ECO2201: Week 1 Quiz

Possibility A I II III Economics (94) (87) (77) History (76) (84) (91) Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is: Select one: a. 7 points on the economics exam b. 12 points on the economics exam c. 10 points on the economics exam d. 8 points on the history exam

a. 7 points on the economics exam

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: Select one: a. All of the above occur. b. the economy begins using its resources efficiently to produce both food and clothing. c. the economy increases production of both clothing and food. d. the economy operates at its productive capacity once it reaches Point B.

a. All of the above occur.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy? Select one: a.Cuba b.China c.Canada d.Chile

a. Cuba

Refer to Figure 2-1. The most inefficient point depicted is: Select one: a. Point G b. Point C c. Point D d. Point A

a. Point G

Which of the following lies primarily within the realm of macroeconomics? Select one: a.a study of how tax cuts stimulate aggregate production b.a study of the impact of "mad cow" disease on the price of beef worldwide c.an analysis of supply and demand conditions in the electricity market d.a study of the demand for gasoline

a. a study of how tax cuts stimulate aggregate production

If macroeconomics looks at the economy as a whole, it focuses on which of the following? Select one: a.the division of labor b.households c.unemployed people d.business firms

c. unemployed people

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. Select one: a. opportunity set b. budget constraints c. utility d. production possibilities frontier

c. utility

Specialization Select one: a.leads to greater self-sufficiency. b.is always the result of an inefficient use of resources c.allows workers to develop skills by working on a large number of tasks d.can lead to an increase in overall production.

d. can lead to an increase in overall production.

Which of the following best describes a monetary policy tool? Select one: a.household savings b.taxes c.government spending d.interest rates

d. interest rates

Marginal thinking is best demonstrated by: Select one: a.choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. b.acquiring the information relevant to a choice before making that choice c.deciding to never purchase a coat made with animal skins or furs d.measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

a. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories. Select one: a.circular flow diagram b.financial capital market c.Specialization Model d.financial investment market

a. circular flow diagram

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected ___ doesn't change. Select one: a. economy b. market c. production d. firm

a. economy

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected ___ doesn't change. a. economy b. market c. production d. firm

a. economy

Which of the following is generally accepted as a valid criticism of the production of useful goods and services? Select one: a.environmental pollution b.the black market c.government involvement d.economic freedom

a. environmental pollution

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending. Select one: a.government b.capital market c.business d.household

a. government

Which of the following best describes a monetary policy tool? Select one: a.interest rates b.household savings c.taxes d.government spending

a. interest rates

Macroeconomics: Select one: a.is concerned with the expansion and contraction of the overall economy. b.is narrower in scope than microeconomics. c.analyzes mergers and acquisitions between firms. d.is concerned with the expansion of a small business into a large corporation.

a. is concerned with the expansion and contraction of the overall economy.

Refer to Figure 2-2. At Point A in the production possibilities graph shown above, the economy: Select one: a. is not using its resources efficiently. b. is using its resources efficiently while producing clothing but no food. c. is using its resources efficiently while producing clothing but no food. d. is using its resources efficiently to produce both food and clothing.

a. is not using its resources efficiently

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. Select one: a.marginal analysis b.opportunity cost c.benefit analysis d.utility

a. marginal analysis

The opportunity cost of attending university is likely to include all except which of the following? Select one: a. the cost of haircuts received during the school term b. the income you forgo in order to attend classes c. tuition fees d. the cost of required textbooks

a. the cost of haircuts received during the school term

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: Select one: a.$44 b.$4 c.$40 d.$0

a.$44

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: Select one: a.$40 b.$44 c.$4 d.$0

b. $44

Possibility A I II III Economics (94) (87) (77) History (76) (84) (91) Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is: Select one: a. 8 points on the history exam. b. 15 points on the history exam. c. 14 points on the history exam. d. 17 points on the history exam.

b. 15 points on the history exam.

Why is there scarcity? Select one: a. Because theory dictates it. b. Because our unlimited wants exceed our limited resources c. Because human wants are limited d. Because the opportunity set determines this

b. Because our unlimited wants exceed our limited resources

Which of the following best characterizes the circular flow of income? Select one: a.Businesses buy resources from the government, and households buy goods and services from businesses. b.Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. c.Households buy factors of production from businesses, and businesses buy goods and services from households. d.The government purchases resources from businesses and households and then sells goods and services to businesses and households.

b. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy? Select one: a.Canada b.Cuba c.China d.Chile

b. Cuba

_____________ a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines. Select one: a. Skill b. Economies of scale c. Specialization d. Division of labor

b. Economies of scale

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________. Select one: a. the production possibilities frontier b. allocative efficiency c. scarcity d. trade-offs

b. allocative efficiency

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible. Select one: a. consumption set b. budget constraint c. original budget d. income cap

b. budget constraint

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. Select one: a.productive efficiency b.budget constraint c.production possibilities frontier d.Opportunity cost

b. budget constraint

The law of ____________________________ explains why people and societies rarely make all-or-nothing choices. Select one: a. marginal analysis b. diminishing marginal utility c. consumption d. utility

b. diminishing marginal utility

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. Select one: a.modern economy b.division of labor c.task economy d.interconnected economy

b. division of labor

The circular flow diagram of economic activity is a model of the: Select one: a.interaction among taxes, prices, and profits. b.flow of goods, services, and payments between households and firms. c.role of unions and government in the economy. d.influence of government on business behaviour.

b. flow of goods, services, and payments between households and firms.

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made. Select one: a.firm b.government c.business sector d.market

b. government

Which of the following best describes a fiscal policy tool? Select one: a.bank lending b.government spending c.household spending d.financial capital markets

b. government spending

Which of the following best describes a fiscal policy tool? Select one: a.financial capital markets b.government spending c.bank lending d.household spending

b. government spending

The basic difference between macroeconomics and microeconomics is: Select one: a.microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. b.microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. c.microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment. d.microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms.

b. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

In many cases, it is reasonable to refer to the ________________ as the price. Select one: a.budget constraint b.opportunity cost c.budget constraint d.sunk cost

b. opportunity cost

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? Select one: a.wage levels b.the macroeconomy c.household income d.the firm's income

b. the macroeconomy

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. Select one: a. sunk costs b. utility c. opportunity cost d. marginal benefit

b. utility

Possibility A I II III Economics (94) (87) (77) History (76) (84) (91) Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is: Select one: a. 17 points on the history exam. b. 8 points on the history exam. c. 15 points on the history exam. d. 14 points on the history exam.

c. 15 points on the history exam.

Possibility A I II III Economics (94) (87) (77) History (76) (84) (91) Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is: Select one: a. 8 points on the history exam b. 12 points on the economics exam c. 7 points on the economics exam d. 10 points on the economics exam

c. 7 points on the economics exam

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: Select one: a. the economy increases production of both clothing and food. b. the economy begins using its resources efficiently to produce both food and clothing. c. All of the above occur. d. the economy operates at its productive capacity once it reaches Point B.

c. All of the above occur.

Why is there scarcity? Select one: a. Because human wants are limited b. Because theory dictates it. c. Because our unlimited wants exceed our limited resources d. Because the opportunity set determines this

c. Because our unlimited wants exceed our limited resources

Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: Select one: a. A to B b. G to F c. C to F d. B to E

c. C to F

Which of the following would most likely shift the production possibilities curve inward? Select one: a.an increase in the production of capital goods b.an increase in the number of hours factories are in use c.a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time d.technological progress

c. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

Which of the following is most likely a topic of discussion in macroeconomics? Select one: a.an increase in the wage rate paid to automobile workers b.an increase in the price of a hamburger c.a decrease in the unemployment rate d.a decrease in the production of DVD players by a consumer electronics company

c. a decrease in the unemployment rate

Which of the following lies primarily within the realm of macroeconomics? Select one: a.an analysis of supply and demand conditions in the electricity market b.a study of the impact of "mad cow" disease on the price of beef worldwide c.a study of how tax cuts stimulate aggregate production d.a study of the demand for gasoline

c. a study of how tax cuts stimulate aggregate production

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: Select one: a.producers and input suppliers. b.producers and government planning committees. c.buyers and sellers. d.all consumers.

c. buyers and sellers.

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. Select one: a.interconnected economy b.modern economy c.division of labor d.task economy

c. division of labor

Which of the following is generally accepted as a valid criticism of the production of useful goods and services? Select one: a.economic freedom b.the black market c.environmental pollution d.government involvement

c. environmental pollution

In the ______________, households receive goods and services and pay firms for them. Select one: a.labor market b.financial capital market c.goods and services market d.savings market

c. goods and services market

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? Select one: a.command economy b.division of labour c.international trade d.economies of scale

c. international trade

The opportunity cost of an action: Select one: a. can be determined by adding up the bills incurred as a result of the action. b. can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. c. is a subjective valuation that can be determined only by the individual who chooses the action. d. can be objectively determined only by economists.

c. is a subjective valuation that can be determined only by the individual who chooses the action.

In the ____________, households work and receive payment from firms. Select one: a.financial capital market b.savings market c.labor market d.financial investment market

c. labor market

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. Select one: a. law of increasing marginal utility b. production possibilities frontier c. law of diminishing marginal utility d. law of trade-offs

c. law of diminishing marginal utility

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being: Select one: a.balanced budget b.assuring competition between firms c.low inflation d.prudent monetary policy

c. low inflation

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. Select one: a.macroeconomy b.command economy c.market-oriented economy d.microeconomy

c. market-oriented economy

Attending college is a case where the ________________ exceeds the monetary cost. Select one: a. marginal utility b. budget constraint c. opportunity cost d. marginal analysis

c. opportunity cost

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is: Select one: a. Point C b. Point B c. Point D d. All points on the production possibilities frontier are equally efficient.

d. All points on the production possibilities frontier are equally efficient.

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is: Select one: a. Point D b. Point B c. Point C d. All points on the production possibilities frontier are equally efficient.

d. All points on the production possibilities frontier are equally efficient.

Which of the following statements most likely lies within the realm of microeconomics? Select one: a.Unemployment rises during a recession and falls during an expansion. b.A rapid acceleration of the supply of money may create inflation. c.An increase in government spending will increase the aggregate demand for goods and services in the economy. d.An increase in labor costs will increase the additional cost of producing another bus.

d. An increase in labor costs will increase the additional cost of producing another bus.

Which of the following best characterizes the circular flow of income? Select one: a.Households buy factors of production from businesses, and businesses buy goods and services from households. b.The government purchases resources from businesses and households and then sells goods and services to businesses and households. c.Businesses buy resources from the government, and households buy goods and services from businesses. d.Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

d. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: Select one: a. A to B b. G to F c. B to E d. C to F

d. C to F

In countries like _____________ the command economy predominates. Select one: a.China and Vietnam b.South Africa and Kenya c.Germany and France d.Cuba and North Korea

d. Cuba and North Korea

Which of the following statements most likely lies within the realm of macroeconomics? Select one: a.An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. b.Due to process innovations in computer chip manufacturing, the market supply of computers increased. c.Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook. d.Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

d. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

Refer to Figure 2-1. The most inefficient point depicted is: a. Point C b. Point D c. Point A d. Point G

d. Point G

Which of the following would most likely shift the production possibilities curve inward? Select one: a.an increase in the number of hours factories are in use b.technological progress c.an increase in the production of capital goods d.a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

d. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

Which of the following is most likely a topic of discussion in macroeconomics? Select one: a.an increase in the price of a hamburger b.an increase in the wage rate paid to automobile workers c.a decrease in the production of DVD players by a consumer electronics company d.a decrease in the unemployment rate

d. a decrease in the unemployment rate

Macroeconomics primarily examines: Select one: a.the behaviour of individual households and firms. b.how prices are determined within individual markets. c.the output levels that maximize the profits of business firms d.broad issues such as national output, employment and inflation.

d. broad issues such as national output, employment and inflation.

Macroeconomics primarily examines: a.the behaviour of individual households and firms. b.how prices are determined within individual markets. c.the output levels that maximize the profits of business firms d.broad issues such as national output, employment and inflation.

d. broad issues such as national output, employment and inflation.

Specialization Select one: a.is always the result of an inefficient use of resources b.allows workers to develop skills by working on a large number of tasks c.leads to greater self-sufficiency. d.can lead to an increase in overall production.

d. can lead to an increase in overall production.

Scarcity implies that: Select one: a. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. b. consumers are too poor to afford the goods and services available c. consumers would be willing to purchase the same quantity of a good at a higher price. d. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

d. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. Select one: a. law of trade-offs b. law of increasing marginal utility c. production possibilities frontier d. law of diminishing marginal utility

d. law of diminishing marginal utility

As a person receives more of a good, the _______________ from each additional unit of the good declines. Select one: a. sunk costs b. budget constraint c. utility d. marginal utility

d. marginal utility

The basic difference between macroeconomics and microeconomics is that: Select one: a.macroeconomics is concerned with generalization while microeconomics is concerned with specialization. b.microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). c.macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. d.microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

d. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. Select one: a.budget constraint b.trade-off c.opportunity cost d.normative statement

d. normative statement

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. Select one: a. budget constraints b. opportunity costs c. marginal analysis d. sunk costs

d. sunk costs

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. Select one: a. marginal analysis b. budget constraints c. opportunity costs d. sunk costs

d. sunk costs

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: Select one: a.nothing, because he enjoys playing basketball more than studying. b.the increase in skill he obtains from playing basketball for that hour. c.nothing, because he had a free pass into the sports complex to play basketball. d.the benefit to his grades from studying for an hour

d. the benefit to his grades from studying for an hour

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. Select one: a. utility b. allocative efficiency c. scarcity d. the production possibilities frontier

d. the production possibilities frontier

Macroeconomic topics do not usually include: Select one: a.the rate of inflation. b.the rate of unemployment. c.economic growth. d.the profit maximizing decisions of an individual manufacturer.

d. the profit maximizing decisions of an individual manufacturer.