Chapter 1: True or False

Because Canada is a rich nation, free health care can be provided for all citizens without considering the issue of scarcity.

False

In one year, Parliament passes a tax cut. Since taxes are reduced, Canada did not incur any opportunity cost from this decision.

False

Market equilibrium will always be efficient even if its not equitable.

False, it USUALLY is.

An economy is efficient if one person could be made better off by reallocating resources without making anyone else worse off.

False, it's NOT YET efficient.

Economists make predictions about individual behaviour based on the assumption that people exploit opportunities to make themselves better off. People with the same opportunities should, therefore, always make the same decisions.

First sentence is true. Second is not. People have preferences!

A trade-off involves weighing the costs and the benefits.

True

Market failure occurs when the pursuit of self-interest by producers and consumers leads to bad results for others.

True

The study of economics arises because of the necessity for choice, and the necessity of choice arises because of the fundamental problem of scarcity of resources.

True

An economic situation is in equilibrium when no individual would be better off taking a different action.

True

In equilibrium, there will be no further opportunities for gains from trade.

True