Question 1

Which of the following best describes the concept of 'scarcity' in economics?

Accepted Answer

Scarcity refers to the limited nature of society's resources, meaning not all wants can be satisfied.

Question 2

According to the study materials, which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 3

In the context of opportunity cost, if you spend $100 on a concert ticket instead of buying a textbook, what is your opportunity cost?

Accepted Answer

The value of the textbook you gave up to attend the concert

Question 4

Which equation best represents the calculation of opportunity cost?

Accepted Answer

$$Opportunity\ Cost = Value\ of\ Next\ Best\ Alternative\ Forgone$$

Question 5

A rational decision-maker will take an action only if:

Accepted Answer

$$Marginal\ Benefit \u003e Marginal\ Cost$$

Question 6

Suppose you have already spent $$1000 repairing your car. The transmission fails and costs 600 to $$fix. If the car's value increases by $800 after the repair, what should you do according to economic reasoning?

Accepted Answer

Repair the transmission because the $1000 already spent is a sunk cost.

Question 7

Which of the following best illustrates the principle that 'people respond to incentives'?

Accepted Answer

A government increases taxes on cigarettes, leading to a decrease in smoking rates.

Question 8

Which of the following is an example of a market failure?

Accepted Answer

A monopoly that restricts output to increase prices.

Question 9

In the context of the factors of production, what does 'human capital' refer to?

Accepted Answer

The knowledge and skills acquired by workers through education and experience.

Question 10

Which of the following statements about efficiency and equity is correct?

Accepted Answer

Efficiency is achieved when it is impossible to make someone better off without making someone else worse off.

Question 11

According to the study materials, which income is earned by the factor of production 'capital'?

Accepted Answer

Interest

Question 12

Which of the following best describes a market economy?

Accepted Answer

An economy that allocates resources through the decentralized decisions of many firms and households.

Question 13

Which of the following is an example of an externality?

Accepted Answer

A factory pollutes a river, affecting the health of nearby residents.

Question 14

If Canada produces 2% agriculture, 28% manufacturing, and 70% services, which sector is the largest contributor to its GDP?

Accepted Answer

Services

Question 15

Which of the following best explains why trade can make everyone better off?

Accepted Answer

Trade allows countries to specialize in what they do best and enjoy a greater variety of goods and services.

Question 16

Which of the following is NOT a reason why governments may intervene in markets?

Accepted Answer

To eliminate all forms of competition

Question 17

Suppose the government wants to promote equity in the distribution of income. Which policy is most likely to achieve this goal?

Accepted Answer

Implementing progressive income taxes and social welfare programs

Question 18

Which of the following best describes the difference between self-interest and social interest?

Accepted Answer

Self-interest is when individuals make choices that are best for themselves, while social interest is when choices are best for society as a whole.

Question 19

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

Accepted Answer

A firm decides to hire one additional worker.

Question 20

If a country increases its investment in education and training, which factor of production is most directly affected?

Accepted Answer

Labour (through increased human capital)

Thinking Like an Economist: Principles and Foundations of Microeconomics

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