Question 1

When is a good considered scarce in a society

Accepted Answer

A)  when more output of the good is possible
B)  when everyone in that society cannot have all they want of the good
C)  when the government restricts production of the good
D)  when only the richest people in the economy can buy all they want of the good

Question 2

How do prices direct economic activity in a market economy

Accepted Answer

A)  by influencing the actions of buyers and sellers
B)  by reducing scarcity of the goods and services produced
C)  by eliminating the need for government intervention
D)  by allocating goods and services produced in the most equitable way

Question 3

What is the effect of a trade between Canada and India

Accepted Answer

A)  benefits for both Canada and India
B)  a losing proposition for Canada because India has cheaper labour
C)  trade between the two countries would be inefficient due to the high cost of transporting the goods
D)  a losing proposition for India because Canadian workers are more productive

Question 4

Which of the following is an example of market power

Accepted Answer

A)  a fast food restaurant in a university town
B)  a wheat farmer in Saskatchewan
C)  the only motel is in a remote Yukon town
D)  a shoe store in Ontario

Question 5

Which observation was made famous by Adam Smith in his book The Wealth of Nations

Accepted Answer

A)  There is no such thing as a free lunch.
B)  People buy more when prices are low than when prices are high.
C)  People tend to spend more than they earn.
D)  Markets are guided by an invisible hand that leads to desirable outcomes.

Question 6

What is the definition of inflation

Accepted Answer

A)  a period of rising productivity in the economy
B)  a period of rising income in the economy
C)  an increase in the overall level of output in the economy
D)  an increase in the overall level of prices in the economy

Question 7

In the short run,what does the tenth principle of economics illustrate

Accepted Answer

A)  the tradeoff between inflation and unemployment
B)  the tradeoff between equity and efficiency
C)  labour productivity in an economy
D)  the level of government intervention in a market economy

Question 8

What is the term for what you give up to obtain an item

Accepted Answer

A)  opportunity cost
B)  explicit cost
C)  true cost
D)  direct cost

Question 9

Carol has spent $2000 purchasing and repairing an old car,which she expects to sell for $2400.She discovers that she needs an additional repair,which will cost $400.She can sell the car as it is now for $2000.What should she do

Accepted Answer

A)  She should sell the car now for $2000.
B)  She should never sell something for less than it cost.
C)  She should complete the repairs and sell the car.
D)  It doesn't matter which action she takes; the outcome is the same either way.

Question 10

What does the tenth principle of economics help explain

Accepted Answer

A)  the business cycle
B)  supply and demand
C)  trade balance
D)  money supply changes

Question 11

In which situation would economists use the word equity

Accepted Answer

A)  Each member of society has the same income.
B)  Society is getting the most it can from its scarce resources.
C)  Those in society who have the least will receive the most.
D)  The benefits of society's resources are distributed fairly among society's members.

Question 12

What are economists illustrating 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

Question 13

A typical worker in Italy can produce 24 units of product in an eight-hour day,where a typical worker in Poland produces 25 units of product in a 10-hour day.What can we conclude

Accepted Answer

A)  Worker productivity in Poland is higher than in Italy.
B)  The standard of living will be higher in Italy than in Poland.
C)  Productivity for the Polish worker is three units per hour and 2.5 units per hour for the Italian worker.
D)  There will be no difference between the standard of living in Italy and Poland.

Question 14

The average cost per seat on an airplane trip from Calgary to Kelowna is $250.Suppose no refreshments are served and seven seats are empty.How could the airline company increase its profit

Accepted Answer

A)  if it charged no less than $250 for the seven remaining seats
B)  if it charged more than $250 for the seven remaining seats
C)  if it charged any ticket price above $0 for the remaining seats
D)  if it left the seats empty

Question 15

If Canada decides to trade with Mexico,what do we know about the probable outcome

Accepted Answer

A)  Mexico will be better off, but trade with a less developed country will not help Canada.
B)  It will not benefit Mexico because workers in Canada are more productive.
C)  It will benefit Mexico because workers in Canada are more productive.
D)  Mexico and Canada can both be better off.

Question 16

A friend of yours asks you why market prices are better than government-determined prices.What do you say

Accepted Answer

A)  Because they generally reflect the value of a good to society, but not the cost of making it.
B)  Because they generally reflect the cost to society of making a good, but not its value.
C)  Because they generally reflect both the value of a good to society and the cost of making it.
D)  Because they generally reflect neither the value of a good to society nor the cost of making it.

Question 17

Which statement best describes the concept represented by the adage "There is no such thing as a free lunch"

Accepted Answer

A)  Melissa can only attend the concert if she takes her sister with her.
B)  Greg is hungry and homeless.
C)  Brian must repair the tire on his bike before he can ride it to class.
D)  Olivia must decide between skiing at Whistler or Lake Louise for spring break.

Question 18

A marginal change is a small incremental adjustment to an existing plan of action.

Accepted Answer

A) True 
 B)False

Question 19

Your professor loves her work teaching economics.She has been offered other positions in the corporate world making 25 percent more,but has decided to stay in teaching.What might change her decision

Accepted Answer

A)  if the marginal cost of teaching increased
B)  if the marginal benefit of teaching increased
C)  if the marginal cost of teaching decreased
D)  if the marginal cost of a corporate job increased

Question 20

What is NOT included in the decisions that every society must make

Accepted Answer

A)  what goods will be produced
B)  who will produce the goods
C)  what determines consumer preferences
D)  who will consume the goods

Exam 1: Ten Principles of Economics

In the short run,what does the tenth principle of economics illustrate

Correct AnswerverifiedShow Answer

A friend of yours asks you why market prices are better than government-determined prices.What do you say

Correct AnswerverifiedShow Answer

Which statement best describes the concept represented by the adage "There is no such thing as a free lunch"

Correct AnswerverifiedShow Answer

If Canada decides to trade with Mexico,what do we know about the probable outcome

Correct AnswerverifiedShow Answer

The average cost per seat on an airplane trip from Calgary to Kelowna is $250.Suppose no refreshments are served and seven seats are empty.How could the airline company increase its profit

Correct AnswerverifiedShow Answer

Your professor loves her work teaching economics.She has been offered other positions in the corporate world making 25 percent more,but has decided to stay in teaching.What might change her decision

Correct AnswerverifiedShow Answer

What is the effect of a trade between Canada and India

Correct AnswerverifiedShow Answer

A typical worker in Italy can produce 24 units of product in an eight-hour day,where a typical worker in Poland produces 25 units of product in a 10-hour day.What can we conclude

Correct AnswerverifiedShow Answer

What are economists illustrating when they use the phrase "There is no such thing as a free lunch"

Correct AnswerverifiedShow Answer

Carol has spent $2000 purchasing and repairing an old car,which she expects to sell for $2400.She discovers that she needs an additional repair,which will cost $400.She can sell the car as it is now for $2000.What should she do

Correct AnswerverifiedShow Answer

How do prices direct economic activity in a market economy

Correct AnswerverifiedShow Answer

What is the definition of inflation

Correct AnswerverifiedShow Answer

In which situation would economists use the word equity

Correct AnswerverifiedShow Answer

Which of the following is an example of market power

Correct AnswerverifiedShow Answer

What is the term for what you give up to obtain an item

Correct AnswerverifiedShow Answer

What is NOT included in the decisions that every society must make

Correct AnswerverifiedShow Answer

What does the tenth principle of economics help explain

Correct AnswerverifiedShow Answer

When is a good considered scarce in a society

Correct AnswerverifiedShow Answer

A marginal change is a small incremental adjustment to an existing plan of action.

Correct AnswerverifiedShow Answer

Which observation was made famous by Adam Smith in his book The Wealth of Nations

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified