Deck 1: Introductory Concepts

Question 1

The science of economics has developed because:

A) countries are always attempting to produce the maximum amount of goods and services.
B) resources used to produce goods and services are scarce.
C) countries are trying to reach their production-possibilities curve.
D) unemployment is a serious social and economic problem that has not been completely solved.

Answer 1

resources used to produce goods and services are scarce.

Question 2

Economics is the study of:

A) determining an appropriate standard of living for all citizens of a country.
B) decision making regarding the use of scarce resources.
C) decision making about the best way to produce a combination of goods and services depicted by the production-possibilities curve.
D) calculating opportunity costs.

Answer 2

decision making regarding the use of scarce resources.

Question 3

Scarcity:

A) is a problem that third-world countries need to solve.
B) forces us to consider the direct costs of our actions.
C) has almost been eliminated in Canada and the United States.
D) will always be a problem as long as people have an unlimited desire for goods and services.

Answer 3

will always be a problem as long as people have an unlimited desire for goods and services.

Question 4

The discussion regarding cod fishery in the Atlantic Coast is used to demonstrate which concept?

A) opportunity cost
B) law of diminishing returns
C) production possibilities
D) scarcity

Question 5

Scarcity could be reduced if:

A) we all work more and want fewer goods.
B) we all work less and want fewer goods.
C) our population expands and production stays the same
D) we do not innovate.

Question 6

The science of economics is primarily concerned with:

A) how a country decides to use its available resources.
B) how a company manufactures a product and distributes it to customers.
C) how a country provides for its citizens.
D) how individuals make a living.

Question 7

Economics deals primarily with the problems created by:

A) the balancing of direct and opportunity costs.
B) the free market system of individual initiative.
C) the law of diminishing returns.
D) limited productive resources.

Question 8

An example of a capital resource is:

A) a nuclear-power plant.
B) a truck.
C) a screwdriver.
D) all of the above

Question 9

The fundamental concept in the study of economics is:

A) scarcity.
B) political decision-making.
C) our natural resources.
D) human wants and desires.

Question 10

In 2006, Canada's population was approximately:

A) 20 million people.
B) 40 million people.
C) 10 million people.
D) 30 million people.

Question 11

In 2004-2005, the province or territory with the lowest birth rate per 1000 population was:

A) Ontario.
B) Newfoundland and Labrador.
C) Alberta.
D) Northwest Territories.

Question 12

In 2004-2005, the province or territory with the highest birth rate per 1000 population was:

A) Nova Scotia.
B) Yukon Territory.
C) Nunavut.
D) British Columbia.

Question 13

The proportion of Canada's land mass covered in trees is approximately:

A) 15 percent.
B) 35 percent.
C) 25 percent.
D) 45 percent.

Question 14

On average, each Canadian uses the following number of litres of water per day:

A) 3400
B) 7100
C) 210
D) 8900

Question 15

The opportunity cost of attending college:

A) depends on the course that an individual is enrolled in.
B) is impossible to measure in dollar terms.
C) can never be greater than the direct costs of going to college.
D) is the most valuable alternative sacrificed in order to attend college.

Question 16

Your opportunity of taking an economics course is:

A) the net benefit of going skiing instead of taking the course.
B) the net benefit of taking the course.
C) the tuition paid for the course.
D) the cost of going skiing instead of taking the course.

Question 17

If the cost of tuition is $1000; books cost $500; supplies cost $100; and you could have earned $20000 instead of attending college, then the total opportunity cost of attending college is:

A) $1600.
B) $21 600.
C) $20 000.
D) impossible to determine unless an interest rate is known.

Question 18

If you were unemployed and decided to return to college:

A) there would be an opportunity cost associated with the money you spent on books.
B) the opportunity costs associated with both your time and your money must be calculated separately.
C) there would be an opportunity cost associated with the use of your time.
D) all of the above are correct

Question 19

The saying "There are no free lunches" is associated with the concept of:

A) opportunity cost.
B) direct costs.
C) capitalism.
D) communism.

Question 20

The opportunity cost associated with the money spent on a domed stadium for Toronto is:

A) the dollar value of the cost of construction.
B) other goods and services that must be sacrificed in order to build the stadium.
C) the loss of government revenue used for the stadium.
D) not relevant since the stadium will bring in tourist dollars to the City of Toronto.

Question 21

The saying "Time is money" refers to:

A) capitalism.
B) direct costs.
C) opportunity costs.
D) socialism.

Question 22

A country that uses all its resources efficiently is presently producing 150 cars and 500 telephones. If it switches to producing 250 cars and 200 telephones, then the opportunity cost of the extra 100 cars produced is:

A) impossible to determine from the information given.
B) 300 telephones.
C) 200 telephones.
D) 500 telephones.

Question 23

The opportunity cost of attending a Friday afternoon economics class is:

A) nothing.
B) the cost of tuition divided by the number of individual classes.
C) another activity that you could otherwise participate in.
D) the cost of your economics textbook.

Question 24

Combinations of goods that are to the left of the production-possibilities curve:

A) will be attainable if people work harder.
B) can be obtained with an increase in resources.
C) indicate that resources are fully employed.
D) are possible combinations for society to produce.

Question 25

A country's production-possibilities curve:

A) shows the maximum amount of two goods that can be produced at this time.
B) shows all possible combinations of two goods that can be produced.
C) is normally depicted on a graph as a straight line.
D) shows the combinations of two goods that the country is currently producing.

Question 26

In order to draw a production-possibilities curve, we need to assume:

A) full employment of resources.
B) that only goods and not services are produced.
C) a free market economic system.
D) full employment, but not necessarily efficient use, of resources.

Question 27

Given a production possibilities curve for consumer goods (on the x-axis) and capital goods (on the y-axis), the opportunity cost of increasing the production of consumer goods is greatest
When the slope of the production possibilities curve is:

A) 3
B) 5/2
C) -5/2
D) -3

Question 28

A shift in the production-possibilities curve will occur if:

A) factories are not used to capacity.
B) the population changes.
C) technological change fails to take place.
D) workers become unemployed.

Question 29

A straight-line production-possibilities curve:

A) shows increasing opportunity costs as the production of one commodity increases.
B) is impossible in the real world.
C) assumes that the law of diminishing returns does not apply in this case.
D) is drawn when identical products are labeled on each axis.

Question 30

Assuming that consumption goods are on the y-axis and capital goods are on the x-axis, a technological improvement in producing capital goods will:

A) shift the production function outward.
B) shift the production function out on the y-axis but it will stay the same on the y-axis.
C) shift the production function inward.
D) shift the production function out on the x-axis but it will stay the same on the y-axis.

Question 31

An unemployment rate of 9 percent in Canada means:

A) that Canada is at a point to the right of its production-possibilities curve.
B) that population increases are necessary in order to reach maximum production.
C) that Canada can only be producing at a point on its production-possibilities curve if technological change occurs.
D) that Canada is producing at a point to the left of its production-possibilities curve.

Question 32

Which of the following economic concepts is not represented by a production-possibilities curve?

A) direct costs
B) scarcity
C) law of diminishing returns
D) opportunity costs

Question 33

Which of the following will not cause a shift to the right in the production-possibilities curve?

A) the acquisition of more capital goods such as factories
B) the introduction of a training program that improves worker productivity
C) reducing the unemployment rate of the labour force
D) an advance in technology

Question 34

Which of the following would be most likely to cause a shift to the right in the production-possibilities curve?

A) an increase in the unemployment rate of the labour force
B) the introduction of skill-training courses to labour-force participants
C) a shift in production from corn to spears
D) a shift in consumer desires away from durable goods to services

Question 35

Which of the following does not affect a country's production-possibilities curve?

A) the country's natural resources
B) the country's population
C) the country's capital resources
D) the country's demand for certain products

Question 36

Assume that a country can only produce two products: corn and spears. A technological advance in spear production will:

A) permit the production of both more spears and more corn.
B) will not influence the production of spears or corn unless there is an accompanying increase in resources.
C) permit the production of more spears but less corn.
D) permit only the production of more spears.

Question 37

If a country is operating at a point on its production-possibilities curve, more of one good can be produced only if less of another good is produced because:

A) the resources used to produce each good are not identical.
B) resources are available only in limited amounts.
C) of the law of diminishing returns.
D) most resources are specialized and can only be used to produce certain goods.

Question 38

The production possibilities curve of a socialist country that suddenly switches to a free-market economy is likely going to:

A) shift to the right and then to the left.
B) shift to the left and then to the right.
C) shift to the right.
D) shift to the left.

Question 39

Which of the following statements is incorrect?

A) it is not possible for economists to use the laboratory methods of research practised in the physical sciences
B) opportunity cost must be considered when making decisions regarding the use of scarce resources
C) the law of diminishing returns influences the shape of the production-possibilities curve
D) the free market approach to economic decision-making allows for some government decisions in important economic matters

Question 40

If Canada's population were to decline:

A) the production-possibilities curve for Canada would shift to the right.
B) Canada would need to shift production to another point on its production-possibilities curve.
C) the production-possibilities curve for Canada would shift to the left.
D) there would be an increase in unemployment.

Question 41

An increase in Canada's unemployment rate would be represented by:

A) a movement along the production-possibilities curve.
B) a shift of the production-possibilities curve to the left.
C) a shift of the production-possibilities curve to the right.
D) no change in the production-possibilities curve but the combination of goods produced would be to the left of the current production-possibilities curve.

Question 42

A production-possibilities curve is an example of:

A) a convex relationship.
B) direct or positive relationship.
C) a linear relationship.
D) indirect or negative relationship.

Question 43

Thomas Robert Malthus is best associated with the:

A) law of diminishing returns.
B) advantages of a free market system.
C) law of comparative advantage.
D) concept of opportunity cost.

Question 44

Malthus believed that:

A) advances in birth-control technology would save the world.
B) contagious diseases could not check population growth.
C) population would grow at a faster rate than would food production.
D) charity should not be provided for anyone.

Question 45

The command approach is based on:

A) public and private resources ownership.
B) private resource ownership and individual decision makers.
C) public resource ownership and centralized decision makers.
D) individual and centralized decision makers.

Question 46

Centralized decision-making regarding the use of all resources:

A) appears in command systems only.
B) predominates in a free market system.
C) appears in both command and free market systems.
D) is necessary in all economic systems because resource use affects all citizens.

Question 47

The Canadian economy can be best described as:

A) a decentralized economy.
B) a command economy.
C) a mixed economy.
D) a free market economy.

Question 48

In a free market system, decisions regarding the use of scarce resources are made:

A) by private companies alone.
B) by individuals and private companies.
C) by individuals alone.
D) by individuals, private companies, and government officials.

Question 49

When comparing the economic systems of Canada to those of the United States, it can be seen that:

A) Canada is a mixed economy and the United States is not.
B) the free market system is more predominant in the United States.
C) the United States is a mixed economy and Canada is not.
D) the free market system is more predominant in Canada.

Question 50

Which of the following Canadian political parties is most closely associated with the free market approach to economic decision-making?

A) the Canadian Alliance
B) the Liberal party
C) the Progressive Conservative party
D) the New Democratic Party

Question 51

Which of the following Canadian political parties is most closely associated with the command approach to economic decision-making?

A) the Liberal party
B) the Progressive Conservative party
C) the New Democratic Party
D) the Canadian Alliance

Question 52

In which of the following countries does the free market approach predominate?

A) China
B) Cuba
C) Canada
D) North Korea

Question 53

In which of the following countries does the command system predominate?

A) Mexico
B) Spain
C) Canada
D) China

Question 54

Which of the following is not a characteristic of a command system?

A) state ownership of resources
B) centralized decision-making
C) reduced individual freedom
D) private ownership of resources

Question 55

Which of the following economic systems is the most popular in the world today?

A) traditional
B) command
C) free market
D) mixed economy

Question 56

In a free market economy, the decisions concerning which goods and services to produce are primarily made by:

A) business and government consultation.
B) individual consumers.
C) the interaction of consumer wants and business concerns.
D) corporations and small businesses.

Question 57

Theories developed by economists:

A) need 100 percent backing from fellow economists before being included in economics textbooks.
B) are not the result of laboratory research and are therefore useless.
C) are never applicable to real-world situations.
D) are only applicable to real-world situations when certain conditions exist.

Question 58

Economists do not use the laboratory methods of the physical sciences because:

A) economic problems are more complex than those of the physical sciences.
B) the scarce resources that are of concern to economists cannot be found in a laboratory.
C) it is impossible to control all the variables that influence the results of the experiment.
D) economic theories cannot be applied to individual situations, only to problems faced by the entire country.

Question 59

The major difference between the sciences that study human behaviour and those that study the physical relationships in the universe is:

A) the fact that the study of economics does not use experiments.
B) the fact that the environment in the study of physical sciences cannot be controlled.
C) the fact that the physical sciences categorize facts as either good or bad.
D) the fact that individuals are not preprogrammed.

Question 60

Which of the following is true about the science of economics?

A) The environment in which experiments take place can be controlled.
B) It does not use experiments to study human behaviour.
C) Economists make value judgements during scientific reasoning.
D) The subject or individuals studied are preprogrammed.

Question 61

If whenever the value of the variable X increases, the value of the variable Y increases, then the relationship between the variables X and Y is:

A) indirect or negative.
B) linear.
C) direct or positive.
D) concave.

Question 62

Which of the following examples demonstrates a positive relationship?

A) Unemployment and inflation rates change at the same rate.
B) Production decreases with less employment.
C) Positive economic growth is associated with good technology.
D) Production increases with less unemployment.

Question 63

If whenever the value of the variable X increases, the value of the variable Y decreases, then the relationship between the variables is:

A) linear.
B) concave.
C) direct or positive.
D) indirect or negative.

Question 64

Which of the following examples demonstrates an inverse relationship?

A) Production increases with less unemployment.
B) Production decreases with less employment.
C) Positive economic growth is associated with good technology.
D) Unemployment and inflation rates change at the same rate.