Question 1

Which of the following is most likely to be a marginal change?

Accepted Answer

A)  doubling the number of fishing boats in a fishery 
B)  increasing the length of all fishing boats by 50 per cent 
C)  comparing fishing technology now, to that used 50 years ago 
D)  increasing a six-month fishing season by one week 
A)  doubling the number of fishing boats in a fishery 
B)  increasing the length of all fishing boats by 50 per cent 
C)  comparing fishing technology now, to that used 50 years ago 
D)  increasing a six-month fishing season by one week D

Question 2

Societies face trade-offs because of scientific improvements to technology.

Accepted Answer

A) True 
 B)False  True

Question 3

Public policies to reduce emissions from cars do not affect the private costs and benefits of driving cars.

Accepted Answer

A) True 
 B)False  False

Question 4

From an economic point of view for most students, the largest single cost of a university education is:

Accepted Answer

A)  transportation, parking and entertainment 
B)  tuition fees and books 
C)  the wages given up to attend university 
D)  room and board 
A)  transportation, parking and entertainment 
B)  tuition fees and books 
C)  the wages given up to attend university 
D)  room and board

Question 5

Productivity is defined as the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 6

Adam Smith used the term 'invisible hand' in his 1776 book The Wealth of Nations. Prices are the instrument with which the 'invisible hand' directs economic activity in a market economy. Explain.

Accepted Answer

Because households and firms look at pri

Question 7

The opportunity cost of consuming a unit of good X is the amount of resources that must be devoted to its production.

Accepted Answer

A) True 
 B)False

Question 8

Two important causes of market failure are:

Accepted Answer

A)  externalities and market power 
B)  externalities and increases in prices 
C)  market power and increases in poverty 
D)  increases in poverty and increases in prices 
A)  externalities and market power 
B)  externalities and increases in prices 
C)  market power and increases in poverty 
D)  increases in poverty and increases in prices

Question 9

The study of economics is concerned with:

Accepted Answer

A)  keeping private businesses from losing money 
B)  demonstrating that capitalistic economies are superior to socialistic economies 
C)  how society manages its scarce resources 
D)  determining the most equitable distribution of society's output 
A)  keeping private businesses from losing money 
B)  demonstrating that capitalistic economies are superior to socialistic economies 
C)  how society manages its scarce resources 
D)  determining the most equitable distribution of society's output

Question 10

You have spent $500 purchasing and repairing an old car which you expect to sell for $800 once the repairs are complete. You discover that you need an additional part, which will cost $400, including labour, in order to complete the repairs. You can sell the car as it is now for $300. What should you do?

Accepted Answer

A)  you should never sell something for less than it costs 
B)  you should cut your losses and take the $300 
C)  you should complete the repairs and sell the car 
D)  it doesn't matter which action you take; the outcome is the same either way 
A)  you should never sell something for less than it costs 
B)  you should cut your losses and take the $300 
C)  you should complete the repairs and sell the car 
D)  it doesn't matter which action you take; the outcome is the same either way

Question 11

The word 'economy' comes from the Greek word for:

Accepted Answer

A)  'one who manages a household' 
B)  'one who participates in a market' 
C)  'environment' 
D)  'conservation' 
A)  'one who manages a household' 
B)  'one who participates in a market' 
C)  'environment' 
D)  'conservation'

Question 12

An 'increase in efficiency' suggests that an economy:

Accepted Answer

A)  is using more costly production techniques 
B)  has decided to produce more luxury goods 
C)  is able to get less goods and services from a given amount of resources 
D)  is able to get more goods and services from a given amount of resources 
A)  is using more costly production techniques 
B)  has decided to produce more luxury goods 
C)  is able to get less goods and services from a given amount of resources 
D)  is able to get more goods and services from a given amount of resources

Question 13

Economists agree that monetary and fiscal policy, although not very powerful, are necessary instruments for controlling the economy.

Accepted Answer

A) True 
 B)False

Question 14

If a uranium mine does not bear the entire cost of cleaning up its waste then it will:

Accepted Answer

A)  clean up its waste so others are not exposed to it 
B)  reduce the volume of waste it produces 
C)  generates an acceptable level of waste 
D)  generate an excessive level of waste 
A)  clean up its waste so others are not exposed to it 
B)  reduce the volume of waste it produces 
C)  generates an acceptable level of waste 
D)  generate an excessive level of waste

Question 15

The opportunity cost of something is not what you give up to get something else.

Accepted Answer

A) True 
 B)False

Question 16

Lead used to be added to petrol to make the engine operate smoothly. Lead is also an atmospheric pollutant and it has been banned as an additive. Was there an economic justification for this ban by the government?

Accepted Answer

Leaded petrol produced an exte

Question 17

Which of the following is the best statement about markets?

Accepted Answer

A)  markets are usually a good way to organise economic activity 
B)  markets are usually inferior to central planning as a way to organise economic activity 
C)  markets are flawed and are therefore not an acceptable way to organise economic activity 
D)  markets are a good way to organise economic activity in developed nations, but not in less-developed nations 
A)  markets are usually a good way to organise economic activity 
B)  markets are usually inferior to central planning as a way to organise economic activity 
C)  markets are flawed and are therefore not an acceptable way to organise economic activity 
D)  markets are a good way to organise economic activity in developed nations, but not in less-developed nations

Question 18

A monopolist has limited market power.

Accepted Answer

A) True 
 B)False

Question 19

A benefit of trade is that it permits two parties to specialise in those tasks in which they have the highest productivity.

Accepted Answer

A) True 
 B)False

Question 20

People make decisions at the margin by:

Accepted Answer

A)  following tradition 
B)  comparing costs and benefits 
C)  experience 
D)  calculating dollar costs 
A)  following tradition 
B)  comparing costs and benefits 
C)  experience 
D)  calculating dollar costs

Exam 1: Ten Lessons From Economics

Which of the following is most likely to be a marginal change?

Societies face trade-offs because of scientific improvements to technology.

Public policies to reduce emissions from cars do not affect the private costs and benefits of driving cars.

From an economic point of view for most students, the largest single cost of a university education is:

Productivity is defined as the quantity of goods and services produced from each hour of a worker's time.

Adam Smith used the term 'invisible hand' in his 1776 book The Wealth of Nations. Prices are the instrument with which the 'invisible hand' directs economic activity in a market economy. Explain.

The opportunity cost of consuming a unit of good X is the amount of resources that must be devoted to its production.

Two important causes of market failure are:

The study of economics is concerned with:

The word 'economy' comes from the Greek word for:

An 'increase in efficiency' suggests that an economy:

Economists agree that monetary and fiscal policy, although not very powerful, are necessary instruments for controlling the economy.

If a uranium mine does not bear the entire cost of cleaning up its waste then it will:

The opportunity cost of something is not what you give up to get something else.

Lead used to be added to petrol to make the engine operate smoothly. Lead is also an atmospheric pollutant and it has been banned as an additive. Was there an economic justification for this ban by the government?

Which of the following is the best statement about markets?

A monopolist has limited market power.

A benefit of trade is that it permits two parties to specialise in those tasks in which they have the highest productivity.

People make decisions at the margin by:

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

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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