Deck 1: What Is Economics

Question 1

The determination of prices in individual markets is primarily a concern of

A)macroeconomics.
B)positive economics.
C)negative economics.
D)descriptive economics.
E)microeconomics.

Answer 1

microeconomics.

Question 2

Complete the following sentence.Microeconomics is

A)not concerned with factors of production.
B)concerned exclusively with the role of the government in the economy.
C)concerned with the size of the total amount of income earned by all households in an economy.
D)the branch of economics that studies the choices of individuals and businesses.
E)concerned with normative issues only.

Answer 2

the branch of economics that studies the choices of individuals and businesses.

Question 3

An incentive

A)could be either a reward or a penalty.
B)is the opposite of a tradeoff.
C)occurs in the macroeconomy but not in the microeconomy.
D)could be a penalty but could not be a reward.
E)could be a reward but could not be a penalty.

Answer 3

could be either a reward or a penalty.

Question 4

Scarcity confronts

A)only families with incomes less than $25,000 a year.
B)the poor but not the rich.
C)neither the poor nor the rich.
D)the rich but not the poor.
E)the rich and the poor.

Question 5

In a world characterized by scarcity

A)individuals need not work to obtain goods.
B)all goods are free.
C)we are not limited by time.
D)opportunity cost is zero.
E)people must make choices among alternatives.

Question 6

Which of the following is the best definition of economics?

A)the study of how consumers spend their income
B)the study of how individuals, businesses, governments, and entire societies make choices as they cope with scarcity and the incentives that influence and reconcile those choices
C)the study of how a provincial government allocates tax dollars
D)the study of how producers decide what inputs to hire and what outputs to produce
E)the study of how consumers and producers meet each other in the market

Question 7

The branch of economics that studies the performance of the national economy and the global economy is

A)normative economics.
B)Keynesian economics.
C)microeconomics.
D)positive economics.
E)macroeconomics.

Question 8

The problem of scarcity applies

A)only in countries that are over- populated
B)to all countries, regardless of their level of development.
C)only in developing countries because resources are scarce in these countries
D)only in industrially developed countries because resources are scarce in these countries.
E)only in countries that use natural resources in most of their production processes

Question 9

Complete the following sentence.Macroeconomics

A)deals mainly with the economic behaviour of households.
B)is primarily concerned with the operation of individual markets in the economy.
C)is the only part of economics to deal with government decisions.
D)is the study of the performance of the national economy and the global economy.
E)is primarily concerned with the behaviour of the stock market.

Question 10

The fact that human wants cannot be fully satisfied with available resources is called the problem of

A)marginal cost.
B)opportunity cost.
C)scarcity.
D)the big tradeoff.
E)normative economics.

Question 11

The inescapable economic fact is that

A)capitalists are always exploiting the workers.
B)there are unlimited resources, and we just have to decide how to allocate them.
C)unions are always exploiting firms.
D)there are unlimited wants and limited resources.
E)capitalists and unions cannot work together.

Question 12

Which of the following is a microeconomic topic?

A)the effect of the government budget deficit on inflation
B)the reasons why the labour force in a country decreases
C)the cause of increasing unemployment
D)the reasons why the average price level in a country falls
E)the reasons why a consumer buys less honey

Question 13

The problem of scarcity exists

A)in all economies.
B)only when people are unemployed.
C)now but will be eliminated with economic growth.
D)only in economies that lack incentives.
E)only in economies that have incentives.

Question 14

The branch of economics that studies the choices of individuals and businesses is

A)microeconomics.
B)positive economics.
C)normative economics.
D)macroeconomics.
E)social economics.

Question 15

The study of how wages are set for New Brunswick teachers is classified as

A)a macroeconomic topic.
B)a microeconomic topic.
C)normative economics.
D)economics of social interest.
E)economics of private interest.

Question 16

Which of the following would be considered a microeconomic topic?

A)the severity of a recession
B)the study of how wages are set for mine workers
C)the determination of aggregate income
D)the cause of unemployment in the economy
E)the effect of the government budget deficit on inflation

Question 17

Each of the following would be considered a macroeconomic topic except

A)the reasons for a decrease in the unemployment rate.
B)the selection of production techniques.
C)the effect of the government budget deficit on inflation.
D)the determination of aggregate income.
E)the cause of recessions.

Question 18

Which one of the following topics does microeconomics study?

A)determination of total production in a country
B)effect of interest rates on national economic growth
C)effect of the government budget deficit on employment
D)reasons for a fall in the price of orange juice
E)the effect of a rise in the Canadian dollar on Canada's exports

Question 19

Which of the following newspaper headlines concerns a macroeconomic issue?

A)How would a tax on e- commerce affect chapters.indigo.ca?
B)Why do grain producers purchase less pesticides?
C)Why are people buying more SUVs and fewer minivans?
D)Why is Japan's economy stagnant?
E)How would an unexpected freeze in Oxford, Nova Scotia change the price of blueberries in the Maritimes?

Question 20

Which one of the following topics does macroeconomics study?

A)the performance of the global economy
B)effects of taxes on the price of gasoline
C)decisions of individual firms
D)prices of individual goods and services
E)effects of government safety regulations on the price of cars

Question 21

Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge. This statement means that the incentive to exercise dogs at the dog park .The operators' decision is a .

A)remains the same; microeconomic decision
B)changes; microeconomic decision
C)changes; macroeconomic decision
D)remains the same; macroeconomic decision
E)changes; decision in the self- interest but not in the social interest

Question 22

Which factor of production earns the most income?

A)entrepreneurship
B)the stock market
C)capital
D)land
E)labour

Question 23

What choices are best for the entire society?

A)self- interest choices
B)choices made by majority rule
C)choices made by well- meaning citizens
D)social interest choices
E)choices influenced by lobbyists

Question 24

Complete the following sentence.Capital is

A)composed of financial investment and commodities such as gold and silver.
B)the knowledge and skill that people obtain from education, on- the- job training, and work experience.
C)the tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services.
D)traded in stock markets and bond markets.
E)money in the bank.

Question 25

The two big economic questions

A)do not consider for whom goods and services are produced.
B)have nothing to do with the way goods and services are produced.
C)are "what goods and services are produced?" and "how are goods and services produced?"
D)summarize the scope of economics.
E)have nothing to do with goods and services.

Question 26

A star athlete can afford a garage full of exotic cars while other people can only afford to take a city bus for transportation.This is an example of an economy facing the question.

A)"what"
B)"when"
C)"how"
D)"where"
E)"for whom"

Question 27

Complete the following sentence.Financial capital is

A)not subject to scarcity.
B)a service.
C)one of the "gifts of nature."
D)money, stocks, and bonds.
E)a factor of production.

Question 28

When a firm decides to produce more hybrid cars and fewer gas guzzlers, it is answering the question.

A)"when"
B)"where"
C)"how"
D)"what"
E)"who"

Question 29

The two big economic questions include all of the following except

A)for whom to produce.
B)how to produce.
C)what to produce.
D)why to produce.
E)a determination of whether the pursuit of self- interest also promotes the social interest.

Question 30

Sue, who has a law degree, earns $200,000 a year, while Chris, a high- school dropout, earns $15.00 an hour.This is an example of an economy facing the question.

A)"how"
B)"when"
C)"where"
D)"what"
E)"for whom"

Question 31

To meet increased demand for its good, a firm decides to hire a few high- skilled workers, rather than hire many low- skilled workers.The firm is answering the question.

A)"how"
B)"what"
C)"who"
D)"when"
E)"where"

Question 32

When a firm decides to produce computers using robots instead of people, it is answering the question.

A)"who"
B)"how"
C)"when"
D)"what"
E)"where"

Question 33

When a textile firm decides to produce more silk fabric and less cotton fabric, it is answering the _ _ question.

A)"what"
B)"how"
C)"when"
D)"who"
E)"where"

Question 34

The fact that some people can afford to live in beautiful homes while others are homeless is an example of an economy facing the question.

A)"when"
B)"for whom"
C)"where"
D)"what"
E)"how"

Question 35

To earn income, people sell the services of the factors of production they own.Land earns and labour earns .

A)wages; interest
B)rent; minimum wage
C)profit; wages
D)profit; interest
E)rent; wages

Question 36

Complete the following sentence.Entrepreneurship is

A)the human resource that organizes labour, land and capital.
B)traded on the stock market.
C)categorized as capital.
D)defined as money.
E)categorized as the factor of production labour.

Question 37

The two big economic questions

A)involve neither self- interest nor social interest.
B)do not arise from scarcity.
C)involve self- interest only.
D)involve both self- interest and social interest.
E)involve only social interest.

Question 38

An art museum decides to offer audio tour downloads rather than have tour guides.The museum is answering the question.

A)"what"
B)"when"
C)"how"
D)"where"
E)"who"

Question 39

When a farmer decides to harvest tomatoes using machines instead of migrant workers, the farmer is answering the question.

A)"who"
B)"how"
C)"when"
D)"where"
E)"what"

Question 40

The fact that a hockey star earns $10 million a year while a teacher earns $75,000 annually is an example of an economy facing the question.

A)"what"
B)"for whom"
C)"how"
D)"when"
E)"where"

Question 41

Which of the following would an economist classify as capital?

A)a deposit of silver
B)a computer
C)natural resources
D)entrepreneurship
E)land

Question 42

The expansion of international trade, borrowing and lending, and investment is

A)a corporate revolution.
B)the big tradeoff.
C)antiglobalization.
D)not in the best interests of most countries.
E)globalization.

Question 43

Which one of the following is an example of capital?

A)a carpenter
B)money
C)a university professor
D)a bread- slicing machine
E)pasture

Question 44

In Canada _______ percent of the adult population have completed high school and _______ percent have a college or university degree.

A)55; 25
B)25; 95
C)100; 55
D)95; 25
E)95; 55

Question 45

Which of the following is not a factor of production?

A)Wilderness areas that have yet to be developed
B)Vans used by a bakery company for deliveries
C)National parks
D)Timmy who is developing a production schedule for a new product
E)175 shares of Microsoft stock

Question 46

Which statement about incomes earned by factors of production is false?

A)Natural resources earn rent.
B)Entrepreneurship earns profit.
C)Land earns rent.
D)Capital earns profit.
E)Labour earns wages.

Question 47

A tractor is an example of which of the following factors of production?

A)land
B)entrepreneurship
C)energy
D)capital
E)labour

Question 48

Which of the following relates factors of production to the sources of income correctly?

A)Labour earns rent.
B)Land earns interest.
C)Capital earns profit.
D)Entrepreneurship earns rent.
E)Land earns rent.

Question 49

Which one of the following is an example of capital as a factor of production?

A)an automobile factory owned by Ford
B)natural gas
C)money held by Tim Hortons
D)a high school teacher
E)a Bell Canada bond

Question 50

The creation of a successful movie can influence the main questions that economics seeks to answer.Choose the statement that is false.

A)The movie influences the how question because the movie can create new production techniques, which can be used in subsequent films.
B)The movie influences the how question because it can use unknown actors or Academy Award winners.
C)The movie influences the what question because it can lead to spinoff goods or a new movie genre, which can result in the production of similar films.
D)The movie influences the when question because movie crews work on many different films and must be available for the entire production.
E)The movie influences the for whom question because the people who earn higher incomes through the movie production buy more goods and services.

Question 51

Choose the correct statement.

A)In Canada today, manufacturing accounts for 50 percent of total production.
B)Canada produces more services than goods.
C)China's production of services is a greater percentage of its total production than Canada's.
D)Canada's production of manufacturing is a greater percentage of its total production than China's.
E)In Canada today, agriculture accounts for 30 percent of total production.

Question 52

According to Adam Smith

A)politicians are well- equipped to regulate corporations and intervene in markets to improve market outcomes.
B)the self- interest and the social interest never conflict.
C)in a market transaction buyers can either get what they want for less than they would be willing to pay or sellers can make a profit, but both buyers and sellers can't gain simultaneously.
D)government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self- interest to unintentionally promote the social interest.
E)when big corporations pursue their self- interest of maximum profit, they will inevitably conflict with social interest.

Question 53

Which one of the following would economists classify as land?

A)an elementary school in Nova Scotia
B)an automotive plant in British Columbia
C)an oil rig in the Atlantic Ocean
D)automobiles parked in a parking lot in Manitoba
E)rich agricultural soil in Saskatchewan

Question 54

Self- interest choices are

A)never in the social interest.
B)those choices which are best for the person making them.
C)those choices that are best for all residents of a region.
D)choices that are agreed to by majority vote.
E)always in the social interest.

Question 55

Which of the following is not a factor of production?

A)the water used to cool a nuclear power plant
B)the effort of farmers raising cattle
C)the land used by a farmer to grow wheat
D)the wages paid to workers
E)the management skill of a small business owner

Question 56

Which one of the following is an example of a factor of production?

A)an IBM stock certificate
B)a computer game
C)a donut
D)an insurance policy
E)the skills of a welder

Question 57

Which one of the following is labour?

A)money
B)a carpenter's hammer
C)a singer's voice
D)a bread- slicing machine
E)a shoe factory

Question 58

An outcome is considered efficient if

A)it is not possible to make someone better off without making anyone else worse off.
B)as many people as possible are happy about the outcome.
C)there is the smallest difference possible between the highest income earned and the lowest income earned.
D)it is the best available choice for an individual.
E)everyone makes the same income.

Question 59

Which one of the following news headlines definitely concerns the social interest?

A)The Maple Leafs Win the Stanley Cup
B)McDonald's Moves into Salads
C)Starbucks Expands in China
D)E Coli Test Results Must be Posted on Beaches
E)Pumpkin Spice Lattes Available Now!

Question 60

Which factor of production includes the "gifts of nature"?

A)capital
B)entrepreneurship
C)labour
D)human capital
E)land

Question 61

"There can be too much of a good thing." This statement suggests that

A)a good may be produced to the point where its marginal benefit is equal to its marginal cost.
B)certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits.
C)a good may be produced to the point where its marginal benefit exceeds its marginal cost.
D)choices made in self- interest cannot be applied to many economic decisions.
E)a good may be produced to the point where its marginal cost exceeds its marginal benefit.

Question 62

Laura is a manager for HP.When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares

A)the total revenue from sales of printers to the total cost of producing all the printers.
B)the revenue from selling HP's printers as compared to printers from competing companies, such as Lexmark.
C)the extra revenue from selling a few additional printers to the extra costs of producing the printers.
D)the cost of producing HP's printers as compared to printers from competing companies, such as Lexmark.
E)the extra revenue from selling a few additional printers to the average cost of producing the additional printers.

Question 63

Which of the following statements is correct?

A)Agriculture accounts for 10 percent of total Canadian production.
B)Canada produces more agricultural goods than manufactured goods.
C)Canada produces more manufactured goods than services.
D)Canada produces more services than goods.
E)Canada produces more agricultural goods than services.

Question 64

Marginal benefit is the

A)total benefit from an activity.
B)opportunity cost of a decrease in an activity.
C)additional benefit from an increase in an activity.
D)additional benefit from a decrease in an activity.
E)opportunity cost of an increase in an activity.

Question 65

Use the information below to answer the following question.
Fact 1.3.1 Costs Soar for London Olympics
The regeneration of East London, the site of the 2012 Olympic Games, is set to add extra £1.5 billion to taxpayers' bill.Source: The Times, London, July 6, 2006
Refer to Fact 1.3.1.The cost of regenerating East London an opportunity cost of hosting the 2012 Olympic Games .

A)is; if the property taxes of people living in East London increase
B)is not; because few people attending the 2012 Olympics will spend much time outside Olympic venues
C)is not; because regenerating East London is an unnecessary expense
D)is; if the costs of the East London regeneration is equal to a significant percentage of the total amount spent by London taxpayers to host the 2012 Olympics
E)is; if the regeneration of East London would not occur unless London hosted the 2012 Olympics

Question 66

The concept of opportunity cost

A)is used in microeconomics but not macroeconomics.
B)suggests that individuals can achieve all they want.
C)is used in macroeconomics but not microeconomics.
D)is relevant only for developing countries.
E)suggests a major increase in public education spending means a reduced expansion in the public healthcare system.

Question 67

During the next hour John can choose one of the following three activities: playing basketball, watching television, or reading a book.The opportunity cost of reading a book

A)is equal to the marginal benefit from reading the book.
B)depends on how much the book cost when it was purchased.
C)is the value of playing basketball if John prefers that to watching television.
D)depends on how much John enjoys the book.
E)is the value of playing basketball and the value of watching television.

Question 68

To make choices, people must

A)be free from government constraint.
B)evaluate the values of alternative actions.
C)have unlimited resources.
D)have unlimited access to information at no cost.
E)be risk- takers.

Question 69

If you take an additional class this term, you can graduate earlier.This is an example of

A)total cost.
B)opportunity cost.
C)the pursuit of social interest.
D)marginal benefit.
E)social cost.

Question 70

Which of the following sayings best describes opportunity cost?

A)"Love of money is the root of all evil."
B)"Make hay while the sun shines."
C)"Baseball has been very good to me."
D)"Boldly go where no one has gone before."
E)"There's no such thing as a free lunch."

Question 71

Monika will choose to eat a seventh pizza slice if

A)the marginal benefit from the seventh slice is greater than its marginal cost.
B)the marginal benefit from the seventh slice is less than its marginal cost.
C)the total benefit from all seven slices is less than their total cost.
D)the total benefit from all seven slices is greater than their total cost.
E)she has enough money to pay for it.

Question 72

The night before a history test, you decide to go to the movies instead of reviewing your notes.You get 60 percent on your test compared with the 75 percent that you normally score.You a tradeoff and the opportunity cost of your evening at the movies was .

A)did not face; zero
B)faced; the 75 percent that you normally score
C)faced; the 15 percent fall in your grade
D)did not face; the 15 percent fall in your grade
E)faced; the mark of 60 percent on your test

Question 73

Marginal benefit is

A)the benefit that arises from a decrease in an activity.
B)the cost of a decrease in an activity.
C)the cost of an increase in an activity.
D)the benefit that arises from an increase in an activity.
E)the sum of benefit and cost that arises from an increase in an activity.

Question 74

When the government chooses to use resources to build a dam, those resources are no longer available to build a highway.This illustrates the concept of

A)a "how" tradeoff.
B)the big tradeoff.
C)macroeconomics.
D)opportunity cost.
E)a market.

Question 75

You have the choice of going on vacation to Florida for one week, staying at work for the week, or spending the week doing fix- up projects around your house.If you decide to go to Florida, the opportunity cost of the trip is

A)working or doing fix- up projects, depending on which you would have done otherwise.
B)nothing because you will enjoy the trip to Florida.
C)variable depending on the weather you leave behind in Canada.
D)working, because you would be giving up income.
E)working and doing fix- up projects.

Question 76

A university decides to change its late night bus service between the campus and student housing from a fare- based service to a free service.This statement means that the incentive to ride the bus and the opportunity cost of a bus ride .The university's decision is a _ decision.

A)remains the same; remains the same; macroeconomic
B)changes; increases; microeconomic
C)changes; decreases; microeconomic
D)changes; decreases; macroeconomic
E)remains the same; remains the same; microeconomic

Question 77

Sally has to decide whether to study for her economics test or her accounting test.If she chooses to study for accounting, her opportunity cost of studying accounting is

A)not comparable to the value of studying economics.
B)studying economics.
C)equal to the value of studying economics.
D)the future lost wages that will occur if she fails her accounting exam.
E)less than the value of studying economics.

Question 78

When the government of Alberta chooses to build more roads, the required resources are no longer available to provide better healthcare facilities.This situation illustrates the concept of

A)marginal benefit.
B)monetary cost.
C)human capital.
D)entrepreneurship.
E)opportunity cost.

Question 79

Complete the following sentence.Marginal cost is

A)the opportunity cost of a decrease in an activity.
B)the total cost of a decrease in an activity.
C)the opportunity cost of an increase in an activity.
D)the total cost of an activity.
E)equal to marginal benefit.

Question 80

Opportunity cost is

A)the marginal benefit from an activity.
B)your value of leisure.
C)the money you spend on food, shelter, and clothing.
D)the value of your favourite activity.
E)the highest- valued alternative that we give up to get something.