Question 1

In economics, the place where buyers and sellers come together to trade is called a

Accepted Answer

A)  market.
B)  cooperative.
C)  collective.
D)  trade-off.E) A) and C)
F) B) and C)

Question 2

Trina quits her $90 000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of her decision?

Accepted Answer

A)  Zero since he will no longer be earning a salary.
B)  Depends on the 'going rate' of museum employees.
C)  At least $90 000.
D)  The value he attributes to the joy of working at a museum.E) A) and B)
F) A) and C)

Question 3

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.

Accepted Answer

A)  Two-dimensional graphs
B)  One-dimensional graphs
C)  Pie charts
D)  Bar graphsE) None of the above
F) B) and C)

Question 4

All economic questions arise from the fact that resources are unlimited.

Accepted Answer

A) True 
 B)False

Question 5

A(n) _________________ cost is the highest valued alternative that must be given up to engage in an activity.

Accepted Answer

A)  economic equity
B)  opportunity cost
C)  marginal benefit
D)  marginal costE) A) and C)
F) B) and C)

Question 6

Abigail's Auto Art is a company that applies pinstripes to vehicles. Abigail's cost for a basic 1-colour pinstriping job is $40, and she charges $100 for this service. For a total price of $185, Abigail will apply a fancier 3-colour pinstripe application to an automobile, a service that adds an additional $50 to the total cost of the package. Should Abigail continue to offer the 3-colour pinstripe application?

Accepted Answer

A)  Yes, she still makes a profit by selling the 3-colour application.
B)  Yes, but only if she lowers the price of the 1-colour application.
C)  No, her marginal benefit is less than her marginal cost.
D)  More information is needed for Abigail to make this decision.E) All of the above
F) B) and C)

Question 7

When Mr Riley decides on the companies to which he will donate his time and money, a ________ issue is being addressed.

Accepted Answer

A)  macroeconomic
B)  microeconomic
C)  positive economic
D)  normative economicE) B) and C)
F) A) and B)

Question 8

Jewellery manufacturers produce a range of products such as rings, necklaces, bracelets and brooches. What fundamental economic question are they addressing by offering this range of items?

Accepted Answer

A)  How to produce goods that consumers want?
B)  Why produce a variety of items?
C)  What to produce?
D)  Who to produce the items for?E) B) and C)
F) All of the above

Question 9

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces, then $50 is the marginal cost of producing the fifth necklace.

Accepted Answer

A) True 
 B)False

Question 10

In a modern mixed economy, who decides what goods and services will be produced?

Accepted Answer

A)  only the producers
B)  only consumers
C)  only the government
D)  All of the above.E) B) and D)
F) C) and D)

Question 11

The three fundamental questions that any economy must address are:

Accepted Answer

A)  What will be the prices of goods and services; how will these goods and services be produced; and who will receive them?
B)  What goods and services will be produced; how will these goods and services be produced; and who receives them?
C)  Who gets jobs; what wages do workers earn; and who owns what property?
D)  How much will be saved; what will be produced; and how can these goods and services be fairly distributed?E) C) and D)
F) B) and C)

Question 12

What is the 'omitted variable' problem in determining cause and effect?

Accepted Answer

A)  It is a problem that arises when an insignificant variable is given too much weight in an economic analysis, leading to skewed conclusions about cause and effect.
B)  It is a problem that arises when a significant variable is not given enough weight in an economic analysis, leading to skewed conclusions about cause and effect.
C)  It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic analysis, leading to false conclusions about cause and effect.
D)  It is a problem that arises when an economic variable that affects other variables is omitted from an analysis, and its omission leads to false conclusions about cause and effect.E) C) and D)
F) B) and C)

Question 13

If the price of milk was $2.75 a litre and it is now $3.50 a litre, what is the percentage change in price?

Accepted Answer

A)  13%
B)  27%
C)  75%
D)  77%E) B) and D)
F) A) and B)

Question 14

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $45, and he charges $80 for this service. For a total price of $95, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is DeShawn's marginal benefit if he sells a basic detailing package?

Accepted Answer

A)  $80
B)  $45
C)  He incurs a marginal loss of $15, not a marginal benefit.
D)  The marginal benefit cannot be determined.E) None of the above
F) B) and D)

Question 15

Making optimal decisions 'at the margin' requires:

Accepted Answer

A)  making decisions according to one's whims and fancies.
B)  making consistently irrational decisions.
C)  weighing the costs and benefits of a decision before deciding if it should be pursued.
D)  making borderline decisions.E) A) and B)
F) A) and C)

Question 16

What is meant by the statement that 'optimal decisions are made at the margin'?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

In economics, the word 'marginal' means ...

Question 17

'The distribution of income should be determined by the government' is an example of a positive economic statement.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a 'normative' economic statement?

Accepted Answer

A)  The price of wheat is too low.
B)  The current low price of wheat is the result of increased worldwide supply.
C)  When the price of wheat falls, the quantity of wheat purchased rises.
D)  When the price of wheat falls, the cost of wheat-based products falls.E) B) and C)
F) A) and D)

Question 19

By definition, economics is the study of:

Accepted Answer

A)  how to make money in the stock market.
B)  how to make money in a market economy.
C)  the choices people make to attain their goals, given their scarce resources.
D)  supply and demand.E) A) and B)
F) A) and C)

Question 20

If the marginal cost of keeping a dentist's office open one additional hour per day is $300, then the dentist should keep the office open for one extra hour:

Accepted Answer

A)  only if the marginal benefit she receives is greater than $300 plus an acceptable profit margin.
B)  as long as the marginal benefit she receives is just equal to or greater than $300.
C)  as long as the marginal cost does not rise.
D)  until the marginal benefit she receives reaches zero.E) B) and C)
F) C) and D)

Exam 1: Economics: Foundations and Models

When Mr Riley decides on the companies to which he will donate his time and money, a ________ issue is being addressed.

Correct Answer
verified

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces, then $50 is the marginal cost of producing the fifth necklace.

Correct Answer
verified

If the price of milk was $2.75 a litre and it is now $3.50 a litre, what is the percentage change in price?

Correct Answer
verified

Correct Answer
verified

In a modern mixed economy, who decides what goods and services will be produced?

Correct Answer
verified

In economics, the place where buyers and sellers come together to trade is called a

Correct Answer
verified

What is meant by the statement that 'optimal decisions are made at the margin'? _ _

Correct Answer
verified
In economics, the word 'marginal' means ...
View Answer

What is the 'omitted variable' problem in determining cause and effect?

Correct Answer
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Which of the following is a 'normative' economic statement?

Correct Answer
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All economic questions arise from the fact that resources are unlimited.

Correct Answer
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Making optimal decisions 'at the margin' requires:

Correct Answer
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By definition, economics is the study of:

Correct Answer
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The three fundamental questions that any economy must address are:

Correct Answer
verified

Jewellery manufacturers produce a range of products such as rings, necklaces, bracelets and brooches. What fundamental economic question are they addressing by offering this range of items?

Correct Answer
verified

Trina quits her $90 000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of her decision?

Correct Answer
verified

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.

Correct Answer
verified

'The distribution of income should be determined by the government' is an example of a positive economic statement.

Correct Answer
verified

If the marginal cost of keeping a dentist's office open one additional hour per day is $300, then the dentist should keep the office open for one extra hour:

Correct Answer
verified

A(n) _________________ cost is the highest valued alternative that must be given up to engage in an activity.

Correct Answer
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Correct Answer
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Exam 1: Economics: Foundations and Models

When Mr Riley decides on the companies to which he will donate his time and money, a ________ issue is being addressed.

Correct AnswerverifiedShow Answer

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces, then $50 is the marginal cost of producing the fifth necklace.

Correct AnswerverifiedShow Answer

If the price of milk was $2.75 a litre and it is now $3.50 a litre, what is the percentage change in price?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a modern mixed economy, who decides what goods and services will be produced?

Correct AnswerverifiedShow Answer

In economics, the place where buyers and sellers come together to trade is called a

Correct AnswerverifiedShow Answer

What is meant by the statement that 'optimal decisions are made at the margin'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Correct AnswerverifiedIn economics, the word 'marginal' means ...View AnswerShow Answer

What is the 'omitted variable' problem in determining cause and effect?

Correct AnswerverifiedShow Answer

Which of the following is a 'normative' economic statement?

Correct AnswerverifiedShow Answer

All economic questions arise from the fact that resources are unlimited.

Correct AnswerverifiedShow Answer

Making optimal decisions 'at the margin' requires:

Correct AnswerverifiedShow Answer

By definition, economics is the study of:

Correct AnswerverifiedShow Answer

The three fundamental questions that any economy must address are:

Correct AnswerverifiedShow Answer

Jewellery manufacturers produce a range of products such as rings, necklaces, bracelets and brooches. What fundamental economic question are they addressing by offering this range of items?

Correct AnswerverifiedShow Answer

Trina quits her $90 000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of her decision?

Correct AnswerverifiedShow Answer

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.

Correct AnswerverifiedShow Answer

'The distribution of income should be determined by the government' is an example of a positive economic statement.

Correct AnswerverifiedShow Answer

If the marginal cost of keeping a dentist's office open one additional hour per day is $300, then the dentist should keep the office open for one extra hour:

Correct AnswerverifiedShow Answer

A(n) _________________ cost is the highest valued alternative that must be given up to engage in an activity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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What is meant by the statement that 'optimal decisions are made at the margin'? _ _

Correct Answer
verified
In economics, the word 'marginal' means ...
View Answer

Correct Answer
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