[PRACTICE QUIZ 1] Ch 1 - What is Economics? PDF

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Exam Name____QUIZ

1 Ch 1 -- WHAT IS ECONOMICS?_______________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) Which of the following is the best definition of economics? A) the study of how producers decide what inputs to hire and what outputs to produce B) the study of how consumers and producers meet each other at the market C) the study of how a provincial government allocates tax dollars 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 spend their income

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2) The inescapable economic fact is that A) there are unlimited wants and limited resources. B) capitalists and unions cannot work together. C) capitalists are always exploiting the workers. D) unions are always exploiting firms. E) there are unlimited resources, and we just have to decide how to allocate them.

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3) The two big economic questions include all of the following except A) what to produce. B) for whom to produce. C) why to produce. D) how to produce. E) can choices made in the pursuit of self- interest also promote the social interest.

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4) When a farmer decides to harvest tomatoes using machines instead of migrant workers, the farmer is answering the ________ question. A) "when" B) "who" C) "how" D) "where" E) "what"

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5) To earn income, people sell the services of the factors of production they own. Land earns ________and labour earns ________. A) profit; interest B) profit; wages C) wages; interest D) rent; minimum wage E) rent; wages

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6) An outcome is considered efficient if A) it is not possible to make someone better off without making anyone else worse off. B) everyone makes the same income. C) there is the smallest difference possible between the highest income earned and the lowest income earned. D) as many people as possible are happy about the outcome. E) it is the best available choice for an individual.

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7) Opportunity cost is A) the highest- valued alternative that we give up to get something. B) the money you spend on food, shelter, and clothing. C) the value of your favourite activity. D) your value of leisure. E) the marginal benefit from an activity.

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8) When asked in an interview what she missed the most because of the time she spent training for the 8) Olympics, a rower, who lived on her own, answered "a normal social life." She also revealed that she had given up a job that paid $30,000 per year to train fulltime. She received a grant of $8,000 per year from Sport Canada, but this failed to cover all her training expenses. Her food and rent were $5,000 per year and training expenses were $12,000 per year. Aside from the value of a normal social life, what is the annual opportunity cost, expressed in dollars, to this rower of "Going for Gold"? A) $39,000 B) $25,000 C) $30,000 D) $4,000 E) $34,000 9) Marginal benefit is the A) additional benefit from an increase in an activity. B) additional benefit from a decrease in an activity. C) opportunity cost of a decrease in an activity. D) total benefit from an activity. E) opportunity cost of an increase in an activity.

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Use the figure below to answer the following question.

Figure 1A.3.2

10) Refer to Figure 1A.3.2. The slope across the arc between A and B is A) 3. B) 2. C) 1/2. D) 2/3.

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10) E) 1.

Answer Key Testname: QUIZ 1 CH 1 -- WHAT IS ECONOMCIS

1) D 2) A 3) C 4) C 5) E 6) A 7) A 8) E 9) A 10) C

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