(Test Bank) Microeconomics Canada In The Global Environment

Parkin, 11

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1 Copyright © 2022 Pearson Canada, Inc. Microeconomics: Canada in Global Environment, 11e (Parkin/Bade) Chapter 1 What Is Economics? 1.1 Definition of Economics 1) In a world characterized by scarcity A) all goods are free. B) opportunity cost is zero. C) we are not limited by time. D) individuals need not work to obtain goods. E) people must make choices among alternatives. Answer: E Diff: 1 Type: MC Topic: Definition of Economics 2) Which of the following is the best definition of economics? A) the study of how a provincial government allocates tax dollars B) the study of how consumers spend their income C) the study of how producers decide what inputs to hire and what outputs to produce 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 and producers meet each other in the market Answer: D Diff: 1 Type: MC Topic: Definition of Economics 3) Which of the following is a microeconomic topic? A) the reasons why a consumer buys less honey B) the reasons why the average price level in a country falls C) the cause of increasing unemployment D) the effect of the government budget deficit on inflation E) the reasons why the labour force in a country decreases Answer: A Diff: 1 Type: MC Topic: Definition of Economics 4) The study of how wages are set for New Brunswick teachers is classified as A) a macroeconomic topic. B) a microeconomic topic. C) economics of social interest. D) economics of private interest. E) normative economics. Answer: B Diff: 1 Type: MC Topic: Definition of Economics 2 Copyright © 2022 Pearson Canada, Inc. 5) 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 the U.S. economy experiencing slow growth? E) Why do grain producers purchase less pesticides? Answer: D Diff: 1 Type: MC Topic: Definition of Economics 6) The branch of economics that studies the choices of individuals and businesses is A) macroeconomics. B) microeconomics. C) positive economics. D) normative economics. E) social economics. Answer: B Diff: 1 Type: MC Topic: Definition of Economics 7) Each of the following would be considered a macroeconomic topic except A) the reasons for a decrease in the unemployment rate. B) the cause of recessions. C) the effect of the government budget deficit on inflation. D) the determination of aggregate income. E) the selection of production techniques. Answer: E Diff: 2 Type: MC Topic: Definition of Economics 8) Complete the following sentence. Macroeconomics A) is primarily concerned with the operation of individual markets in the economy. B) deals mainly with the economic behaviour of households. C) is the only part of economics to deal with government decisions. D) is primarily concerned with the behaviour of the stock market. E) is the study of the performance of the national economy and the global economy. Answer: E Diff: 2 Type: MC Topic: Definition of Economics 3 Copyright © 2022 Pearson Canada, Inc. 9) The determination of prices in individual markets is primarily a concern of A) positive economics. B) negative economics. C) macroeconomics. D) microeconomics. E) descriptive economics. Answer: D Diff: 2 Type: MC Topic: Definition of Economics 10) Which one of the following topics does macroeconomics study? A) decisions of individual firms B) effects of government safety regulations on the price of cars C) the performance of the global economy D) prices of individual goods and services E) effects of taxes on the price of gasoline Answer: C Diff: 2 Type: MC Topic: Definition of Economics 11) Which one of the following topics does microeconomics study? A) reasons for a fall in the price of orange juice B) the effect of a rise in the Canadian dollar on Canada's exports C) effect of interest rates on national economic growth D) effect of the government budget deficit on employment E) determination of total production in a country Answer: A Diff: 2 Type: MC Topic: Definition of Economics 12) Complete the following sentence. Microeconomics is A) not concerned with factors of production. B) concerned with normative issues only. C) concerned with the size of the total amount of income earned by all households in an economy. D) the branch of economics that studies the choices of individuals and businesses. E) concerned exclusively with the role of the government in the economy. Answer: D Diff: 2 Type: MC Topic: Definition of Economics 4 Copyright © 2022 Pearson Canada, Inc. 13) Which of the following would be considered a microeconomic topic? A) the severity of a recession B) the cause of unemployment in the economy C) the effect of the government budget deficit on inflation D) the determination of aggregate income E) the study of how wages are set for childcare workers Answer: E Diff: 2 Type: MC Topic: Definition of Economics 14) The branch of economics that studies the performance of the national economy and the global economy is A) macroeconomics. B) microeconomics. C) Keynesian economics. D) positive economics. E) normative economics. Answer: A Diff: 1 Type: MC Topic: Definition of Economics 15) The fact that human wants cannot be fully satisfied with available resources is called the problem of A) opportunity cost. B) scarcity. C) normative economics. D) marginal cost. E) the big tradeoff. Answer: B Diff: 1 Type: MC Topic: Definition of Economics 16) The problem of scarcity exists A) only in economies that lack incentives. B) only in economies that have incentives. C) in all economies. D) only when people are unemployed. E) now but will be eliminated with economic growth. Answer: C Diff: 2 Type: MC Topic: Definition of Economics 5 Copyright © 2022 Pearson Canada, Inc. 17) The inescapable economic fact is that A) there are unlimited wants and limited resources. B) there are unlimited resources, and we have to decide how to allocate them. C) resources cannot be allocated without government intervention. D) resources cost too much. E) there are limited wants and limited resources. Answer: A Diff: 2 Type: MC Topic: Definition of Economics 18) 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 Diff: 1 Type: MC Topic: Definition of Economics 19) 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 Diff: 1 Type: MC Topic: Definition of Economics 20) The problem of scarcity applies A) to all countries, regardless of their level of development. B) only to industrially developed countries because they create pollution. C) only to developing countries because resources are scarce in these countries. D) only to countries that are over-populated. E) only to countries that use natural resources in most of their production processes. Answer: A Diff: 1 Type: MC Topic: Definition of Economics 6 Copyright © 2022 Pearson Canada, Inc. 21) Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge. This statement means that the incentive to exercise dogs at the dog park ________. The operators' decision is a ________. A) remains the same; macroeconomic decision B) changes; microeconomic decision C) remains the same; microeconomic decision D) changes; macroeconomic decision E) changes; decision in the self-interest but not in the social interest Answer: B Diff: 2 Type: MC Topic: Definition of Economics 22) Choose the statement about incentives that is incorrect. A) An incentive can be a penalty that discourages an action. B) Incentives create scarcity. C) With stiffer penalties for fraud, company directors have an incentive to play by the rules. D) If the price of a bus ride falls, Jill has less incentive to drive herself to school. E) An incentive can be a reward that encourages an action. Answer: B Diff: 1 Type: MC Topic: Definition of Economics 1.2 Two Big Economic Questions 1) The two big economic questions A) involve self-interest only. B) involve only social interest. C) involve neither self-interest nor social interest. D) do not arise from scarcity. E) involve both self-interest and social interest. Answer: E Diff: 1 Type: MC Topic: Two Big Economic Questions 2) The two big economic questions A) summarize the scope of economics. B) are "what goods and services are produced?" and "how are goods and services produced?" C) are "why are goods and services produced?" and "when are goods and services produced?" D) deal with macroeconomics but not microeconomics. E) are "where are goods and services produced?" and "what goods and services are produced?" Answer: A Diff: 1 Type: MC Topic: Two Big Economic Questions 7 Copyright © 2022 Pearson Canada, Inc. 3) The two big economic questions include all of the following except A) what to produce. B) why to produce. C) how to produce. D) for whom to produce. E) a determination of whether the pursuit of self-interest also promotes the social interest. Answer: B Diff: 2 Type: MC Topic: Two Big Economic Questions 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 Diff: 2 Type: MC Topic: Two Big Economic Questions 5) When a textile firm decides to produce more silk fabric and less cotton fabric, it is answering the ________ question. A) "who" B) "how" C) "what" D) "where" E) "when" Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 6) When a farmer decides to harvest tomatoes using machines instead of migrant workers, the farmer is answering the ________ question. A) "what" B) "how" C) "who" D) "where" E) "when" Answer: B Diff: 2 Type: MC Topic: Two Big Economic Questions 8 Copyright © 2022 Pearson Canada, Inc. 7) What is capital? Capital is A) money in the bank. B) the knowledge and skill that people obtain from education, on-the-job training, and work experience. C) the tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services. D) composed of financial investment and commodities such as gold and silver. E) traded in stock markets and bond markets. Answer: C Diff: 1 Type: MC Topic: Two Big Economic Questions 8) When a firm decides to produce computers using robots instead of people, it is answering the ________ question. A) "what" B) "where" C) "how" D) "who" E) "when" Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 9) To meet increased demand for its good, a firm decides to hire a few high-skilled workers, rather than hire many low-skilled workers. The firm is answering the ________ question. A) "when" B) "what" C) "who" D) "where" E) "how" Answer: E Diff: 2 Type: MC Topic: Two Big Economic Questions 10) An art museum decides to offer audio tour downloads rather than have tour guides. The museum is answering the ________ question. A) "what" B) "who" C) "how" D) "where" E) "when" Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 9 Copyright © 2022 Pearson Canada, Inc. 11) To earn income, people sell the services of the factors of production they own. Land earns ________ and labour earns ________. A) profit; wages B) wages; interest C) rent; wages D) profit; interest E) rent; minimum wage Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 12) Some people can afford to live in beautiful homes and others are homeless. This is an example of an economy answering the ________ question. A) "what" B) "how" C) "for whom" D) "where" E) "when" Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 13) A hockey player earns $10 million a year and a teacher earns $75,000 a year. This is an example of an economy answering the ________ question. A) "what" B) "how" C) "where" D) "for whom" E) "when" Answer: D Diff: 2 Type: MC Topic: Two Big Economic Questions 14) What is entrepreneurship? Entrepreneurship is A) a form of money. B) traded on the stock market. C) categorized as capital. D) the human resource that organizes labour, land and capital. E) categorized as the factor of production labour. Answer: D Diff: 2 Type: MC Topic: Two Big Economic Questions 10 Copyright © 2022 Pearson Canada, Inc. 15) Sue, who has a law degree, earns $200,000 a year, while Chris, a high-school dropout, earns $15.00 an hour. This is an example of an economy answering the ________ question. A) "what" B) "how" C) "for whom" D) "where" E) "when" Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 16) A star athlete owns many cars while other people who cannot afford a car use a city bus for transportation. This is an example of an economy answering the ________ question. A) "what" B) "how" C) "for whom" D) "where" E) "when" Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 17) What is financial capital? Financial capital is A) one of the "gifts of nature." B) a factor of production. C) money, stocks, and bonds. D) not subject to scarcity. E) a service. Answer: C Diff: 1 Type: MC Topic: Two Big Economic Questions 18) Which factor of production earns the most income? A) capital B) land C) labour D) entrepreneurship E) the stock market Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 11 Copyright © 2022 Pearson Canada, Inc. 19) A choice is in the social interest when it is A) best for the poorest citizens. B) influenced by lobbyists. C) best for society as a whole. D) made by majority vote. E) made by well-meaning citizens. Answer: C Diff: 1 Type: MC Topic: Two Big Economic Questions 20) Choices in the self-interest are A) choices which are best for the person making them. B) never in the social interest. C) always in the social interest. D) choices that are best for all residents of a region. E) choices that are agreed to by majority vote. Answer: A Diff: 3 Type: MC Topic: Two Big Economic Questions 21) The expansion of international trade, borrowing and lending, and investment is A) the big tradeoff. B) not in the best interests of most countries. C) a corporate revolution. D) globalization. E) antiglobalization. Answer: D Diff: 3 Type: MC Topic: Two Big Economic Questions 22) Which statement about incomes earned by factors of production is correct? A) Land earns interest. B) Land earns rent. C) Labour earns rent. D) Capital earns profit. E) Entrepreneurship earns rent. Answer: B Diff: 1 Type: MC Topic: Two Big Economic Questions 12 Copyright © 2022 Pearson Canada, Inc. 23) 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 Diff: 1 Type: MC Topic: Two Big Economic Questions 24) A tractor is an example of which of the following factors of production? A) capital B) labour C) land D) entrepreneurship E) energy Answer: A Diff: 1 Type: MC Topic: Two Big Economic Questions 25) Which one of the following is an example of capital as a factor of production? A) money B) a Bell Canada bond C) an automobile factory owned by Ford D) a high school teacher E) natural gas Answer: C Diff: 1 Type: MC Topic: Two Big Economic Questions 26) Which of the following would an economist classify as capital? A) natural resources B) a deposit of silver C) entrepreneurship D) a computer E) land Answer: D Diff: 1 Type: MC Topic: Two Big Economic Questions 13 Copyright © 2022 Pearson Canada, Inc. 27) Which one of the following is labour? A) money B) a carpenter's hammer C) a shoe factory D) a bread-slicing machine E) a singer's voice Answer: E Diff: 1 Type: MC Topic: Two Big Economic Questions 28) Which one of the following would economists classify as land? A) an automotive plant in British Columbia B) rich agricultural soil in Saskatchewan C) an oil rig in the Atlantic Ocean D) an elementary school in Nova Scotia E) automobiles parked in a parking lot in Manitoba Answer: B Diff: 2 Type: MC Topic: Two Big Economic Questions 29) 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 Diff: 1 Type: MC Topic: Two Big Economic Questions 30) Which one of the following is an example of capital? A) money B) a carpenter C) pasture D) a bread-slicing machine E) a university professor Answer: D Diff: 1 Type: MC Topic: Two Big Economic Questions 14 Copyright © 2022 Pearson Canada, Inc. 31) The creation of a successful movie can influence the main questions that economics seeks to answer. Choose the statement that is false. A) The movie influences the how question because the movie can create new production techniques, which can be used in subsequent films. B) The movie influences the for whom question because the people who earn higher incomes through the movie production buy more goods and services. C) The movie influences the when question because movie crews work on many different films and must be available for the entire production. D) The movie influences the what question because it can lead to spinoff goods or a new movie genre, which can result in the production of similar films. E) The movie influences the how question because it can use unknown actors or Academy Award winners. Answer: C Diff: 1 Type: MC Topic: Two Big Economic Questions 32) Choose the correct statement. A) Canada produces more services than goods. B) In Canada today, manufacturing accounts for 50 percent of total production. C) In Canada today, agriculture accounts for 30 percent of total production. D) China's production of services is a greater percentage of its total production than Canada's. E) Canada's production of manufacturing is a greater percentage of its total production than China's. Answer: A Diff: 1 Type: MC Topic: Two Big Economic Questions 33) In Canada approximately ________ percent of the adult population have completed high school and approximately ________ percent have a college or university degree. A) 25; 95 B) 95; 55 C) 95; 25 D) 100; 55 E) 55; 25 Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 34) Which of the following is not a factor of production? A) the water used to cool a nuclear power plant B) the effort of farmers raising cattle C) the wages paid to workers D) the management skill of a small business owner E) the land used by a farmer to grow wheat Answer: C Diff: 1 Type: MC Topic: Two Big Economic Questions 15 Copyright © 2022 Pearson Canada, Inc. 35) Which factor of production includes the "gifts of nature"? A) labour B) capital C) human capital D) entrepreneurship E) land Answer: E Diff: 1 Type: MC Topic: Two Big Economic Questions 36) Which of the following is not a factor of production? A) Tim who is developing a production schedule for a new product B) 175 shares of Microsoft stock C) vans used by a bakery company for deliveries D) wilderness areas that have yet to be developed E) national parks Answer: B Diff: 1 Type: MC Topic: Two Big Economic Questions 37) An outcome is considered efficient if A) it is the best available choice for an individual. B) as many people as possible are happy about the outcome. C) it is not possible to make someone better off without making anyone else worse off. D) everyone makes the same income. E) there is the smallest difference possible between the highest income earned and the lowest income earned. Answer: C Diff: 2 Type: MC Topic: Two Big Economic Questions 38) According to Adam Smith A) government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self-interest to unintentionally promote the social interest. B) in a market transaction buyers can either get what they want for less than they would be willing to pay or sellers can make a profit, but both buyers and sellers can't gain simultaneously. C) politicians are well-equipped to regulate corporations and intervene in markets to improve market outcomes. D) when big corporations pursue their self-interest of maximum profit, they will inevitably conflict with social interest. E) the self-interest and the social interest never conflict. Answer: A Diff: 2 Type: MC Topic: Two Big Economic Questions