Question 1

Figure 1-7 shows the production possibilities boundary for an economy that produces two goods - cotton and bananas.
  FIGURE 1-7
-A modern economy like Canadaʹs is largely organized by

Accepted Answer

A)   governments at all levels coordinating the activities of firms and citizens.
B)   individuals forming cooperative enterprises and labour unions.
C)   individuals following their own self interest, doing what seems best for themselves.
D)   benevolent individuals pursuing the public interest.
E)   the self-interested behaviour of a small number of individuals.F) All of the above
G) B) and C)

Question 2

On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the

Accepted Answer

A)   points on the boundary.
B)   area within the boundary.
C)   distance from the origin to the boundary.
D)   negative slope of the boundary.
E)   unattainable points outside the boundary.F) B) and E)
G) A) and C)

Question 3

Figure 2-5 shows monthly average per unit)  production costs for producing Good X.
  FIGURE 2-5
-A basic underlying point in economics is that

Accepted Answer

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.F) C) and D)
G) A) and E)

Question 4

Suppose Andrea has a job that pays her $25 000 per year after taxes) . She is considering quitting her job and going to university full time for four years. Tuition fees and books will cost $12 000 per year. Living expenses in either situation will cost $10 000 per year. What is the opportunity cost of Andreaʹs four -year university degree?

Accepted Answer

A)   $88 000
B)   $100 000
C)   $120 000
D)   $148 000
E)   $188 000F) A) and E)
G) C) and E)

Question 5

Suppose that a bakeshop with 5 employees can produce both pies and cakes. In one day, if all resources are devoted to baking pies, the shop can produce 125 pies; if all resources are devoted to baking cakes, the shop can produce 50. What is the shopʹs opportunity cost of producing any one pie?

Accepted Answer

A)   125 pies
B)   0.4 cakes
C)   2.5 pies
D)   0.4 pies
E)   50 cakesF) C) and E)
G) A) and B)

Question 6

Which of the following is illustrated by the circular flow of income?

Accepted Answer

A)   the flows of expenditures and income in a household
B)   that firms own the factors of production
C)   the interaction of households and firms through the factors and goods markets
D)   that the flow of payments moves in the same direction as the flow of goods
E)   that there is no relationship between goods markets and factor marketsF) C) and D)
G) B) and E)

Question 7

Figure 2-5 shows monthly average per unit)  production costs for producing Good X.
  FIGURE 2-5
-Which of the following best describes the study of economics?

Accepted Answer

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 possibleF) All of the above
G) D) and E)

Question 8

Most modern economies in the world today

Accepted Answer

A)   have pure market exchange.
B)   are similar to feudal systems.
C)   are mostly run by government decree.
D)   have a mix of traditional, command and market elements.
E)   are complex systems that defy description and analysis.F) A) and B)
G) A) and C) D

Question 9

FIGURE 1-5
-Refer to Figure 1-5. Which production possibilities boundaries are consistent with increasing opportunity costs?

Accepted Answer

A)   boundary A only
B)   boundaries A and B
C)   boundary C only
D)   boundaries B and C
E)   boundaries A, B, and CF) B) and D)
G) A) and E)

Question 10

Which of the following has most contributed to the globalization of the economy?

Accepted Answer

A)   the decreased importance of agriculture
B)   reductions in transportation and communication costs
C)   the shift toward a market economy in China
D)   tariffs and trade barriers
E)   the decline in the relative importance of manufacturingF) B) and D)
G) B) and C) B

Question 11

Money facilitates trade and specialization by

Accepted Answer

A)   allowing an efficient barter system to develop.
B)   increasing the value of gold.
C)   eliminating the need for barter.
D)   reducing the shift of resources between uses.
E)   providing employment for coin makers.F) A) and D)
G) C) and D)

Question 12

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 governmentʹs budget of $200 million?

Accepted Answer

A)   B
B)   D
C)   E
D)   F
E)   GF) B) and C)
G) B) and D)

Question 13

When discussing types of economic systems the Canadian economy is best described as

Accepted Answer

A)   primarily a public ownership economy.
B)   primarily free-market decision making.
C)   traditional.
D)   a command economy.
E)   a mixed economic system.F) None of the above
G) A) and C)

Question 14

The diagram below shows two production possibilities boundaries for Country X.
  FIGURE 1-4
-Refer to Figure 1-4. If Country X is currently producing at point A, it could move to point B if

Accepted Answer

A)   the cost of producing capital goods were to increase.
B)   some resources were switched from the capital goods industries to the consumer goods industries.
C)   the cost of producing consumer goods were to increase.
D)   some resources were switched from the consumer goods industries to the capital goods industries.
E)   Country X is no longer able to produce the quantity of capital goods at point A.F) D) and E)
G) None of the above

Question 15

The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce either 6 fishing lures or mow 6 lawns.  TABLE 1-1
-Refer to Table 1-1. If Tristan and Thomas want to maximize their joint output from one day of work, how should they specialize their production?

Accepted Answer

A)   Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns
B)   Tristan produces 6 lures; Thomas produces 6 lures
C)   Tristan produces 6 lures and 3 mowed lawns
D)   Tristan produces 12 lures; Thomas produces 6 mowed lawns
E)   Tristan produces nothing, Thomas produces 6 lures and 6 mowed lawnsF) None of the above
G) A) and B) D

Question 16

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

Accepted Answer

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.F) A) and C)
G) B) and E)

Question 17

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

Accepted Answer

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.F) C) and D)
G) A) and E)

Question 18

The diagram below shows two production possibilities boundaries for Country X.
  FIGURE 1-4
-Refer to Figure 1-4. A shift of the production possibilities boundary from PPB1 to PPB2 implies

Accepted Answer

A)   a movement from full employment to some unemployment.
B)   that if point E is the new choice of outputs, productivity has increased in the consumer goods industry.
C)   that technology in the capital goods industries has improved.
D)   an inevitable decrease in total output.
E)   that technology in the consumer goods industry has improved.F) All of the above
G) C) and D)

Question 19

The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue.
  FIGURE 1-6
-Suppose there are only two goods produced in our economysnowplows and helicopters. If there is always a two-for-one tradeoff between the production of these two goods in terms of opportunity cost) , then the production possibilities boundary between snowplows and helicopters is

Accepted Answer

A)   a downward-sloping curve convex to the origin.
B)   circular.
C)   a downward-sloping straight line.
D)   a downward-sloping straight line with slope equal to -1.
E)   a downward-sloping curve concave to the origin.F) B) and D)
G) A) and E)

Question 20

In mixed economies, economic behaviour is

Accepted Answer

A)   largely determined by a central authority.
B)   based primarily on custom and habit.
C)   directed only by self interest.
D)   affected by elements of tradition, government command, and market incentives.
E)   random and unpredictable.F) C) and D)
G) B) and E)

Exam 1: Economic Issues and Concepts

Figure 1-7 shows the production possibilities boundary for an economy that produces two goods - cotton and bananas. FIGURE 1-7 -A modern economy like Canadaʹs is largely organized by

Correct Answer
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On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the

Correct Answer
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Figure 2-5 shows monthly average per unit) production costs for producing Good X. FIGURE 2-5 -A basic underlying point in economics is that

Correct Answer
verified

Correct Answer
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Suppose that a bakeshop with 5 employees can produce both pies and cakes. In one day, if all resources are devoted to baking pies, the shop can produce 125 pies; if all resources are devoted to baking cakes, the shop can produce 50. What is the shopʹs opportunity cost of producing any one pie?

Correct Answer
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Which of the following is illustrated by the circular flow of income?

Correct Answer
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Figure 2-5 shows monthly average per unit) production costs for producing Good X. FIGURE 2-5 -Which of the following best describes the study of economics?

Correct Answer
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Most modern economies in the world today

Correct Answer
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D

FIGURE 1-5 -Refer to Figure 1-5. Which production possibilities boundaries are consistent with increasing opportunity costs?

Correct Answer
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Which of the following has most contributed to the globalization of the economy?

Correct Answer
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B

Money facilitates trade and specialization by

Correct Answer
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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 governmentʹs budget of $200 million?

Correct Answer
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When discussing types of economic systems the Canadian economy is best described as

Correct Answer
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The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 -Refer to Figure 1-4. If Country X is currently producing at point A, it could move to point B if

Correct Answer
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Correct Answer
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D

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

Correct Answer
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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

Correct Answer
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The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 -Refer to Figure 1-4. A shift of the production possibilities boundary from PPB1 to PPB2 implies

Correct Answer
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Correct Answer
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In mixed economies, economic behaviour is

Correct Answer
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Exam 1: Economic Issues and Concepts

Figure 1-7 shows the production possibilities boundary for an economy that produces two goods - cotton and bananas. FIGURE 1-7 -A modern economy like Canadaʹs is largely organized by

Correct AnswerverifiedShow Answer

On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the

Correct AnswerverifiedShow Answer

Figure 2-5 shows monthly average per unit) production costs for producing Good X. FIGURE 2-5 -A basic underlying point in economics is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that a bakeshop with 5 employees can produce both pies and cakes. In one day, if all resources are devoted to baking pies, the shop can produce 125 pies; if all resources are devoted to baking cakes, the shop can produce 50. What is the shopʹs opportunity cost of producing any one pie?

Correct AnswerverifiedShow Answer

Which of the following is illustrated by the circular flow of income?

Correct AnswerverifiedShow Answer

Figure 2-5 shows monthly average per unit) production costs for producing Good X. FIGURE 2-5 -Which of the following best describes the study of economics?

Correct AnswerverifiedShow Answer

Most modern economies in the world today

Correct AnswerverifiedD

FIGURE 1-5 -Refer to Figure 1-5. Which production possibilities boundaries are consistent with increasing opportunity costs?

Correct AnswerverifiedShow Answer

Which of the following has most contributed to the globalization of the economy?

Correct AnswerverifiedB

Money facilitates trade and specialization by

Correct AnswerverifiedShow Answer

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 governmentʹs budget of $200 million?

Correct AnswerverifiedShow Answer

When discussing types of economic systems the Canadian economy is best described as

Correct AnswerverifiedShow Answer

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 -Refer to Figure 1-4. If Country X is currently producing at point A, it could move to point B if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 -Refer to Figure 1-4. A shift of the production possibilities boundary from PPB1 to PPB2 implies

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In mixed economies, economic behaviour is

Correct AnswerverifiedShow Answer

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D

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B

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D

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