Question 1

Which of the following statements best describes the underlying feature of most economic problems?
A)People have unlimited wants in the face of limited resources.
B)There are unlimited resources.
C)Resources are distributed fairly.
D)People have limited wants in the face of limited resources.
E)Governments should never interfere in the workings of a market economy.

Accepted Answer

The fundamental economic problem is scarcity, which means that there are limited resources to fulfill unlimited wants and needs. This is the underlying feature of most economic problems. Choice B is incorrect because resources are not unlimited. Choice C is incorrect because the distribution of resources may not always be fair. Choice D is incorrect because people usually have unlimited wants and needs. Choice E is incorrect because governments often play a role in regulating and improving market economies.

Question 2

Which of the following best completes the definition of opportunity cost? The opportunity cost of choosing any one alternative is the
A)market cost of the next best alternative.
B)value of the next best alternative that is given up.
C)the revenues that would be given up if that alternative is not chosen.
D)value of all other alternatives combined.
E)value of resources used to make that alternative available to the market.

Accepted Answer

Opportunity cost refers to the value of the next best alternative that is forgone in order to choose a particular option. This means that choosing one alternative involves giving up the benefits that could have been obtained from the next best alternative. Therefore, the correct choice is B, which refers to the value of the next best alternative that is given up.

Question 3

Society's resources are often divided into broad categories.They are
A)goods and services.
B)factors of consumption.
C)land,labour,and capital.
D)population and natural resources.
E)tangible commodities and intangible commodities.

Accepted Answer

The society's resources are divided into three broad categories - land, labor, and capital. These are the factors of production and are required in varying proportions to produce goods and services. Land refers to natural resources such as land, water, oil, natural gas, minerals, etc. Labor refers to human resources or the workforce that performs various activities to produce goods and services. Capital refers to the man-made resources such as machinery, tools, factories, and other infrastructure that are used to produce goods and services. Thus, option C is the correct answer.

Question 4

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.  FIGURE 1-1 Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is
A)0 kilometres of highway repair.
B)50 kilometres of highway repair.
C)100 kilometres of highway repair.
D)150 kilometres of highway repair.
E)200 kilometres of highway repair.

Accepted Answer

The answer of With a budget of $200 million,the government...

Question 5

Consider the following factors of production: - a pharmaceutical research centre
- a hairstylist's scissors
- Google headquarters
- a cloud computing system
- a stapler at a checkout counter.
Each of these is an example of
A)land.
B)goods.
C)services.
D)capital.
E)labour.

Accepted Answer

The factors of production mentioned - a pharmaceutical research centre, Google headquarters, a cloud computing system - all fall under the category of capital, which refers to physical or human assets used for production. The other options - a hairstylist's scissors and a stapler at a checkout counter - could be considered tools or equipment, but not necessarily capital.

Question 6

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.  FIGURE 1-1 Refer to Figure 1-1.Which of the following combinations of kilometres of highway repair and helicopters is unaffordable,given the government's budget of $200 million?
A)B
B)D
C)E
D)F
E)G

Accepted Answer

The answer of With a budget of $200 million,the government...

Question 7

In economics,what word is used to describe the act of using goods or services to satisfy wants?
A)consumption
B)production
C)purchasing power
D)investment
E)shopping

Accepted Answer

Consumption is the term used to describe the act of using goods or services to satisfy wants. Production refers to the creation of goods and services, purchasing power refers to the ability to buy goods and services, investment refers to putting money into assets with the hope of future financial gain, and shopping refers to the activity of browsing or buying goods in a store.

Question 8

Consider the following list: a worker with training in video gaming technology,10 hectares of arable land in southern Ontario,a fishing trawler in Nova Scotia,an ice-cream truck at a park in Quebec.Each of these is an example of
A)a factor of production.
B)a capital resource.
C)a commodity.
D)goods and services.
E)an economic service.

Accepted Answer

Each of the items listed represents a factor of production. The worker with training in video gaming technology represents human capital, the arable land represents land, the fishing trawler represents capital, and the ice-cream truck represents entrepreneurship.

Question 9

Which of the following statements provides the best definition of economics?
A)The study of the most equitable distribution of scarce resources.
B)The study of the use of scarce resources to satisfy unlimited human wants.
C)The study of the production of goods and services.
D)The study of the productive capacity of a nation's factors of production.
E)The study of production and increasing its efficiency.

Accepted Answer

Economics is the study of how people make choices in a world of scarcity. Resources are finite, but people's wants and needs are infinite. This forces people to make choices, and economics studies those choices.

Question 10

With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms.  FIGURE 1-2 Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional laptop computer?
A)0 textbooks
B)1/10 of a textbook
C)10 textbooks
D)20 textbooks
E)2000 textbooks

Accepted Answer

The answer of With a budget of $500 000,a school...

Question 11

Which of the following best describes the study of economics?
A)how to plan an economy
B)how to limit human wants so that scarce resources are sufficient
C)why resources are scarce
D)the allocation of scarce resources among alternative uses
E)how to distribute income as equally as possible

Accepted Answer

Economics is primarily concerned with the allocation of scarce resources among alternative uses. This means that economics is concerned with studying how to distribute resources such as labor, capital, and land so that they can be used most efficiently to satisfy unlimited human wants. While understanding why resources are scarce is important, it is not the central focus of economics. Planning an economy and limiting human wants are also not the primary goals of economics. Similarly, while income distribution is an aspect of economics, it is not the only or primary concern of the field.

Question 12

Which of the following statements best describes the economic concept of scarcity?
A)Society is not employing all of its available resources in an efficient manner.
B)People's wants can never be satisfied by the available resources.
C)Scarcity afflicts only poor countries.
D)Too many frivolous goods and services are produced at the expense of socially desirable goods and services.
E)Production is efficient,but distribution is inefficient.

Accepted Answer

Scarcity is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It means that people's wants and needs are greater than the resources available to satisfy them. This is a universal concept that applies to all individuals and societies, regardless of their level of wealth or development.

Question 13

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.  FIGURE 1-1 Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that
A)the opportunity cost of the highway repair is uncertain.
B)the opportunity cost of the highway repair is $0.
C)the opportunity cost of the highway repair is 4 search and rescue helicopters.
D)there is no opportunity cost involved because the government has achieved its objectives.
E)there is no opportunity cost involved because the government stayed within its budget.

Accepted Answer

Opportunity cost is the value of the next best alternative that must be given up to pursue a certain action. If the government chooses to allocate all $200 million to highway repair, they cannot also purchase the 4 helicopters. Therefore, the opportunity cost of the highway repair is 4 search and rescue helicopters. So, the best choice is to purchase the 4 helicopters.

Question 14

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.  FIGURE 1-1 Refer to Figure 1-1.For the government,the opportunity cost of one kilometre of highway repair is
A)1 search and rescue helicopter.
B)1/2 of a search and rescue helicopter.
C)1/10 of a search and rescue helicopter.
D)1/50 of a search and rescue helicopter.
E)1/100 of a search and rescue helicopter.

Accepted Answer

The answer of With a budget of $200 million,the government...

Question 15

Which of the following is NOT considered a "factor of production" in economics?
A)the espresso machine at your local cafe
B)the barista who makes the coffee
C)the espresso drink you purchase
D)the wood stir sticks
E)the land on which the cafe sits

Accepted Answer

The espresso drink is not considered a factor of production because it is the end product that is sold to the consumer, rather than a resource or input used in the production process. The other options (espresso machine, barista, stir sticks, and land) are all examples of factors of production.

Question 16

Economics can best be described as
A)the study of how a society ought to allocate its resources.
B)the study of the use of scarce resources to satisfy unlimited human wants.
C)the application of sophisticated mathematical models to address social problems.
D)a normative science.
E)the study of how to reduce inflation and unemployment.

Accepted Answer

Economics is the study of how to allocate scarce resources among unlimited human wants. It is not a normative science, which would prescribe how things should be done, but rather a positive science that describes how things actually work. It also includes the study of inflation and unemployment, but these are only two aspects of the broader subject matter of economics. And while some economists do use mathematical models to address social problems, this is not the only or even the primary method used in the field.

Question 17

Scarcity implies that choices must be made.Making choices implies
A)the wasteful use of resources.
B)that scarcity can be eliminated.
C)the existence of costs of production.
D)the existence of opportunity costs.
E)both C and D above.

Accepted Answer

Scarcity means limited resources and unlimited wants. When making choices, one must weigh the benefits and costs of each option, which leads to the concept of opportunity cost. Opportunity cost is the value of the next best alternative that must be forgone in order to pursue a certain action. Therefore, the best choice in a situation of scarcity is the one with the lowest opportunity cost.

Question 18

Because resources are scarce,individuals are required to
A)make choices among alternatives.
B)use resources inefficiently.
C)sacrifice production but not consumption.
D)improve distribution but not production.
E)improve production but not distribution.

Accepted Answer

Scarcity necessitates that individuals make choices among alternative uses of resources, as they cannot have access to every resource they want. This involves choosing which resources to allocate towards certain goals or needs, and often requires individuals to forego other desired outcomes.

Question 19

A basic underlying point in economics is that
A)people have unlimited wants in the face of limited resources.
B)there are unlimited resources.
C)governments should satisfy the needs of the people.
D)people have limited wants in the face of limited resources.
E)governments should never interfere in the workings of a market economy.

Accepted Answer

One of the fundamental principles of economics is the concept of scarcity, meaning that resources are limited while people have unlimited wants and needs. Therefore, people need to make choices about how to allocate scarce resources, and this is the basis for economic decision-making.

Question 20

Scarcity is likely to be
A)a problem that will be solved by the proper use of available resources.
B)unique to the twenty-first century.
C)a problem that will always exist.
D)a result of the work ethic.
E)eliminated with a better understanding of economics.

Accepted Answer

Scarcity is a fundamental economic problem that arises because resources are limited but human wants are unlimited. As long as human wants exist, scarcity will always exist. It is not a problem that can be completely solved.

Quiz 1: Economic Issues and Concepts

Which of the following statements best describes the underlying feature of most economic problems?

Which of the following best completes the definition of opportunity cost? The opportunity cost of choosing any one alternative is the

Society's resources are often divided into broad categories.They are

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1 Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is

Consider the following factors of production: - a pharmaceutical research centre - a hairstylist's scissors - Google headquarters - a cloud computing system - a stapler at a checkout counter. Each of these is an example of

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1 Refer to Figure 1-1.Which of the following combinations of kilometres of highway repair and helicopters is unaffordable,given the government's budget of $200 million?

In economics,what word is used to describe the act of using goods or services to satisfy wants?

Consider the following list: a worker with training in video gaming technology,10 hectares of arable land in southern Ontario,a fishing trawler in Nova Scotia,an ice-cream truck at a park in Quebec.Each of these is an example of

Which of the following statements provides the best definition of economics?

With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms. FIGURE 1-2 Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional laptop computer?

Which of the following best describes the study of economics?

Which of the following statements best describes the economic concept of scarcity?

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1 Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1 Refer to Figure 1-1.For the government,the opportunity cost of one kilometre of highway repair is

Which of the following is NOT considered a "factor of production" in economics?

Economics can best be described as

Scarcity implies that choices must be made.Making choices implies

Because resources are scarce,individuals are required to

A basic underlying point in economics is that

Scarcity is likely to be