Ch01
Student: ___________________________________________________________________________
1. The economic problem is essentially one of deciding how to make the best use of:
A. unlimited resources to satisfy unlimited wants
B. limited resources to satisfy unlimited wants
C. unlimited resources to satisfy limited wants
D. limited resources to satisfy limited wants
E. free resources to satisfy expensive wants
2. Economists assume that people customarily behave rationally, meaning that people:
A virtually always weigh the personal benefits and costs of every available action and choose an action on
. the basis of their individual wants
B. act in a rational way when buying and selling products, but not in other settings
C. act rationally when they buy products, but not when they sell them
D. act rationally when they sell products, but not when they buy them
E. are unable to act in an irrational way
3. An economist who says that consumer wants are inexhaustible means that:
A. economic resources are valuable only because they can be used to produce consumer goods
B. economic resources—natural, capital, and human resources—are scarce
C. consumers wants are virtually unlimited and, therefore, incapable of being fully satisfied
D. the nature of consumer wants is highly unpredictable
E. the nature of consumer demand varies from time to time and from country to country
4. The fundamental problem of economics is:
A. to establish equity between personal and business taxation
B. to establish a democratic political framework for the provision of social goods and services
C. to establish prices that accurately reflect the relative scarcities of products and resources
D. to achieve a fair distribution of money income to reduce poverty
E. the scarcity of productive resources relative to consumer wants
5. The economic problem stems from the fact that:
A. the production possibilities curve bows out to the right
B. resources are scarce relative to people's demand for goods and services
C. people act to maximize their own welfare
D. historically the production possibilities curve has been shifting down toward the origin
E. the production possibilities curve bows in to the left
6. The study of economics is carried out because:
A. government interferes with the efficient distribution of scarce resources
B. resources are scarce in relation to consumer wants
C. the market system is an obstacle to the efficient use of plentiful resources to satisfy limited wants
D. resources are overly abundant as compared with wants and, therefore, a distribution problem exists
E. government aids in the efficient distribution of scarce resources
,7. The scarcity problem:
A. persists only because countries have failed to achieve continual full employment
B. persists because a society's consumer wants exceed its available economic resources
C. has been eliminated in all industrialized nations
D. has been eliminated in affluent societies such as Canada and the United States
E. is eliminated when a nation has achieved full employment
8. Because of scarcity, the efficient use of resources is:
A. an important economic goal in all economies
B. an important economic goal only in command economies
C. an important economic goal only in market economies
D. not an important economic goal
E. an important economic goal only in traditional economies
9. As used in economics, the notion of scarcity means that:
A. mineral deposits are available only in limited amounts
B. resources are not so plentiful that all consumer wants can be fulfilled
C. many resources are freely available
D. the quantities available of some resources exceed the demand for them
E. the demand for some resources is nonexistent
10. Stocks and bonds are not considered to be an economic resource because they:
A. sometimes fall in value
B. do not earn interest income
C. are available in unlimited quantities
D. are not free gifts of nature
E. do not add to the economy's stock of real capital
11. The money payments made to owners of human resources are:
A. wages, salaries, or interest
B. wages, salaries, or rent
C. interest or profit
D. wages, salaries, or profit
E. rent or profit
12. Economic resources do NOT include:
A. natural resources
B. real capital assets
C. human effort
D. stocks and bonds
E. human ingenuity
,13. Which of the following is a capital resource?
A. a pair of stockings
B. a dump truck
C. a savings account
D. a share of IBM stock
E. a Bell Canada bond
14. The role of the entrepreneur involves:
A. waiting for leadership
B. manual labour
C. bearing risks
D. hiring chartered accountants to make business decisions for them
E. acting as a landowner
15. Economics can best be described as the study of how:
A. to profitably to invest one's income in stocks and bonds
B. to manage household expenses
C. government policies affect businesses and labour
D. to manage business enterprises for profit
E. to distribute limited resources among alternative ends
16. Economics is primarily the study of:
A. why resources are scarce
B. how advertising and sales promotion shape consumer wants
C. how to make profitable investments
D. how to use scarce resources among alternative ends
E. why consumer wants are unlimited
17. Microeconomics is concerned with the:
A. total levels of income, employment, and output
B. behaviour of individual participants in various markets
C. causes of inflation and unemployment
D. overall view of the operation of the economic system
E. way governments can stabilize the economy
18. Which of the following is a microeconomic statement?
A. Total economic output increased by 2.5 percent last year.
B. Unemployment was 9.8 percent of the labour force last year.
C. The price of wheat declined last year.
D. The general price level increased by 4 percent last year.
E. Business investment decreased by 2 percent last year.
, 19. Macroeconomics approaches the study of economics from the viewpoint of:
A. individual producers
B. governmental units
C. specific product and resource markets
D. individual consumers
E. entire economic sectors
20. Which of the following is a macroeconomic statement?
A. The gross profits of all Canadian businesses were $60 billion last year.
B. The price of computers declined by 3 percent last year.
C. Research in Motion's profits increased last year.
D. The productivity of Canadian steelworkers increased by 1 percent last year.
E. The prices of science and technology stock rose by 10 percent last year.
21. Economic models:
A. are useless because they are not based upon laboratory experiments
B. deal with a multitude of details
C. are generalizations of economic reality
D. are abstractions of reality and are, therefore, of no use to economists
E. are more effective the more complex they are
22. Economic models:
A. are of limited use because they cannot be tested empirically
B. are limited to variables that are directly related to one another
C. emphasize basic economic relationships by abstracting from the complexities of the real world
D. are unrealistic and are, therefore, of no practical consequence
E. are often illogical, but are sometimes useful
23. Which of the following is a correct statement?
A. Economics is concerned only with explaining the way that economies actually operate and not with how
they should operate.
B Though not quantitatively exact, economic laws are useful because they allow us to predict and,
. therefore, to control or to adjust to events.
C Economics is as scientific as physics and chemistry because economic laws are as quantitatively precise
. as the laws of physics or chemistry.
D. Because economics is concerned with questions of "ought," it is a branch of applied ethics and not
scientific.
E. Economics is concerned with how economies should operate and not with how they do operate.
24. An economic model usually includes:
A. neither independent nor dependent variables
B. only a dependent variable and no independent variables
C. the proposition that no relationship exists between various factors
D. only an independent variable and no dependent variables
E. two or more factors that have measurable values
Student: ___________________________________________________________________________
1. The economic problem is essentially one of deciding how to make the best use of:
A. unlimited resources to satisfy unlimited wants
B. limited resources to satisfy unlimited wants
C. unlimited resources to satisfy limited wants
D. limited resources to satisfy limited wants
E. free resources to satisfy expensive wants
2. Economists assume that people customarily behave rationally, meaning that people:
A virtually always weigh the personal benefits and costs of every available action and choose an action on
. the basis of their individual wants
B. act in a rational way when buying and selling products, but not in other settings
C. act rationally when they buy products, but not when they sell them
D. act rationally when they sell products, but not when they buy them
E. are unable to act in an irrational way
3. An economist who says that consumer wants are inexhaustible means that:
A. economic resources are valuable only because they can be used to produce consumer goods
B. economic resources—natural, capital, and human resources—are scarce
C. consumers wants are virtually unlimited and, therefore, incapable of being fully satisfied
D. the nature of consumer wants is highly unpredictable
E. the nature of consumer demand varies from time to time and from country to country
4. The fundamental problem of economics is:
A. to establish equity between personal and business taxation
B. to establish a democratic political framework for the provision of social goods and services
C. to establish prices that accurately reflect the relative scarcities of products and resources
D. to achieve a fair distribution of money income to reduce poverty
E. the scarcity of productive resources relative to consumer wants
5. The economic problem stems from the fact that:
A. the production possibilities curve bows out to the right
B. resources are scarce relative to people's demand for goods and services
C. people act to maximize their own welfare
D. historically the production possibilities curve has been shifting down toward the origin
E. the production possibilities curve bows in to the left
6. The study of economics is carried out because:
A. government interferes with the efficient distribution of scarce resources
B. resources are scarce in relation to consumer wants
C. the market system is an obstacle to the efficient use of plentiful resources to satisfy limited wants
D. resources are overly abundant as compared with wants and, therefore, a distribution problem exists
E. government aids in the efficient distribution of scarce resources
,7. The scarcity problem:
A. persists only because countries have failed to achieve continual full employment
B. persists because a society's consumer wants exceed its available economic resources
C. has been eliminated in all industrialized nations
D. has been eliminated in affluent societies such as Canada and the United States
E. is eliminated when a nation has achieved full employment
8. Because of scarcity, the efficient use of resources is:
A. an important economic goal in all economies
B. an important economic goal only in command economies
C. an important economic goal only in market economies
D. not an important economic goal
E. an important economic goal only in traditional economies
9. As used in economics, the notion of scarcity means that:
A. mineral deposits are available only in limited amounts
B. resources are not so plentiful that all consumer wants can be fulfilled
C. many resources are freely available
D. the quantities available of some resources exceed the demand for them
E. the demand for some resources is nonexistent
10. Stocks and bonds are not considered to be an economic resource because they:
A. sometimes fall in value
B. do not earn interest income
C. are available in unlimited quantities
D. are not free gifts of nature
E. do not add to the economy's stock of real capital
11. The money payments made to owners of human resources are:
A. wages, salaries, or interest
B. wages, salaries, or rent
C. interest or profit
D. wages, salaries, or profit
E. rent or profit
12. Economic resources do NOT include:
A. natural resources
B. real capital assets
C. human effort
D. stocks and bonds
E. human ingenuity
,13. Which of the following is a capital resource?
A. a pair of stockings
B. a dump truck
C. a savings account
D. a share of IBM stock
E. a Bell Canada bond
14. The role of the entrepreneur involves:
A. waiting for leadership
B. manual labour
C. bearing risks
D. hiring chartered accountants to make business decisions for them
E. acting as a landowner
15. Economics can best be described as the study of how:
A. to profitably to invest one's income in stocks and bonds
B. to manage household expenses
C. government policies affect businesses and labour
D. to manage business enterprises for profit
E. to distribute limited resources among alternative ends
16. Economics is primarily the study of:
A. why resources are scarce
B. how advertising and sales promotion shape consumer wants
C. how to make profitable investments
D. how to use scarce resources among alternative ends
E. why consumer wants are unlimited
17. Microeconomics is concerned with the:
A. total levels of income, employment, and output
B. behaviour of individual participants in various markets
C. causes of inflation and unemployment
D. overall view of the operation of the economic system
E. way governments can stabilize the economy
18. Which of the following is a microeconomic statement?
A. Total economic output increased by 2.5 percent last year.
B. Unemployment was 9.8 percent of the labour force last year.
C. The price of wheat declined last year.
D. The general price level increased by 4 percent last year.
E. Business investment decreased by 2 percent last year.
, 19. Macroeconomics approaches the study of economics from the viewpoint of:
A. individual producers
B. governmental units
C. specific product and resource markets
D. individual consumers
E. entire economic sectors
20. Which of the following is a macroeconomic statement?
A. The gross profits of all Canadian businesses were $60 billion last year.
B. The price of computers declined by 3 percent last year.
C. Research in Motion's profits increased last year.
D. The productivity of Canadian steelworkers increased by 1 percent last year.
E. The prices of science and technology stock rose by 10 percent last year.
21. Economic models:
A. are useless because they are not based upon laboratory experiments
B. deal with a multitude of details
C. are generalizations of economic reality
D. are abstractions of reality and are, therefore, of no use to economists
E. are more effective the more complex they are
22. Economic models:
A. are of limited use because they cannot be tested empirically
B. are limited to variables that are directly related to one another
C. emphasize basic economic relationships by abstracting from the complexities of the real world
D. are unrealistic and are, therefore, of no practical consequence
E. are often illogical, but are sometimes useful
23. Which of the following is a correct statement?
A. Economics is concerned only with explaining the way that economies actually operate and not with how
they should operate.
B Though not quantitatively exact, economic laws are useful because they allow us to predict and,
. therefore, to control or to adjust to events.
C Economics is as scientific as physics and chemistry because economic laws are as quantitatively precise
. as the laws of physics or chemistry.
D. Because economics is concerned with questions of "ought," it is a branch of applied ethics and not
scientific.
E. Economics is concerned with how economies should operate and not with how they do operate.
24. An economic model usually includes:
A. neither independent nor dependent variables
B. only a dependent variable and no independent variables
C. the proposition that no relationship exists between various factors
D. only an independent variable and no dependent variables
E. two or more factors that have measurable values
