Test Bank for Principles of Microeconomics, 8th Canadian Edition by Mankiw

Name: Class: Date:

Chap 01_8ce

Indicate whether the statement is true or false.
1. Inflation decreases the value of money.
a. True
b. False
a. True
b. False

2. If the average cost of transporting a passenger on the bus from Peterborough to Toronto is $35, it would be
irrational for the railroad to allow any passenger to ride for less than $35.
a. True
b. False
a. True
b. False

3. The cost of an action is measured in terms of foregone opportunities.
a. True
b. False
a. True
b. False

4. Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.
a. True
b. False
a. True
b. False

5. Productivity is defined as the quantity of goods and services produced from each hour of a worker’s time.
a. True
b. False
a. True
b. False

6. Market failure refers to a situation in which the market does not allocate resources efficiently.
a. True
b. False
a. True
b. False

7. A rational decision maker takes an action if and only if the marginal cost exceeds the marginal benefit.
a. True
b. False
a. True
b. False




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