TEST BANK
MICROECONOMICS
16TH CANADIAN EDITION
CHAPTER 1: LIMITS, ALTERNATIVES, AND CHOICES
1) The economic concept that serves as the basis for the study of economics is:
A) inflation.
B) unemployment.
C) money.
D) scarcity.
ANSWER: D
2) As a consequence of the condition of scarcity:
A) there is always enough of everything.
B) production has to be centrally planned.
C) things which are plentiful have relatively high prices.
D) individuals and communities have to make choices among alternatives.
ANSWER: D
3) In every economic system, choices must be made because resources are:
A) infinite, but economic wants are finite.
B) finite, but economic wants are insatiable.
C) unlimited, but economic wants are limited.
D) limited, and so are economic wants.
ANSWER: B
4) Opportunity cost is best defined as:
, A) marginal cost minus marginal benefit.
B) the time spent on an economic activity.
C) the value of the best foregone alternative.
D) the money cost of an economic decision.
ANSWER: C
5) Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to
fly to another city to attend the concert of her favourite music group. The cost of transportation
for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's trip to
the concert is:
A) $300
B) $450
C) $500
D) $600
ANSWER: D
6) When a provincial government chooses to build more roads, the required resources are no
longer available for spending on public education. This dilemma illustrates the concept of:
A) marginal analysis.
B) full employment.
C) full production.
D) opportunity cost.
ANSWER: D
7) Specialization and trade are beneficial to society because:
A) the output of economic goods may be increased with no increase in resources.
B) scarce resources are utilized more efficiently.
C) a division of labour lowers prices for products.
D) all of these are correct.
ANSWER: D
,8) When economists describe "a market," they mean:
A) a place where stocks and bonds are traded.
B) information networks that allow individuals to keep in touch with each other.
C) a hypothetical place where the production of goods and services takes place.
D) a mechanism which coordinates actions of consumers and producers to establish
equilibrium prices and quantities.
ANSWER: D
9) The institution that coordinates actions of consumers and producers to establish prices for
goods and services is known as:
A) a market.
B) a monopoly.
C) a production possibilities curve.
D) consumer sovereignty.
ANSWER: A
10) A major argument for economic growth is that it:
A) creates an equal distribution of income.
B) protects common property resources.
C) leads to a higher standard of living.
D) reduces the amount of taxation.
ANSWER: C
11) One of the basic economic defences of economic growth rests on the conclusion that:
A) growth makes workers less obsolete and more secure in employment.
B) growth reduces the cost of "common property" resources to society.
C) growth makes the gap between unlimited wants and scarce resources less acute.
D) a growth-oriented society has a relatively equitable income distribution.
, ANSWER: C
12) Concern about the general level of prices in an economy is primarily a concern about the
economic goal of:
A) economic efficiency.
B) economic security.
C) price-level stability.
D) equity.
ANSWER: C
13) Assume that a tradeoff exists in the short run between inflation and unemployment. This
relationship means that:
A) a low rate of unemployment causes a low rate of inflation.
B) the unemployment rate always equals the inflation rate.
C) less unemployment can be achieved with more inflation.
D) less unemployment can be achieved with less inflation.
ANSWER: C
14) The study of economics is primarily concerned with:
A) keeping private businesses from losing money.
B) demonstrating that capitalistic economies are superior to socialistic economies.
C) choices which are made in seeking to use scarce resources efficiently.
D) determining the most equitable distribution of society's output.
ANSWER: C
MICROECONOMICS
16TH CANADIAN EDITION
CHAPTER 1: LIMITS, ALTERNATIVES, AND CHOICES
1) The economic concept that serves as the basis for the study of economics is:
A) inflation.
B) unemployment.
C) money.
D) scarcity.
ANSWER: D
2) As a consequence of the condition of scarcity:
A) there is always enough of everything.
B) production has to be centrally planned.
C) things which are plentiful have relatively high prices.
D) individuals and communities have to make choices among alternatives.
ANSWER: D
3) In every economic system, choices must be made because resources are:
A) infinite, but economic wants are finite.
B) finite, but economic wants are insatiable.
C) unlimited, but economic wants are limited.
D) limited, and so are economic wants.
ANSWER: B
4) Opportunity cost is best defined as:
, A) marginal cost minus marginal benefit.
B) the time spent on an economic activity.
C) the value of the best foregone alternative.
D) the money cost of an economic decision.
ANSWER: C
5) Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to
fly to another city to attend the concert of her favourite music group. The cost of transportation
for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's trip to
the concert is:
A) $300
B) $450
C) $500
D) $600
ANSWER: D
6) When a provincial government chooses to build more roads, the required resources are no
longer available for spending on public education. This dilemma illustrates the concept of:
A) marginal analysis.
B) full employment.
C) full production.
D) opportunity cost.
ANSWER: D
7) Specialization and trade are beneficial to society because:
A) the output of economic goods may be increased with no increase in resources.
B) scarce resources are utilized more efficiently.
C) a division of labour lowers prices for products.
D) all of these are correct.
ANSWER: D
,8) When economists describe "a market," they mean:
A) a place where stocks and bonds are traded.
B) information networks that allow individuals to keep in touch with each other.
C) a hypothetical place where the production of goods and services takes place.
D) a mechanism which coordinates actions of consumers and producers to establish
equilibrium prices and quantities.
ANSWER: D
9) The institution that coordinates actions of consumers and producers to establish prices for
goods and services is known as:
A) a market.
B) a monopoly.
C) a production possibilities curve.
D) consumer sovereignty.
ANSWER: A
10) A major argument for economic growth is that it:
A) creates an equal distribution of income.
B) protects common property resources.
C) leads to a higher standard of living.
D) reduces the amount of taxation.
ANSWER: C
11) One of the basic economic defences of economic growth rests on the conclusion that:
A) growth makes workers less obsolete and more secure in employment.
B) growth reduces the cost of "common property" resources to society.
C) growth makes the gap between unlimited wants and scarce resources less acute.
D) a growth-oriented society has a relatively equitable income distribution.
, ANSWER: C
12) Concern about the general level of prices in an economy is primarily a concern about the
economic goal of:
A) economic efficiency.
B) economic security.
C) price-level stability.
D) equity.
ANSWER: C
13) Assume that a tradeoff exists in the short run between inflation and unemployment. This
relationship means that:
A) a low rate of unemployment causes a low rate of inflation.
B) the unemployment rate always equals the inflation rate.
C) less unemployment can be achieved with more inflation.
D) less unemployment can be achieved with less inflation.
ANSWER: C
14) The study of economics is primarily concerned with:
A) keeping private businesses from losing money.
B) demonstrating that capitalistic economies are superior to socialistic economies.
C) choices which are made in seeking to use scarce resources efficiently.
D) determining the most equitable distribution of society's output.
ANSWER: C
