Question 1

What is one advantage that market economies have over central planning

Accepted Answer

A)  They provide an equal distribution of goods and services to consumers.
B)  They establish government economic control.
C)  They solve the problem of scarcity.
D)  They are more efficient.E) A) and B)
F) All of the above

Question 2

Which statement is consistent with the tenth principle of economics

Accepted Answer

A)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily fall.
B)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily rise.
C)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently fall.
D)  If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently rise.E) A) and D)
F) All of the above

Question 3

In the former Soviet Union,producers were paid for meeting output targets,not for selling products.Under those circumstances,what were the economic incentives for producers

Accepted Answer

A)  to produce good quality products which last longer so output targets can be reduced
B)  to conserve on costs, so as to maintain efficiency in the economy
C)  to produce enough to meet the output target, without regard for quality or cost
D)  to produce those products that society desires mostE) A) and D)
F) None of the above

Question 4

Henry decides to spend two hours playing golf rather than working at his job,which pays $8 per hour.What is Henry's tradeoff

Accepted Answer

A)  the $16 he could have earned working for two hours
B)  nothing, because he enjoys playing golf more than working
C)  the increase in skill he obtains from playing golf for those two hours
D)  nothing, because he spent $16 for green fees to play golfE) A) and B)
F) B) and D)

Question 5

What would happen to the study of economics if scarcity disappeared

Accepted Answer

Since economics is the study of how soci...

Question 6

Lisa buys a 1982 BMW,which she plans to restore and sell.She anticipates that the cost of the car and the repairs will be $10,000 and that she can sell it for $15,000.After she has spent $10,000,she discovers she needs to replace the engine,which will cost $4000.She can sell the car without the new engine for $11,000.What should Lisa do

Accepted Answer

A)  She should complete the repairs for $4000 and sell the car for $15,000.
B)  She should sell the car now for $11,000.
C)  She should keep the car because selling it would be a loss.
D)  She should be totally indifferent between finishing the project and selling the car now.E) A) and C)
F) B) and C)

Question 7

With careful planning,we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 8

What is a marginal change

Accepted Answer

A)  a long-term trend
B)  a large, significant adjustment
C)  a change for the worse, and so is usually short term
D)  a small incremental adjustmentE) None of the above
F) B) and C)

Question 9

What is NOT a characteristic of markets

Accepted Answer

A)  Firms decide whom to hire and what to produce.
B)  Government policies do not affect the decisions of firms and households.
C)  Households decide which firms to work for and what to buy with their incomes.
D)  Firms and households guide the decisions based on profit and self-interest.E) A) and B)
F) B) and C)

Question 10

In each of the following decision situations,show what tradeoffs are involved.
a) You are driving and need to decide how fast to drive.
b) You meet a young lady at a party and you are considering whether to ask her out.
c) You like a co-worker whom you have known for a couple of years,and you need to decide whether to go on a date with him.
d) You ponder moving back with your parents.
e) You need to decide whether to buy a used or a new car.
f) You are thinking about opening a computer services business in your basement.
g) You are a consultant for the City of Toronto.The city council asks you to analyze the implications of a new high-rise office building in downtown.

Accepted Answer

a) Driving faster gets you earlier to yo...

Question 11

What can hinder the invisible hand's ability to coordinate the decisions of the firms and households in the economy

Accepted Answer

A)  government actions that distort prices
B)  increased competition in the market
C)  extended periods of unemployment
D)  a dramatic reduction in consumer spendingE) All of the above
F) C) and D)

Question 12

What does economics study

Accepted Answer

A)  how society manages its scarce resources
B)  the government's role in society
C)  how to increase production
D)  how firms make profitsE) A) and B)
F) C) and D)

Question 13

How is the self-interest of the participants in an economy guided into promoting general economic self-interest

Accepted Answer

A)  by the invisible hand
B)  by market power
C)  by government intervention
D)  by property rightsE) A) and C)
F) C) and D)

Question 14

What would happen without the government's protection of property rights

Accepted Answer

A)  Businesses would have less incentive to provide goods and services.
B)  There would be less government regulation of businesses and prices would be lower for consumers.
C)  Taxes would be lower, causing less market inefficiencies.
D)  Businesses would have more freedom with production processes.E) A) and B)
F) None of the above

Question 15

Monica has spent $120,000 purchasing and repairing an old cabin,which she expects to sell for $130,000.She discovers that she needs an additional repair,which will cost $20,000.She can sell the cabin as it is now for $115,000.What should she do

Accepted Answer

A)  She should take the $115,000.
B)  She should never sell something for less than its cost.
C)  She should complete the repairs and sell the cabin.
D)  It doesn't matter which action she takes; the outcome is the same either way.E) None of the above
F) All of the above

Question 16

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require

Accepted Answer

A)  child booster seats in all new cars
B)  seat belts in all new cars
C)  air bags in all new cars
D)  stricter drunk driving lawsE) All of the above
F) A) and D)

Question 17

When people act in their self-interest,what typically happens in a market system,according to Adam Smith

Accepted Answer

A)  They help only themselves.
B)  They harm others.
C)  They help others, but not as much as they would have if they were not self-interested.
D)  They help others even more than when they seek to help others.E) None of the above
F) All of the above

Question 18

What is the definition of productivity

Accepted Answer

A)  the amount of goods and services produced from each hour of a worker's time
B)  the amount of labour that can be saved by replacing workers with machines
C)  the actual amount of effort workers put into an hour of working time
D)  the estimated amount of effort workers put into an hour of working timeE) A) and B)
F) A) and C)

Question 19

What term refers to a situation in which markets fail to allocate resources efficiently

Accepted Answer

A)  economic depression
B)  market failure
C)  corporate bankruptcy
D)  disequilibriumE) C) and D)
F) A) and D)

Question 20

What is the best way to measure the opportunity cost of gasoline

Accepted Answer

A)  by the average price of a litre of gasoline
B)  by the fuel efficiency of the average North American car
C)  by the pollution emitted per 1 km of driving
D)  by the number of minutes of work needed to pay for 1 km of drivingE) B) and C)
F) A) and D)

Exam 1: Ten Principles of Economics

What is the definition of productivity

Correct Answer
verified

When people act in their self-interest,what typically happens in a market system,according to Adam Smith

Correct Answer
verified

What would happen without the government's protection of property rights

Correct Answer
verified

Correct Answer
verified
a) Driving faster gets you earlier to yo...
View Answer

What would happen to the study of economics if scarcity disappeared

Correct Answer
verified
Since economics is the study of how soci...
View Answer

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require

Correct Answer
verified

What can hinder the invisible hand's ability to coordinate the decisions of the firms and households in the economy

Correct Answer
verified

How is the self-interest of the participants in an economy guided into promoting general economic self-interest

Correct Answer
verified

Which statement is consistent with the tenth principle of economics

Correct Answer
verified

Monica has spent $120,000 purchasing and repairing an old cabin,which she expects to sell for $130,000.She discovers that she needs an additional repair,which will cost $20,000.She can sell the cabin as it is now for $115,000.What should she do

Correct Answer
verified

What is a marginal change

Correct Answer
verified

With careful planning,we can usually get something that we like without having to give up something else that we like.

Correct Answer
verified

What term refers to a situation in which markets fail to allocate resources efficiently

Correct Answer
verified

Henry decides to spend two hours playing golf rather than working at his job,which pays $8 per hour.What is Henry's tradeoff

Correct Answer
verified

In the former Soviet Union,producers were paid for meeting output targets,not for selling products.Under those circumstances,what were the economic incentives for producers

Correct Answer
verified

Correct Answer
verified

What is one advantage that market economies have over central planning

Correct Answer
verified

What is NOT a characteristic of markets

Correct Answer
verified

What does economics study

Correct Answer
verified

What is the best way to measure the opportunity cost of gasoline

Correct Answer
verified

Exam 1: Ten Principles of Economics

What is the definition of productivity

Correct AnswerverifiedShow Answer

When people act in their self-interest,what typically happens in a market system,according to Adam Smith

Correct AnswerverifiedShow Answer

What would happen without the government's protection of property rights

Correct AnswerverifiedShow Answer

Correct Answerverifieda) Driving faster gets you earlier to yo...View AnswerShow Answer

What would happen to the study of economics if scarcity disappeared

Correct AnswerverifiedSince economics is the study of how soci...View AnswerShow Answer

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require

Correct AnswerverifiedShow Answer

What can hinder the invisible hand's ability to coordinate the decisions of the firms and households in the economy

Correct AnswerverifiedShow Answer

How is the self-interest of the participants in an economy guided into promoting general economic self-interest

Correct AnswerverifiedShow Answer

Which statement is consistent with the tenth principle of economics

Correct AnswerverifiedShow Answer

Monica has spent $120,000 purchasing and repairing an old cabin,which she expects to sell for $130,000.She discovers that she needs an additional repair,which will cost $20,000.She can sell the cabin as it is now for $115,000.What should she do

Correct AnswerverifiedShow Answer

What is a marginal change

Correct AnswerverifiedShow Answer

With careful planning,we can usually get something that we like without having to give up something else that we like.

Correct AnswerverifiedShow Answer

What term refers to a situation in which markets fail to allocate resources efficiently

Correct AnswerverifiedShow Answer

Henry decides to spend two hours playing golf rather than working at his job,which pays $8 per hour.What is Henry's tradeoff

Correct AnswerverifiedShow Answer

In the former Soviet Union,producers were paid for meeting output targets,not for selling products.Under those circumstances,what were the economic incentives for producers

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is one advantage that market economies have over central planning

Correct AnswerverifiedShow Answer

What is NOT a characteristic of markets

Correct AnswerverifiedShow Answer

What does economics study

Correct AnswerverifiedShow Answer

What is the best way to measure the opportunity cost of gasoline

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a) Driving faster gets you earlier to yo...
View Answer

Correct Answer
verified
Since economics is the study of how soci...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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