor people consume more goods, resulting in no real change. 
A) Efficiency is improved, but equity is not. 
B) Both rich people and poor people benefit directly. 
C) People work less and produce fewer goods and services. 
D) Rich people consume fewer goods, but poor people consume more goods, resulting in no real change.

Question 10

What do economists illustrate when they use the phrase "There is no such thing as a free lunch"?

Accepted Answer

A) how inflation increases prices 
B) that to get one thing, we must give up something else 
C) that nothing is free in a market economy 
D) that if something looks too good to be true, it probably is 
A) how inflation increases prices 
B) that to get one thing, we must give up something else 
C) that nothing is free in a market economy 
D) that if something looks too good to be true, it probably is

Question 11

What was inflation in Canada in the 1990s?

Accepted Answer

A) almost zero 
B) about 2 percent per year 
C) approached double digits 
D) caused by too much consumer spending 
A) almost zero 
B) about 2 percent per year 
C) approached double digits 
D) caused by too much consumer spending

Question 12

According to Adam Smith, what is the success of decentralized market economies primarily due to?

Accepted Answer

A) the basic benevolence of society 
B) society's justice (legal) system 
C) individuals' self-interest 
D) basic human survival instincts 
A) the basic benevolence of society 
B) society's justice (legal) system 
C) individuals' self-interest 
D) basic human survival instincts

Question 13

When does scarcity exist?

Accepted Answer

A) when there is less than an infinite amount of a resource or good 
B) when society can meet the wants of every individual 
C) when there is less of a good or resource available than people wish to have 
D) when the government fails to produce goods 
A) when there is less than an infinite amount of a resource or good 
B) when society can meet the wants of every individual 
C) when there is less of a good or resource available than people wish to have 
D) when the government fails to produce goods

Question 14

When government policies such as the welfare system try to help the neediest members of society, what happens?

Accepted Answer

A) It increases equity and reduces efficiency. 
B) It reduces charitable contributions in an economy. 
C) It increases the productivity of the needy in the society. 
D) It causes market failure to occur. 
A) It increases equity and reduces efficiency. 
B) It reduces charitable contributions in an economy. 
C) It increases the productivity of the needy in the society. 
D) It causes market failure to occur.

Question 15

Which of the following businesses most likely has market power?

Accepted Answer

A) a furniture store in Kingston 
B) a vineyard in the Okanagan Valley 
C) a maple sugar candy store in Sherbrooke, Quebec 
D) a hospital in Nelson, British Columbia 
A) a furniture store in Kingston 
B) a vineyard in the Okanagan Valley 
C) a maple sugar candy store in Sherbrooke, Quebec 
D) a hospital in Nelson, British Columbia

Question 16

Paul receives $300 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices, Option A, Option B, Option C, and Option D. Each option costs $200. Finally he decides on Option B. What is the opportunity cost of Option B?

Accepted Answer

A) the value to him of the Option he would have chosen if Option B were not available 
B) the value to him of Options A, C, and D combined 
C) $300 
D) $200 
A) the value to him of the Option he would have chosen if Option B were not available 
B) the value to him of Options A, C, and D combined 
C) $300 
D) $200

Question 17

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

Question 18

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 19

Which of the following is most likely to generate an externality?

Accepted Answer

A) Teachers at a local high school have pizza delivered every Friday for lunch. 
B) A young man from a small town attends medical school to become a doctor. 
C) A newlywed couple buys a TV for their family room. 
D) John buys a tractor to mow his newly purchased 5-acre lot. 
A) Teachers at a local high school have pizza delivered every Friday for lunch. 
B) A young man from a small town attends medical school to become a doctor. 
C) A newlywed couple buys a TV for their family room. 
D) John buys a tractor to mow his newly purchased 5-acre lot.

Question 20

Which of the following statements about trade is NOT true?

Accepted Answer

A) Trade increases competition. 
B) One country wins and one country loses. 
C) Canada can benefit from trade with any country. 
D) Trade allows people to buy a greater variety of goods and services at lower cost. 
A) Trade increases competition. 
B) One country wins and one country loses. 
C) Canada can benefit from trade with any country. 
D) Trade allows people to buy a greater variety of goods and services at lower cost.

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

Economics is the study of how fairly goods and services are distributed within society.

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Which of the following is NOT a major area of study for economists?

What has been the result of laws requiring that drivers wear seat belts?

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

In a market economy, what do prices reflect?

When the government redistributes income from the rich to the poor, what is the result?

What do economists illustrate when they use the phrase "There is no such thing as a free lunch"?

What was inflation in Canada in the 1990s?

According to Adam Smith, what is the success of decentralized market economies primarily due to?

When does scarcity exist?

When government policies such as the welfare system try to help the neediest members of society, what happens?

Which of the following businesses most likely has market power?

Paul receives $300 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices, Option A, Option B, Option C, and Option D. Each option costs $200. Finally he decides on Option B. What is the opportunity cost of Option B?

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

What is market power?

Which of the following is most likely to generate an externality?

Which of the following statements about trade is NOT true?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 1: Ten Principles of Economics

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

Economics is the study of how fairly goods and services are distributed within society.

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Which of the following is NOT a major area of study for economists?

What has been the result of laws requiring that drivers wear seat belts?

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

In a market economy, what do prices reflect?

When the government redistributes income from the rich to the poor, what is the result?

What do economists illustrate when they use the phrase "There is no such thing as a free lunch"?

What was inflation in Canada in the 1990s?

According to Adam Smith, what is the success of decentralized market economies primarily due to?

When does scarcity exist?

When government policies such as the welfare system try to help the neediest members of society, what happens?

Which of the following businesses most likely has market power?

Paul receives $300 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices, Option A, Option B, Option C, and Option D. Each option costs $200. Finally he decides on Option B. What is the opportunity cost of Option B?

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

What is market power?

Which of the following is most likely to generate an externality?

Which of the following statements about trade is NOT true?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters