Definition of Economics
1) In a world characterized by scarcity
A) all goods are free.
B) opportunity cost is zero.
C) we are not limited by time.
D) individuals need not work to obtain goods.
E) people must make choices among alternatives.
Answer: E
Diff: 1 Type: MC
Topic: Definition of Economics
2) Which of the following is the best definition of economics?
A) the study of how a provincial government allocates tax dollars
B) the study of how consumers spend their income
C) the study of how producers decide what inputs to hire and what outputs to produce
D) the study of how individuals, businesses, governments, and entire societies make choices as they cope with scarcity and the incentives that influence and reconcile those choices
E) the study of how consumers and producers meet each other in the market
Answer: D
Diff: 1 Type: MC
Topic: Definition of Economics
3) Which of the following is a microeconomic topic?
A) the reasons why a consumer buys less honey
B) the reasons why the average price level in a country falls
C) the cause of increasing unemployment
D) the effect of the government budget deficit on inflation
E) the reasons why the labour force in a country decreases
Answer: A
Diff: 1 Type: MC
Topic: Definition of Economics
4) The study of how wages are set for New Brunswick teachers is classified as
A) a macroeconomic topic.
B) a microeconomic topic.
C) economics of social interest.
D) economics of private interest.
E) normative economics.
Answer: B
Diff: 1 Type: MC
Topic: Definition of Economics
5) Which of the following newspaper headlines concerns a macroeconomic issue?
A) Why are people buying more SUVs and fewer minivans?
B) How would a tax on e-commerce affect chapters.indigo.ca?
C) How would an unexpected freeze in Oxford, Nova Scotia change the price of blueberries in the Maritimes?
D) Why is Japan's economy stagnant?
E) Why do grain producers purchase less pesticides?
Answer: D
Diff: 1 Type: MC
Topic: Definition of Economics
6) The branch of economics that studies the choices of individuals and businesses is
A) macroeconomics.
B) microeconomics.
C) positive economics.
D) normative economics.
E) social economics.
Answer: B
Diff: 1 Type: MC
Topic: Definition of Economics
7) Each of the following would be considered a macroeconomic topic except
A) the reasons for a decrease in the unemployment rate.
B) the cause of recessions.
C) the effect of the government budget deficit on inflation.
D) the determination of aggregate income.
E) the selection of production techniques.
Answer: E
Diff: 2 Type: MC
Topic: Definition of Economics
8) Complete the following sentence. Macroeconomics
A) is primarily concerned with the operation of individual markets in the economy.
B) deals mainly with the economic behaviour of households.
C) is the only part of economics to deal with government decisions.
D) is primarily concerned with the behaviour of the stock market.
E) is the study of the performance of the national economy and the global economy.
Answer: E
Diff: 2 Type: MC
Topic: Definition of Economics
9) The determination of prices in individual markets is primarily a concern of
A) positive economics.
B) negative economics.
C) macroeconomics.
D) microeconomics.
E) descriptive economics.
Answer: D
Diff: 2 Type: MC
Topic: Definition of Economics
10) Which one of the following topics does macroeconomics study?
A) decisions of individual firms
B) effects of government safety regulations on the price of cars
C) the performance of the global economy
D) prices of individual goods and services
E) effects of taxes on the price of gasoline
Answer: C
Diff: 2 Type: MC
Topic: Definition of Economics
11) Which one of the following topics does microeconomics study?
A) reasons for a fall in the price of orange juice
B) the effect of a rise in the Canadian dollar on Canada's exports
C) effect of interest rates on national economic growth
D) effect of the government budget deficit on employment
E) determination of total production in a country
Answer: A
Diff: 2 Type: MC
Topic: Definition of Economics
12) Complete the following sentence. Microeconomics is
A) not concerned with factors of production.
B) concerned with normative issues only.
C) concerned with the size of the total amount of income earned by all households in an economy.
D) the branch of economics that studies the choices of individuals and businesses.
E) concerned exclusively with the role of the government in the economy.
Answer: D
Diff: 2 Type: MC
Topic: Definition of Economics
13) Which of the following would be considered a microeconomic topic?
A) the severity of a recession
B) the cause of unemployment in the economy
C) the effect of the government budget deficit on inflation
D) the determination of aggregate income
E) the study of how wages are set for mine workers
Answer: E
Diff: 2 Type: MC
Topic: Definition of Economics
14) The branch of economics that studies the performance of the national economy and the global economy is
A) macroeconomics.
B) microeconomics.
C) Keynesian economics.
D) positive economics.
E) normative economics.
Answer: A
Diff: 1 Type: MC
Topic: Definition of Economics
15) The fact that human wants cannot be fully satisfied with available resources is called the problem of
A) opportunity cost.
B) scarcity.
C) normative economics.
D) marginal cost.
E) the big tradeoff.
Answer: B
Diff: 1 Type: MC
Topic: Definition of Economics
16) The problem of scarcity exists
A) only in economies that lack incentives.
B) only in economies that have incentives.
C) in all economies.
D) only when people are unemployed.
E) now but will be eliminated with economic growth.
Answer: C
Diff: 2 Type: MC
Topic: Definition of Economics
17) The inescapable economic fact is that
A) there are unlimited wants and limited resources.
B) there are unlimited resources, and we just have to decide how to allocate them.
C) capitalists are always exploiting the workers.
D) unions are always exploiting firms.
E) capitalists and unions cannot work together.
Answer: A
Diff: 2 Type: MC
Topic: Definition of Economics
18) An incentive
A) could be a reward but could not be a penalty.
B) could be a penalty but could not be a reward.
C) could be either a reward or a penalty.
D) is the opposite of a tradeoff.
E) occurs in the macroeconomy but not in the microeconomy.
Answer: C
Diff: 1 Type: MC
Topic: Definition of Economics
19) Scarcity confronts
A) neither the poor nor the rich.
B) the rich but not the poor.
C) the poor but not the rich.
D) the rich and the poor.
E) only families with incomes less than $25,000 a year.
Answer: D
Diff: 1 Type: MC
Topic: Definition of Economics
20) The problem of scarcity applies
A) to all countries, regardless of their level of development.
B) only in industrially developed countries because resources are scarce in these countries.
C) only in developing countries because resources are scarce in these countries
D) only in countries that are over-populated
E) only in countries that use natural resources in most of their production processes
Answer: A
Diff: 1 Type: MC
Topic: Definition of Economics
21) Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge.
This statement means that the incentive to exercise dogs at the dog park ________.
The operators' decision is a ________.
A) remains the same; macroeconomic decision
B) changes; microeconomic decision
C) remains the same; microeconomic decision
D) changes; macroeconomic decision
E) changes; decision in the self-interest but not in the social interest
Answer: B
Diff: 2 Type: MC
Topic: Definition of Economics
Source: MyLab Economics
1.2 Two Big Economic Questions
1) The two big economic questions
A) involve self-interest only.
B) involve only social interest.
C) involve neither self-interest nor social interest.
D) do not arise from scarcity.
E) involve both self-interest and social interest.
Answer: E
Diff: 1 Type: MC
Topic: Two Big Economic Questions
2) The two big economic questions
A) summarize the scope of economics.
B) are "what goods and services are produced?" and "how are goods and services produced?"
C) have nothing to do with goods and services.
D) do not consider for whom goods and services are produced.
E) have nothing to do with the way goods and services are produced.
Answer: A
Diff: 1 Type: MC
Topic: Two Big Economic Questions
3) The two big economic questions include all of the following except
A) what to produce.
B) why to produce.
C) how to produce.
D) for whom to produce.
E) a determination of whether the pursuit of self-interest also promotes the social interest.
Answer: B
Diff: 2 Type: MC
Topic: Two Big Economic Questions
4) When a firm decides to produce more hybrid cars and fewer gas guzzlers, it is answering the ________ question.
A) "how"
B) "what"
C) "who"
D) "where"
E) "when"
Answer: B
Diff: 2 Type: MC
Topic: Two Big Economic Questions
5) When a textile firm decides to produce more silk fabric and less cotton fabric, it is answering the ________ question.
A) "who"
B) "how"
C) "what"
D) "where"
E) "when"
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
6) When a farmer decides to harvest tomatoes using machines instead of migrant workers, the farmer is answering the ________ question.
A) "what"
B) "how"
C) "who"
D) "where"
E) "when"
Answer: B
Diff: 2 Type: MC
Topic: Two Big Economic Questions
7) Complete the following sentence. Capital is
A) money in the bank.
B) the knowledge and skill that people obtain from education, on-the-job training, and work experience.
C) the tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services.
D) composed of financial investment and commodities such as gold and silver.
E) traded in stock markets and bond markets.
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
8) When a firm decides to produce computers using robots instead of people, it is answering the ________ question.
A) "what"
B) "where"
C) "how"
D) "who"
E) "when"
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
9) To meet increased demand for its good, a firm decides to hire a few high-skilled workers, rather than hire many low-skilled workers. The firm is answering the ________ question.
A) "when"
B) "what"
C) "who"
D) "where"
E) "how"
Answer: E
Diff: 2 Type: MC
Topic: Two Big Economic Questions
10) An art museum decides to offer audio tour downloads rather than have tour guides. The museum is answering the ________ question.
A) "what"
B) "who"
C) "how"
D) "where"
E) "when"
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
11) To earn income, people sell the services of the factors of production they own. Land earns ________and labour earns ________.
A) profit; wages
B) wages; interest
C) rent; wages
D) profit; interest
E) rent; minimum wage
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
12) The fact that some people can afford to live in beautiful homes while others are homeless is an example of an economy facing the ________ question.
A) "what"
B) "how"
C) "for whom"
D) "where"
E) "when"
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
13) The fact that a hockey star earns $10 million a year while a teacher earns $75,000 annually is an example of an economy facing the ________ question.
A) "what"
B) "how"
C) "where"
D) "for whom"
E) "when"
Answer: D
Diff: 2 Type: MC
Topic: Two Big Economic Questions
14) Complete the following sentence. Entrepreneurship is
A) defined as money.
B) traded on the stock market.
C) categorized as capital.
D) the human resource that organizes labour, land and capital.
E) categorized as the factor of production labour.
Answer: D
Diff: 2 Type: MC
Topic: Two Big Economic Questions
15) Sue, who has a law degree, earns $200,000 a year, while Chris, a high-school dropout, earns $15.00 an hour. This is an example of an economy facing the ________ question.
A) "what"
B) "how"
C) "for whom"
D) "where"
E) "when"
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
16) A star athlete can afford a garage full of exotic cars while other people can only afford to take a city bus for transportation. This is an example of an economy facing the ________ question.
A) "what"
B) "how"
C) "for whom"
D) "where"
E) "when"
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
17) Complete the following sentence. Financial capital is
A) one of the "gifts of nature."
B) a factor of production.
C) money, stocks, and bonds.
D) not subject to scarcity.
E) a service.
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
18) Which factor of production earns the most income?
A) capital
B) land
C) labour
D) entrepreneurship
E) the stock market
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
19) What choices are best for the entire society?
A) self-interest choices
B) choices influenced by lobbyists
C) social interest choices
D) choices made by majority rule
E) choices made by well-meaning citizens
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
20) Self-interest choices are
A) those choices which are best for the person making them.
B) never in the social interest.
C) always in the social interest.
D) those choices that are best for all residents of a region.
E) choices that are agreed to by majority vote.
Answer: A
Diff: 3 Type: MC
Topic: Two Big Economic Questions
21) The expansion of international trade, borrowing and lending, and investment is
A) the big tradeoff.
B) not in the best interests of most countries.
C) a corporate revolution.
D) globalization.
E) antiglobalization.
Answer: D
Diff: 3 Type: MC
Topic: Two Big Economic Questions
22) Which of the following relates factors of production to the sources of income correctly?
A) Land earns interest.
B) Land earns rent.
C) Labour earns rent.
D) Capital earns profit.
E) Entrepreneurship earns rent.
Answer: B
Diff: 1 Type: MC
Topic: Two Big Economic Questions
23) Which statement about incomes earned by factors of production is false?
A) Land earns rent.
B) Natural resources earn rent.
C) Labour earns wages.
D) Capital earns profit.
E) Entrepreneurship earns profit.
Answer: D
Diff: 1 Type: MC
Topic: Two Big Economic Questions
24) A tractor is an example of which of the following factors of production?
A) capital
B) labour
C) land
D) entrepreneurship
E) energy
Answer: A
Diff: 1 Type: MC
Topic: Two Big Economic Questions
25) Which one of the following is an example of capital as a factor of production?
A) money held by Tim Hortons
B) a Bell Canada bond
C) an automobile factory owned by Ford
D) a high school teacher
E) natural gas
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
26) Which of the following would an economist classify as capital?
A) natural resources
B) a deposit of silver
C) entrepreneurship
D) a computer
E) land
Answer: D
Diff: 1 Type: MC
Topic: Two Big Economic Questions
27) Which one of the following is labour?
A) money
B) a carpenter's hammer
C) a shoe factory
D) a bread-slicing machine
E) a singer's voice
Answer: E
Diff: 1 Type: MC
Topic: Two Big Economic Questions
28) Which one of the following would economists classify as land?
A) an automotive plant in British Columbia
B) rich agricultural soil in Saskatchewan
C) an oil rig in the Atlantic Ocean
D) an elementary school in Nova Scotia
E) automobiles parked in a parking lot in Manitoba
Answer: B
Diff: 2 Type: MC
Topic: Two Big Economic Questions
29) Which one of the following is an example of a factor of production?
A) an insurance policy
B) a donut
C) the skills of a welder
D) an IBM stock certificate
E) a computer game
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
30) Which one of the following is an example of capital?
A) money
B) a carpenter
C) pasture
D) a bread-slicing machine
E) a university professor
Answer: D
Diff: 1 Type: MC
Topic: Two Big Economic Questions
31) The creation of a successful movie can influence the main questions that economics seeks to answer. Choose the statement that is false.
A) The movie influences the how question because the movie can create new production techniques, which can be used in subsequent films.
B) The movie influences the for whom question because the people who earn higher incomes through the movie production buy more goods and services.
C) The movie influences the when question because movie crews work on many different films and must be available for the entire production.
D) The movie influences the what question because it can lead to spinoff goods or a new movie genre, which can result in the production of similar films.
E) The movie influences the how question because it can use unknown actors or Academy Award winners.
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
Source: MyLab Economics
32) Choose the correct statement.
A) Canada produces more services than goods.
B) In Canada today, manufacturing accounts for 50 percent of total production.
C) In Canada today, agriculture accounts for 30 percent of total production.
D) China's production of services is a greater percentage of its total production than Canada's.
E) Canada's production of manufacturing is a greater percentage of its total production than China's.
Answer: A
Diff: 1 Type: MC
Topic: Two Big Economic Questions
33) In Canada ________ percent of the adult population have completed high school and ________ percent have a college or university degree.
A) 25; 95
B) 95; 55
C) 95; 25
D) 100; 55
E) 55; 25
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
34) Which of the following is not a factor of production?
A) the water used to cool a nuclear power plant
B) the effort of farmers raising cattle
C) the wages paid to workers
D) the management skill of a small business owner
E) the land used by a farmer to grow wheat
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
35) Which factor of production includes the "gifts of nature"?
A) labour
B) capital
C) human capital
D) entrepreneurship
E) land
Answer: E
Diff: 1 Type: MC
Topic: Two Big Economic Questions
36) Which of the following is not a factor of production?
A) Timmy who is developing a production schedule for a new product
B) 175 shares of Microsoft stock
C) Vans used by a bakery company for deliveries
D) Wilderness areas that have yet to be developed
E) National parks
Answer: B
Diff: 1 Type: MC
Topic: Two Big Economic Questions
37) An outcome is considered efficient if
A) it is the best available choice for an individual.
B) as many people as possible are happy about the outcome.
C) it is not possible to make someone better off without making anyone else worse off.
D) everyone makes the same income.
E) there is the smallest difference possible between the highest income earned and the lowest income earned.
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
38) According to Adam Smith
A) government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self-interest to unintentionally promote the social interest.
B) in a market transaction buyers can either get what they want for less than they would be willing to pay or sellers can make a profit, but both buyers and sellers can't gain simultaneously.
C) politicians are well-equipped to regulate corporations and intervene in markets to improve market outcomes.
D) when big corporations pursue their self-interest of maximum profit, they will inevitably conflict with social interest.
E) the self-interest and the social interest never conflict.
Answer: A
Diff: 2 Type: MC
Topic: Two Big Economic Questions
39) Which one of the following news headlines definitely concerns the social interest?
A) McDonald's Moves into Salads
B) Starbucks Expands in China
C) E Coli Test Results Must be Posted on Beaches
D) Pumpkin Spice Lattes Available Now!
E) The Maple Leafs Win the Stanley Cup
Answer: C
Diff: 2 Type: MC
Topic: Two Big Economic Questions
Source: MyLab Economics
40) Which of the following statements is correct?
A) Canada produces more manufactured goods than services.
B) Canada produces more agricultural goods than services.
C) Canada produces more services than goods.
D) Agriculture accounts for 10 percent of total Canadian production.
E) Canada produces more agricultural goods than manufactured goods.
Answer: C
Diff: 1 Type: MC
Topic: Two Big Economic Questions
1.3 The Economic Way of Thinking
1) Opportunity cost is
A) the value of your favourite activity.
B) your value of leisure.
C) the money you spend on food, shelter, and clothing.
D) the marginal benefit from an activity.
E) the highest-valued alternative that we give up to get something.
Answer: E
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
2) During the next hour John can choose one of the following three activities: playing basketball, watching television, or reading a book. The opportunity cost of reading a book
A) depends on how much the book cost when it was purchased.
B) is the value of playing basketball if John prefers that to watching television.
C) is the value of playing basketball and the value of watching television.
D) depends on how much John enjoys the book.
E) is equal to the marginal benefit from reading the book.
Answer: B
Diff: 3 Type: MC
Topic: The Economic Way of Thinking
3) Sally has to decide whether to study for her economics test or her accounting test. If she chooses to study for accounting, her opportunity cost of studying accounting is
A) studying economics.
B) less than the value of studying economics.
C) not comparable to the value of studying economics.
D) equal to the value of studying economics.
E) the future lost wages that will occur if she fails her accounting exam.
Answer: A
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
4) When the government of Alberta chooses to build more roads, the required resources are no longer available to provide better healthcare facilities. This situation illustrates the concept of
A) marginal benefit.
B) monetary cost.
C) opportunity cost.
D) human capital.
E) entrepreneurship.
Answer: C
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
5) The concept of opportunity cost
A) is used in microeconomics but not macroeconomics.
B) suggests that individuals can achieve all they want.
C) suggests a major increase in public education spending means a reduced expansion in the public healthcare system.
D) is used in macroeconomics but not microeconomics.
E) is relevant only for developing countries.
Answer: C
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
6) To make choices, people must
A) be risk-takers.
B) have unlimited resources.
C) be free from government constraint.
D) have unlimited access to information at no cost.
E) evaluate the values of alternative actions.
Answer: E
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
7) When the government chooses to use resources to build a dam, those resources are no longer available to build a highway. This illustrates the concept of
A) a market.
B) macroeconomics.
C) opportunity cost.
D) a "how" tradeoff.
E) the big tradeoff.
Answer: C
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
8) Marginal benefit is
A) the cost of an increase in an activity.
B) the sum of benefit and cost that arises from an increase in an activity.
C) the cost of a decrease in an activity.
D) the benefit that arises from an increase in an activity.
E) the benefit that arises from a decrease in an activity.
Answer: D
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
9) "There can be too much of a good thing." This statement suggests that
A) choices made in self-interest cannot be applied to many economic decisions.
B) a good may be produced to the point where its marginal cost exceeds its marginal benefit.
C) certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits.
D) a good may be produced to the point where its marginal benefit exceeds its marginal cost.
E) a good may be produced to the point where its marginal benefit is equal to its marginal cost.
Answer: B
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
10) Which of the following sayings best describes opportunity cost?
A) "Make hay while the sun shines."
B) "Love of money is the root of all evil."
C) "Boldly go where no one has gone before."
D) "There's no such thing as a free lunch."
E) "Baseball has been very good to me."
Answer: D
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
11) If you take an additional class this term, you can graduate earlier. This is an example of
A) opportunity cost.
B) total cost.
C) the pursuit of social interest.
D) marginal benefit.
E) social cost.
Answer: D
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
12) Marginal benefit is the
A) total benefit from an activity.
B) additional benefit from a decrease in an activity.
C) additional benefit from an increase in an activity.
D) opportunity cost of a decrease in an activity.
E) opportunity cost of an increase in an activity.
Answer: C
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
13) Complete the following sentence. Marginal cost is
A) the total cost of an activity.
B) the total cost of a decrease in an activity.
C) the opportunity cost of an increase in an activity.
D) the opportunity cost of a decrease in an activity.
E) equal to marginal benefit.
Answer: C
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
14) Monika will choose to eat a seventh pizza slice if
A) the marginal benefit from the seventh slice is greater than its marginal cost.
B) the marginal benefit from the seventh slice is less than its marginal cost.
C) the total benefit from all seven slices is greater than their total cost.
D) the total benefit from all seven slices is less than their total cost.
E) she has enough money to pay for it.
Answer: A
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
15) The night before a history test, you decide to go to the movies instead of reviewing your notes. You get 60 percent on your test compared with the 75 percent that you normally score. You ________ a tradeoff and the opportunity cost of your evening at the movies was ________.
A) faced; the 15 percent fall in your grade
B) did not face; zero
C) did not face; the 15 percent fall in your grade
D) faced; the mark of 60 percent on your test
E) faced; the 75 percent that you normally score
Answer: A
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
Source: MyLab Economics
16) A university decides to change its late night bus service between the campus and student housing from a fare-based service to a free service. This statement means that the incentive to ride the bus ________ and the opportunity cost of a bus ride ________. The university's decision is a ________ decision.
A) changes; decreases; microeconomic
B) changes; decreases; macroeconomic
C) remains the same; remains the same; macroeconomic
D) remains the same; remains the same; microeconomic
E) changes; increases; microeconomic
Answer: A
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
Source: MyLab Economics
Use the information below to answer the following question.
Fact 1.3.1 Costs Soar for London Olympics
The regeneration of East London, the site of the 2012 Olympic Games, is set to add extra £1.5 billion to taxpayers' bill.
Source: The Times, London, July 6, 2006
17) Refer to Fact 1.3.1. The cost of regenerating East London ________ an opportunity cost of hosting the 2012 Olympic Games ________.
A) is not; because few people attending the 2012 Olympics will spend much time outside Olympic venues
B) is; if the costs of the East London regeneration is equal to a significant percentage of the total amount spent by London taxpayers to host the 2012 Olympics
C) is; if the regeneration of East London would not occur unless London hosted the 2012 Olympics
D) is not; because regenerating East London is an unnecessary expense
E) is; if the property taxes of people living in East London increase
Answer: C
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
Source: MyLab Economics
18) You have the choice of going on vacation to Florida for one week, staying at work for the week, or spending the week doing fix-up projects around your house. If you decide to go to Florida, the opportunity cost of the trip is
A) working and doing fix-up projects.
B) working or doing fix-up projects, depending on which you would have done otherwise.
C) working, because you would be giving up income.
D) nothing because you will enjoy the trip to Florida.
E) variable depending on the weather you leave behind in Canada.
Answer: B
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
19) Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares
A) the total revenue from sales of printers to the total cost of producing all the printers.
B) the extra revenue from selling a few additional printers to the extra costs of producing the printers.
C) the extra revenue from selling a few additional printers to the average cost of producing the additional printers.
D) the revenue from selling HP's printers as compared to printers from competing companies, such as Lexmark.
E) the cost of producing HP's printers as compared to printers from competing companies, such as Lexmark.
Answer: B
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
20) Which of the following creates an incentive to increase the amount of an activity?
A) an increase in the marginal cost of the activity and a decrease in the marginal benefit from the activity
B) a decrease in the marginal cost of the activity and an increase in the marginal benefit from the activity
C) constant marginal cost and constant marginal benefit from the activity
D) an increase in the marginal cost of the activity and an equal increase in the marginal benefit from the activity
E) a decrease in the marginal cost of the activity and an equal decrease in the marginal benefit from the activity
Answer: B
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
21) You have the choice to go skiing during spring break, staying at the university to study, or spending the week visiting your family. If you decide to go skiing, the opportunity cost of the holiday is
A) staying at the university to study because you need to improve your grades.
B) staying at the university because your parents are paying your tuition.
C) staying at the university or spending the week visiting your family, depending on what you would have done otherwise.
D) nothing because you enjoy skiing.
E) visiting your family because not visiting means that you will feel guilty.
Answer: C
Diff: 1 Type: MC
Topic: The Economic Way of Thinking
22) Chanel has the option of purchasing one of three products: Brand A, Brand B, or Brand C. The price of each product is $10. If Chanel decides to purchase Brand A, the opportunity cost of this decision is
A) $20.
B) Brand B or Brand C, depending on which she considers to be the highest-valued alternative forgone.
C) Brand A.
D) Brand B and Brand C.
E) zero if this is a frivolous purchase with no marginal benefit.
Answer: B
Diff: 2 Type: MC
Topic: The Economic Way of Thinking
1.4 Economics as Social Science and Policy Tool
1) Statements about "what ought to be" are called
A) positive statements.
B) normative statements.
C) economic statements.
D) scientific statements.
E) hypotheses.
Answer: B
Diff: 1 Type: MC
Topic: Economics as Social Science and Policy Tool
2) Statements about "what is" are called
A) positive statements.
B) normative statements.
C) economic statements.
D) scientific statements.
E) hypotheses.
Answer: A
Diff: 1 Type: MC
Topic: Economics as Social Science and Policy Tool
3) Which of the following statements is normative?
A) Scientists should not make normative statements.
B) Warts are caused by handling toads.
C) As e-book prices fall, people buy more of them.
D) If income increases, sales of luxury goods fall.
