Question 1

The statement that "there is no such thing as a free lunch" means:

Accepted Answer

The statement "there is no such thing as a free lunch" means that everything has a cost, whether it is monetary or in the form of an opportunity cost. In other words, any production requires the use of scarce resources, and thus the sacrifice of another alternative. Therefore, choice B is the best answer.

Question 2

The Case in Point on the Canadian government suggests the opportunity cost of economic growth for Canada is:

Accepted Answer

The opportunity cost of economic growth for Canada, as suggested by the Case in Point on the Canadian government, is environmental quality.
The concept of opportunity cost refers to the value of the next best alternative that must be forgone as a result of making a decision. In the context of economic growth, if the Canadian government prioritizes economic expansion, it may come at the expense of environmental quality. This is because increased industrial activity, resource extraction, and development can lead to environmental degradation if not managed sustainably. Therefore, the opportunity cost of pursuing economic growth could be a reduction in environmental quality, as natural resources are consumed and ecosystems potentially harmed in the process.

Question 3

The three fundamental economic questions of what, how, and for whom:

Accepted Answer

The three fundamental economic questions exist because of scarcity, which means resources are limited while wants and needs are unlimited. Therefore, every economic system must address these questions to allocate resources efficiently.

Question 4

The problem of determining what goods and services society should produce exists because:

Accepted Answer

The problem of determining what goods and services society should produce exists because resources are scarce. If resources were plentiful, there would be no need for society to make choices on what to produce since everything could be produced. However, since resources like time, money, and materials are limited, society must decide how to allocate them efficiently.

Question 5

A free good is different from a scarce good because it is:

Accepted Answer

A free good refers to a good that is not scarce and is available in abundance, hence it is available for free without any cost. On the other hand, scarce goods are limited in supply and have a price tag attached to them, which means they are not available for free. Therefore, option C is correct as it highlights the essential difference between a free good and a scarce good.

Question 6

The problem of determining how goods and services should be produced is a problem of deciding:

Accepted Answer

The problem of determining how goods and services should be produced involves deciding on the most efficient and effective combination of resources to use in the production process. This includes determining which resources to use, in what quantities, and how to organize their use in order to maximize output while minimizing costs. The other options, such as reducing imports or exports or determining resource ownership, are not directly related to this production decision.

Question 7

The answer to, "What goods are to be produced ?" deals with:

Accepted Answer

The question "What goods are to be produced?" specifically asks about the kinds and quantities of goods and services that will be produced, which is addressed in choice D. Choice A deals with the distribution of goods, choice B pertains to the determination of consumer preferences, and choice C involves the process of resource allocation and utilization.

Question 8

An answer to the question "How are goods produced?" determines:

Accepted Answer

The process of how goods are produced involves the combination of resources such as land, labor, and capital to create goods and services. This determines the efficiency and effectiveness of production, as well as the quality and availability of goods and services. Factors such as technology and the organization of production also play a role in determining how goods are produced. The other choices are not directly related to the production process.

Question 9

The fundamental economic questions that every economic system must answer are:

Accepted Answer

The three fundamental economic questions that every economic system must answer are what goods and services to produce, how should these goods and services be produced, and who will consume these goods and services. These are all covered in option A, which includes what, how, and for whom.

Question 10

One question that arises when determining for whom goods and services should be produced is:

Accepted Answer

The question of who gets how much of the economic pie is directly related to determining for whom goods and services should be produced. It involves issues of income distribution and social welfare, and is a fundamental question in economics. The other options are not as relevant to this particular question.

Question 11

The problem of determining for whom to produce exists because:

Accepted Answer

The problem of determining for whom to produce arises because resources are scarce which means that producing goods and services for one person or group often means that resources cannot be used to produce goods and services for another person or group. This is sometimes referred to as the "opportunity cost" of choosing to produce one good or service over another.

Question 12

In the 1970s, the Organization of Petroleum Exporting Countries (OPEC) tripled the price of petroleum, causing automobile manufacturers to look for ways to produce more fuel-efficient cars by substituting aluminum and plastic for steel. This was primarily a response to the economic question of:

Accepted Answer

The decision to substitute aluminum and plastic for steel in automobile production was made in response to the increased price of petroleum, a key input in the manufacturing process. This reflects the economic question of how goods and services should be produced, which involves making decisions about which inputs to use in production in order to minimize costs and maximize efficiency.

Question 13

A free good is:

Accepted Answer

A free good is a good that is not scarce and therefore has no opportunity cost. This means that it is not limited in supply and does not require resources to produce or acquire. Examples of free goods include air and sunlight, which are readily available and do not require any cost to access.

Question 14

The problem of determining how goods and services should be produced exists because:

Accepted Answer

The problem of determining how goods and services should be produced exists because most goods can be produced with different combinations of resources. This leads to the need to determine the most efficient and effective way to produce goods and services in order to maximize productivity and profitability.

Question 15

An answer to the question "For whom" determines:

Accepted Answer

The answer to the question "For whom" determines who gets the goods and services produced. The other choices may be influenced by the answer to this question, but ultimately it is the distribution of the goods produced that is determined by the answer to "For whom".

Question 16

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:

Accepted Answer

The question of what goods and services a society should produce is addressed by the decision to allocate funds to education through a sales tax increase, which may result in a reduction in the consumption of other goods. This decision reflects the prioritization of education as a societal need over other goods that could be consumed with the same funds.

Question 17

A(n) _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.

Accepted Answer

A free good is a good that is not scarce, meaning that one use of the good does not pose the problem of scarcity and is not an alternative to another use. Examples of free goods include air and sunlight.

Question 18

Water is considered a scarce good rather than a free good because:

Accepted Answer

Water is considered a scarce good because it has alternative uses. It is used for drinking, cooking, farming, and industrial purposes, and the demand for each of these uses competes with each other. When a resource has alternative uses, it becomes scarce because the demand for the resource exceeds its supply.

Question 19

The Case in Point on Canadian politics, voters faced a choice between:

Accepted Answer

The New Democratic Party is the only option presented that aligns with higher corporate tax rates, which is in line with the party's socialist ideology. Additionally, the party's platform includes less deficit reduction than the Conservatives, which further supports its left-leaning economic agenda.

Question 20

The problem of determining what goods and services society should produce:

Accepted Answer

The problem of determining what goods and services society should produce arises because there are limited resources, but people have unlimited wants and needs. Therefore, society must determine how to allocate its limited resources to produce the goods and services that provide the most value and utility.

Quiz 1: Economics: the Study of Choice