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The document is a quiz for an Economics 103 course, covering various fundamental concepts in economics such as macroeconomics, incentives, scarcity, trade-offs, and production possibilities. It includes multiple-choice questions with correct answers provided for each question. Topics addressed include marginal benefit, opportunity cost, comparative advantage, and the implications of production possibilities frontiers.

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3 views

Quiz1_v1_ans

The document is a quiz for an Economics 103 course, covering various fundamental concepts in economics such as macroeconomics, incentives, scarcity, trade-offs, and production possibilities. It includes multiple-choice questions with correct answers provided for each question. Topics addressed include marginal benefit, opportunity cost, comparative advantage, and the implications of production possibilities frontiers.

Uploaded by

desyos351
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Econ103 Quiz 1

Name _______________________________ Student Number ________________________


1) 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
2) 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
3) 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
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

5) 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
6) 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
7) 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
8) 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
9) 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
10) "The rich should face higher income tax rates than the poor." This is an example of
A) a normative statement.
B) a positive statement.
C) a negative statement.
D) economic reasoning.
E) neither a normative nor a positive statement.
Answer: A
11) The scientific purpose of simplifying assumptions in an economic model is to
A) avoid confronting difficult issues.
B) eliminate the need for further testing of the implications of the model.
C) abstract from the complexities of the real world those issues that are not important for the issues under examination.
D) eliminate the possibility of personal bias in the model.
E) add necessary hypotheses to the problem.
Answer: C
12) Which one of the following concepts is not illustrated by a production possibilities frontier?
A) scarcity
B) marginal benefit
C) opportunity cost
D) attainable and unattainable points
E) the tradeoff between producing one good versus another
Answer: B
13) A tradeoff exists when
A) we move from a point inside the PPF to a point on the PPF.
B) we move from a point on the PPF to a point within the PPF.
C) the PPF shifts outward.
D) we move along the PPF.
E) the PPF shifts inward.
Answer: D

14) The bowed-out (concave) shape of a production possibilities frontier illustrates


A) the equal usefulness of resources in all activities.
B) capital accumulation.
C) technological change.
D) increasing opportunity cost.
E) decreasing opportunity cost.
Answer: D
15) Refer to the production possibilities frontier in Figure 2.1.2. At point A, the opportunity cost of increasing
production of Y to 80 units is
A) 10 units of Y.
B) 80 units of Y.
C) 2 units of X.
D) 3 units of X.
E) 1 unit of X.
Answer: D
16) To describe preferences, economists use the concept of
A) opportunity cost.
B) scarcity.
C) marginal benefit.
D) marginal cost.
E) price.
Answer: C

Figure 2.2.1
17) In Figure 2.2.1, the curve labelled A is the ________ curve and the curve labelled B is the ________ curve.
A) marginal cost; marginal benefit
B) marginal cost; trade
C) marginal benefit; trade
D) production possibilities; trade
E) marginal benefit; marginal cost
Answer: A
Diff: 1 Type: MC
Topic: Using Resources Efficiently

18) In Figure 2.2.1, when 4,000 bicycles are produced each month,
A) the marginal benefit from the 4,000th bicycle is greater than the marginal cost of the 4,000th bicycle.
B) more bicycles must be produced to reach the efficient level of output.
C) fewer bicycles must be produced to reach the efficient level of output.
D) the production of bicycles is efficient.
E) the marginal benefit from the 4,000th bicycle equals the marginal cost of the 4th scooter.
Answer: C
Fact 2.3.2

Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units
of Y in an hour.

19) Refer to Fact 2.3.2. Which one of the following statements is true?
A) Brenda has an absolute advantage over Agnes in the production of both goods.
B) Agnes has a comparative advantage in the production of Y.
C) Brenda has a comparative advantage in the production of X.
D) Brenda will not gain from trade.
E) Agnes will not gain from trade.
Answer: A
20) Complete the following sentence. Given Fact 2.3.2,
A) there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize.
B) there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X.
C) there will be gains from trade only if Agnes becomes faster at producing X.
D) there will be no gains from trade because Agnes has an absolute advantage.
E) there will be gains from trade if Agnes specializes in the production of X and Brenda in Y.
Answer: E
21) Given Fact 2.3.2, what would be the total output of X and Y in an eight-hour day if Agnes and Brenda each
specialized in producing the good in which they have a comparative advantage?
A) 3 units of X and 5 units of Y
B) 8 units of X and 16 units of Y
C) 8 units of X and 32 units of Y
D) 24 units of X and 40 units of Y
E) 16 units of X and 8 units of Y
Answer: C
22) A situation in which resources are either unused or misallocated or both is represented in a production possibilities
frontier diagram by
A) any point on either the horizontal or the vertical axis.
B) a point above or to the right of the production possibilities frontier.
C) a point outside the production possibilities frontier.
D) a point inside the production possibilities frontier.
E) a point on or inside the production possibilities frontier.

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