Question 1

The difference between a straight-line production possibilities frontier and one that is concave is that:

Accepted Answer

A)   the concave production possibilities frontier exhibits constant opportunity costs, while the straight line frontier does not.
B)   the concave frontier reflects the problem of scarcity but the straight line frontier does not.
C)   the straight line frontier reflects constant opportunity costs but the concave frontier does not.
D)   neither the straight line nor the concave frontier reflect output limits.E) None of the above
F) A) and B)

Question 2

Dynamic aspects of resource allocations help us to understand all of the following issues, except one. Which is the exception?

Accepted Answer

A)   Why some economies grow at a faster rate than others?
B)   Why some economies are stagnant?
C)   Why some economies have higher savings and investments than others?
D)   Why some economies have stronger governmental regulations than others?E) A) and B)
F) B) and C)

Question 3

All of the following, except one, are normative statements. Which is the exception?

Accepted Answer

A)   The government should lower the goods and services tax (GST) .
B)   There should be more advertisements to discourage smoking among teenagers.
C)   The degree of monopoly in our economy has been increasing in the last ten years.
D)   The government needs to balance the budget this year.E) A) and C)
F) A) and D)

Question 4

On October 20, 1987, some financial newspapers wrote editorials commenting on one of the worst stock market crashes in a century. Many offered suggestions about what the government should do in order to prevent a recession. These editorials were examples of:

Accepted Answer

A)   positive economics.
B)   microeconomics.
C)   normative economics.
D)   applied economics.E) A) and B)
F) B) and C)

Question 5

When an economy is achieving economic efficiency and is operating on its production possibilities frontier, it is possible to increase production.

Accepted Answer

A) True 
 B)False

Question 6

A pure command economy is best characterized by:

Accepted Answer

A)   a rather large degree of market activities.
B)   citizens owning and supplying the factors of production.
C)   the "invisible hand" concept.
D)   a strong central government deciding what, how, and for whom to produce.E) A) and D)
F) None of the above

Question 7

Microeconomics studies all of the following except:

Accepted Answer

A)   the consumption behaviour of an individual household.
B)   why a dozen fresh eggs costs less than a dozen fresh shrimp.
C)   the effect of price supports on the supply of milk.
D)   the effect of a tax cut on the nation's spendable income.E) B) and D)
F) B) and C)

Question 8

The number of Canadian households with access to the Internet and those with broadband connections is growing rapidly. As an economist, one could predict that when a major purchase is being considered, families will:

Accepted Answer

A)   collect as much information as humanly possible beforehand.
B)   always buy online.
C)   never buy online.
D)   collect more information beforehand because the cost of finding and acquiring it is lower.E) A) and B)
F) None of the above

Question 9

What does the expression 'invisible hand' denote in economics?

Accepted Answer

This expression means that there is a gu...

Question 10

Maria spends her afternoon at the beach, paying $2 to rent a beach umbrella and $10 for food and drinks rather than spending an equal amount of money to go to a movie. The opportunity cost of going to the beach is:

Accepted Answer

A)   zero, because she got food, drinks, and an umbrella in return for the money.
B)   the $12 she spent on the umbrella, food, and drinks.
C)   only $2 because she would have spent the money on food, and drinks whether or not she went to the beach.
D)   the movie she missed seeing plus the $12 she spent on the umbrella, food and drinks.E) A) and B)
F) All of the above

Question 11

The table indicates production possibilities with given resources.
 
-Which of the following statements is false?

Accepted Answer

A)   Country A has comparative advantage in food and the country B has a comparative advantage in film.
B)   Country B has comparative advantage in food and the country A has a comparative advantage in film.
C)   The country A should specialize in films.
D)   The country B should specialize in food.E) A) and D)
F) None of the above

Question 12

Understanding how individuals make economic decisions is an example of:

Accepted Answer

A)   undertaking normative economic analysis.
B)   undertaking positive economic analysis.
C)   making a choice at the margin.
D)   undertaking microeconomic analysis.E) None of the above
F) B) and D)

Question 13

The table indicates production possibilities with given resources.
 
-Which of the following statements is false?

Accepted Answer

A)   The opportunity cost one unit of food is one unit of film in country A.
B)   The opportunity cost one unit of food is one unit of film in country B.
C)   The opportunity cost one unit of film is one unit of food in country A.
D)   The opportunity cost one unit of film is two units of food in country BE) None of the above
F) C) and D)

Question 14

The study of the complete interaction of the economy as a whole is:

Accepted Answer

A)   macroeconomics.
B)   microeconomics.
C)   ergonomics.
D)   econometrics.E) B) and C)
F) A) and B)

Question 15

Which of the following statements is false?

Accepted Answer

A)   In most western economies, markets play a central role in allocating resources among competing uses.
B)   In a market economy, prices do not play an important role in allocating of society's scarce resources.
C)   Markets can answer the "what," "how," and "for whom" questions faced by every society.
D)   Markets consist of both buyers and sellers of a good or service.E) B) and D)
F) All of the above

Question 16

A price system depends on the buying and selling of goods and services to allocate resources.

Accepted Answer

A) True 
 B)False

Question 17

Public policy can play at best a marginal role in improving the performance of the economy.

Accepted Answer

A) True 
 B)False

Question 18

What is economics sometimes called?

Accepted Answer

A)   The science of choice.
B)   The most scientific of all sciences.
C)   The enlightened discipline.
D)   Practical subject.E) C) and D)
F) B) and D)

Question 19

Marginalist thinking means that economists have a marginal impact on public policy.

Accepted Answer

A) True 
 B)False

Question 20

Global warming is a world responsibility and therefore the Canadian government should not involve itself in the matter.

Accepted Answer

A) True 
 B)False

Exam 1: Introduction to Key Ideas

Understanding how individuals make economic decisions is an example of:

Correct AnswerverifiedShow Answer

The number of Canadian households with access to the Internet and those with broadband connections is growing rapidly. As an economist, one could predict that when a major purchase is being considered, families will:

Correct AnswerverifiedShow Answer

The table indicates production possibilities with given resources. -Which of the following statements is false?

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The difference between a straight-line production possibilities frontier and one that is concave is that:

Correct AnswerverifiedShow Answer

Marginalist thinking means that economists have a marginal impact on public policy.

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Microeconomics studies all of the following except:

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All of the following, except one, are normative statements. Which is the exception?

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A pure command economy is best characterized by:

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A price system depends on the buying and selling of goods and services to allocate resources.

Correct AnswerverifiedShow Answer

What does the expression 'invisible hand' denote in economics?

Correct AnswerverifiedThis expression means that there is a gu...View AnswerShow Answer

On October 20, 1987, some financial newspapers wrote editorials commenting on one of the worst stock market crashes in a century. Many offered suggestions about what the government should do in order to prevent a recession. These editorials were examples of:

Correct AnswerverifiedShow Answer

Public policy can play at best a marginal role in improving the performance of the economy.

Correct AnswerverifiedShow Answer

The study of the complete interaction of the economy as a whole is:

Correct AnswerverifiedShow Answer

The table indicates production possibilities with given resources. -Which of the following statements is false?

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Maria spends her afternoon at the beach, paying $2 to rent a beach umbrella and $10 for food and drinks rather than spending an equal amount of money to go to a movie. The opportunity cost of going to the beach is:

Correct AnswerverifiedShow Answer

Global warming is a world responsibility and therefore the Canadian government should not involve itself in the matter.

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What is economics sometimes called?

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Which of the following statements is false?

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Dynamic aspects of resource allocations help us to understand all of the following issues, except one. Which is the exception?

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When an economy is achieving economic efficiency and is operating on its production possibilities frontier, it is possible to increase production.

Correct AnswerverifiedShow Answer

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This expression means that there is a gu...
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