Exam 1: First Principles

A) reduced its opportunity costs.
B) increased the equity of its distribution of goods and services.
C) made more people better off without making others worse off.
D) increased the incentives for its citizens to follow their own self-interest.

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A) is efficient.
B) cannot be efficient since efficiency requires a more nearly equal distribution of income.
C) may be efficient.
D) is neither efficient nor equitable.

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A) benefit the United States more than Canada.
B) benefit Canada more than the United States.
C) benefit both countries.
D) hurt both countries.

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A) possible to produce more of all goods and services.
B) possible to produce more of one good without producing less of another.
C) not possible to produce more of one good without producing less of another good.
D) producing a combination of goods.

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A) Resources are usually renewable.
B) The true cost of something is impossible to measure.
C) People take advantage of opportunities to make themselves better off only if there is no risk involved.
D) Choices are necessary because resources are scarce.

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A) Resource scarcity is a major economic concern in the rich countries of the world.
B) Most opportunity costs are zero.
C) An economic situation is in equilibrium when no individual would be better off taking a different action.
D) Very talented individuals,who can do most things better than most people,may still benefit greatly from specializing in doing one thing.

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A) the efficient allocation of resources is bad for business and industry.
B) allocating resources fairly may cause inefficiency.
C) everyone must pay more tax to ensure equity.
D) efficiency is politically unpopular.

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A) it is not possible to be self-sufficient when it comes to growing food.
B) this will eliminate the opportunity cost of buying food.
C) buying locally will decrease human capital in the community.
D) one person's local spending will increase another local person's income.

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A) are insufficient to provide enough goods and services to satisfy all human material wants and needs.
B) have no opportunity cost.
C) are probably not valued by consumers.
D) have an unlimited supply.

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A) A student chooses to rent a movie with friends,rather than study for an economics quiz.
B) Your roommate offers to pay for the movie tickets if you drive to the theatre.
C) A city builds a new public park on the grounds of an abandoned warehouse.
D) In 2008,fearing a recession,the federal government approved a proposal to rebate some taxes for 2007.

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A) the chef
B) the oven
C) the food ingredients
D) the chef's training and experience

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A) exploitation.
B) efficiency.
C) scarcity.
D) the margin.

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A) everyone gets an efficient share of the goods and services produced.
B) everyone gets his or her fair share of the goods and services produced.
C) more of some goods and services can be produced only if the production of others is reduced.
D) more of all goods and services may be produced.

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A) all goods are produced at their maximum quantity.
B) all opportunities to make people better off without making other people worse off have been taken.
C) more resources have been used to produce specific consumer goods than producer goods.
D) prices are the lowest they can possibly be.

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A) Resource scarcity is not a major concern in the rich countries of the world.
B) Most opportunity costs are zero.
C) An economic situation is in equilibrium when no individual would be better off taking a different action.
D) Some very talented,skilled individuals who can do everything better than most people should not specialize in doing any one thing.

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A) What additional output does a family business produce when it hires one more worker?
B) How do tax cuts change the growth rate of median income?
C) What is the impact of a trade embargo on labour cost?
D) Should a commuter take the bus to work instead of driving?

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A) The concept of equilibrium requires that all individuals have an equal amount of income.
B) If a market is in equilibrium,the price in that market will not fluctuate by more than 5%.
C) If a market is in equilibrium,there will be no remaining opportunities for individuals to make themselves better off.
D) A market is in equilibrium when the number of buyers is equal to the number of sellers.

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