Question 1

Raghib teaches mathematics at Camford University and receives $40,000 per year.His spouse, Noraini, works as a self-employed computer programmer and charges $40 per hour.Which statement describes Raghib and Noraini's income?

Accepted Answer

Raghib's income is a salary because he is employed by a university and receives a fixed annual amount. Noraini's income is a proprietor's income because she is self-employed and earns money based on the hours she works.

Question 2

Which of the following is an example of a durable good?

Accepted Answer

Durable goods are items that have a long lifespan and can be used multiple times. Binoculars are an example of a durable good because they can be used for years, whereas food (choices A and B) are perishable and have a short lifespan. High-fashion clothing (choice C) is also not a durable good because it may go out of style quickly or wear out after a few uses.

Question 3

Brian is the sole proprietor of Long Voyage Software, which generates maps for wilderness exploration trips.He started the business with an initial investment of $80,000.A faulty map caused one customer to get hopelessly lost.After her rescue and recuperation, the customer sued Long Voyage for $5,000,000.Which statement describes Brian's liability?

Accepted Answer

As a sole proprietor, Brian has unlimited personal liability, meaning that he is personally responsible for all debts and legal judgments against the business. Therefore, if the customer is awarded $5,000,000, Brian will be personally responsible for paying all of it.

Question 4

Which of the following do consumers obtain using household income?

Accepted Answer

Consumers use their household income to obtain services such as housing, transportation, healthcare, and education. Dividends, interest, and capital gains are forms of income obtained from investments and not directly related to household income.

Question 5

Suppose Theo owns a proprietorship that is in serious financial difficulty.The assets of the company are $100,000, but liabilities are $175,000.However, Theo also has stock in General Motors worth $200,000.If Theo files for bankruptcy, what amount of personal assets might he lose?

Accepted Answer

In a proprietorship, the owner's personal assets are not protected from the business's liabilities. Theo's business owes $175,000 but only has $100,000 in assets, leaving a $75,000 shortfall. This amount could be claimed from Theo's personal assets, including his General Motors stock, to satisfy business debts.

Question 6

Which of the following occurred during the Industrial Revolution?

Accepted Answer

During the Industrial Revolution, direct supervision of labour increased as factory owners sought to maximize production and ensure adherence to strict schedules and procedures.

Question 7

Which of the following did NOT occur during the Industrial Revolution?

Accepted Answer

While the other options all occurred during the Industrial Revolution, workers did not bear all the costs of production. In fact, many factory owners invested heavily in new technology and infrastructure to increase production and efficiency. However, workers did often experience poor working conditions, low wages, and long hours, and had limited bargaining power in the early stages of industrialization.

Question 8

Which of the following is an advantage of a sole proprietorship?

Accepted Answer

The ease of organization is a key advantage of a sole proprietorship, as it is the simplest form of business structure to set up and manage. The other options, including pooling resources, limited liability, and double tax exemption, are advantages of other business structures such as partnerships and corporations.

Question 9

Which of the following is an example of a capital resource?

Accepted Answer

A capital resource is a man-made tool or equipment that is used by individuals or firms to produce goods or services. A tractor is a capital resource used by a farmer to plow and cultivate their land, which helps in the production of agricultural goods. The other options do not fit the definition of a capital resource as they are not man-made tools used in the production of goods or services.

Question 10

What are the four basic resources supplied by households?

Accepted Answer

The four basic resources supplied by households are labor, capital, natural resources, and entrepreneurial ability. Option D lists these four resources correctly. Option A includes "intelligence," which is not a fundamental resource in economics. Option B correctly lists natural resources, labor, and entrepreneurial ability but includes "money" instead of "capital" which is a more precise term in economics. Option C includes "intellectual ability" and "physical ability," which are not separate categories of resources but rather fall under the broader categories of labor and natural resources.

Question 11

Which of the following is an example of a durable good?

Accepted Answer

A durable good is an item that lasts for an extended period of time, typically three years or more. Options A, B, and D are all considered non-durable goods because they are consumed quickly and have a short lifespan. On the other hand, a hand-held calculator is an example of a durable good because it can last for many years if properly cared for.

Question 12

Which of the following is a major advantage of the sole proprietorship?

Accepted Answer

The major advantage of the sole proprietorship is the ease of start-up. It is the simplest and least expensive form of business ownership requiring minimal legal formalities to get started. However, it does not offer separation of ownership and control, limited liability for business debt or transferability of ownership and firm continuity over time.

Question 13

To which of the following categories is the largest portion of household personal income allocated?

Accepted Answer

Services typically account for the largest portion of household personal income allocation. This includes expenses such as healthcare, education, housing, and financial services, which often represent a significant portion of consumer spending.

Question 14

Which statement describes a cottage industry?

Accepted Answer

A cottage industry is a type of small-scale industry where the production is carried out in workers' homes rather than in a formal factory setting. The term "cottage" refers to the idea that the production takes place in a small-scale setting, often in workers' cottages. This type of industry is often characterized by the use of simple tools and the division of labor among workers who specialize in certain tasks.

Question 15

Which of the following is a basic type of resource supplied by a household?

Accepted Answer

A household can supply labor as a resource, but not money or taxes. While a household may consume final goods and services, they are not considered a resource supplied by the household.

Question 16

Which of the following accounts for the largest percentage of spending by households in Canada?

Accepted Answer

Services account for the largest percentage of spending by households in Canada, including things like housing, transportation, healthcare, and education. Durable goods (e.g. cars, furniture) and nondurable goods (e.g. food, clothing) also make up a significant portion of spending, but services make up the highest percentage. Underground activities are not typically included in official economic data and are not a significant factor in household spending.

Question 17

Which component of Canadian household spending has grown the most over the past ten years?

Accepted Answer

Spending on services has seen the most significant growth among Canadian households over the past decade, reflecting changes in consumption patterns towards more service-oriented expenditures.

Question 18

Caleb teaches economics at Yucky University and is paid $50,000 per year.He also provides economic forecasts for local business for which he charges $100 per hour.What type of income does Caleb have?

Accepted Answer

Caleb has two sources of income: his salary from teaching economics and his income from providing economic forecasts for local businesses. The salary is considered wage income, while the income from providing economic forecasts is considered proprietor's income. Therefore, some of Caleb's income is salary and some is proprietor's income.

Question 19

Which statement reflects the main purpose of private sector firms in the Canadian economy? Firms:

Accepted Answer

The main purpose of private sector firms is to maximize profit, which is assumed to be the driving force of their decision-making process. While private firms may also provide services that the government cannot, this is not their primary purpose. Social responsibility and maximizing sales may also be goals of private firms, but they are subordinate to the main goal of maximizing profit.

Question 20

Which of the following is one of the main disadvantages of a sole proprietorship as a form of business organization?

Accepted Answer

The main disadvantage of a sole proprietorship is that the owner is personally liable for all the debts and legal obligations of the business. This means that if the business is sued or fails, the owner's personal assets can be at risk. Options A and B are incorrect because they describe advantages of a different form of business organization (partnerships and corporations, respectively). Option D is incorrect because a sole proprietorship, by definition, has only one owner and therefore does not have partners to negotiate separation agreements with.

Quiz 3: Economic Decision Makers

Raghib teaches mathematics at Camford University and receives $40,000 per year.His spouse, Noraini, works as a self-employed computer programmer and charges $40 per hour.Which statement describes Raghib and Noraini's income?

Which of the following is an example of a durable good?

Which of the following do consumers obtain using household income?

Suppose Theo owns a proprietorship that is in serious financial difficulty.The assets of the company are $100,000, but liabilities are $175,000.However, Theo also has stock in General Motors worth $200,000.If Theo files for bankruptcy, what amount of personal assets might he lose?

Which of the following occurred during the Industrial Revolution?

Which of the following did NOT occur during the Industrial Revolution?

Which of the following is an advantage of a sole proprietorship?

Which of the following is an example of a capital resource?

What are the four basic resources supplied by households?

Which of the following is an example of a durable good?

Which of the following is a major advantage of the sole proprietorship?

To which of the following categories is the largest portion of household personal income allocated?

Which statement describes a cottage industry?

Which of the following is a basic type of resource supplied by a household?

Which of the following accounts for the largest percentage of spending by households in Canada?

Which component of Canadian household spending has grown the most over the past ten years?

Caleb teaches economics at Yucky University and is paid $50,000 per year.He also provides economic forecasts for local business for which he charges $100 per hour.What type of income does Caleb have?

Which statement reflects the main purpose of private sector firms in the Canadian economy? Firms:

Which of the following is one of the main disadvantages of a sole proprietorship as a form of business organization?