Question 1

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The value of the next best alternative that is forgone when a choice is made.

Question 2

Suppose a city planner has a budget of $$12 million to allocate between repairing roads at 1 $$million per km and building bicycle paths at $$0.5 million per km. If the planner spends 8 $$million on road repairs, how many kilometers of bicycle paths can be built with the remaining budget?

Accepted Answer

$$ \frac{12 - 8}{0.5} = 8  km$$

Question 3

Which of the following is NOT considered a factor of production in economics?

Accepted Answer

Consumption

Question 4

A student decides to attend university full-time rather than work a job that pays $30,000 per year. What is the opportunity cost of attending university?

Accepted Answer

The value of the salary from the job forgone, plus tuition and textbooks.

Question 5

Which statement best explains why scarcity leads to the need for choice in economics?

Accepted Answer

Scarcity means resources are limited, so individuals and societies must choose how to allocate them.

Question 6

In the context of the production possibilities boundary (PPB), what does a point inside the curve represent?

Accepted Answer

A combination where resources are under-utilized or used inefficiently.

Question 7

If moving from point b to point c on a PPB requires giving up 2.5 units of clothing to gain 1 unit of food, what is the opportunity cost of 1 unit of food?

Accepted Answer

$$ 2.5 $$ units of clothing

Question 8

Which of the following is a key feature of a market economy?

Accepted Answer

Self-organizing coordination through independent decisions of consumers and producers.

Question 9

Why is specialization of labour important in modern economies?

Accepted Answer

It increases efficiency and output by allowing workers to focus on specific tasks.

Question 10

Which of the following is an example of a marginal decision?

Accepted Answer

A consumer deciding to buy one more unit of a product.

Question 11

Which of the following is NOT a characteristic of a free-market economy?

Accepted Answer

Most economic decisions are made by a central planning authority.

Question 12

If a country adopts protectionist policies, what is a likely economic consequence for a small open economy like Canada?

Accepted Answer

Potential negative impacts on citizen well-being due to restricted trade.

Question 13

Which of the following best describes the role of government in a mixed economy?

Accepted Answer

The government provides institutions such as private property and freedom of contract, and intervenes when markets fail.

Question 14

What is the main reason that all actual economies are considered 'mixed economies'?

Accepted Answer

They combine elements of market, command, and traditional systems.

Question 15

Which of the following is a real-world example of opportunity cost?

Accepted Answer

A government spending money on healthcare instead of education.

Question 16

If the opportunity cost of building 1 km of new bicycle path is 0.5 km of road repair, what does this imply about the allocation of resources?

Accepted Answer

Building bicycle paths uses fewer resources than repairing roads.

Question 17

Which of the following statements about Adam Smith's 'invisible hand' is correct?

Accepted Answer

It describes how self-interested actions of individuals can lead to efficient outcomes for society.

Question 18

Which of the following is NOT a direct cost of obtaining a university degree?

Accepted Answer

Salary from a full-time job forgone

Question 19

Suppose a country can produce either 100 units of food or 200 units of clothing with all its resources. If it chooses to produce 50 units of food, what is the maximum number of clothing units it can produce, assuming a linear production possibilities boundary?

Accepted Answer

$$ 150 $$ units

Question 20

Which of the following is a plausible reason for a point to be unattainable on a production possibilities boundary?

Accepted Answer

The combination requires more resources than are available.

Economic Issues and Concepts: Foundations of Microeconomics

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