ECN 104 Lecture Notes - Lecture 8: Scientific Method, Moral Hazard, Savings Account

25 views76 pages

bluegnat451

6 Jun 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Chapter1Limits,Alternatives,andChoices

CHAPTER 1

Limits, Alternatives, and Choices

Topic Question numbers

___________________________________________________________________________________________________

1.1 Ten key concepts to retain for a lifetime 1-13

The individual 1-6

Interaction among individuals 7-9

Economy as a whole and the standard of living 10-13

1.2 The economic way of thinking 14-30

Scarcity and choice 14-16

Purposeful behaviour 17-19

Marginal analysis: benefits and costs 20-30

1.3 Theories, principles, and models 31-40

1.4 Microeconomics and Macroeconomics 41-58

Microeconomics 41-43

Macroeconomics 44-49

Positive and normative economics 50-58

1.5 The economic problem 59-78

Limited income 59-60

Unlimited wants 61-62

The budget line 63-72

Society’s economic problem 73

Scarce resources 74-75

Resources categories 74-78

1.6 The production possibilities model and increasing

opportunity cost 79-148

The production possibilities table 79-82

The production possibilities curve 83-107

The law of increasing opportunity cost 108-141

Optimal Allocation 142-148

1.7 Economic growth, present choices, and

future possibilities 149-185

A growing economy 149-177

Present choices and future possibilities 178-183

A qualification: International trade 184-185

Last word 186-201

True-False Questions 202-224

Appendix

A.1.1 Graphs and their meanings 225-277

___________________________________________________________________________________________________

hzzled

find more resources at oneclass.com

Unlock document

This preview shows pages 1-3 of the document.
Unlock all 76 pages and 3 million more documents.

Already have an account? Log in

Chapter1Limits,Alternatives,andChoices

Page2

1. The key economic concept that serves as the basis for the study of economics is:

A) inflation.

B) unemployment.

C) money.

D) scarcity.

Ans: D Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: The individual Type: Application

2. As a consequence of the condition of scarcity:

A) there is never enough of anything.

B) production has to be centrally planned.

C) things which are plentiful have relatively high prices.

D) individuals and communities have to make choices among alternatives.

Ans: D Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: The individual Type: Application

3. In every economic system, choices must be made because resources are:

A) infinite, but economic wants are finite.

B) finite, but economic wants are insatiable.

C) unlimited, but economic wants are limited.

D) limited, and so are economic wants.

Ans: B Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: The individual Type: Application

4. Opportunity cost is best defined as:

A) marginal cost minus marginal benefit.

B) the time spent on an economic activity.

C) the value of the best foregone alternative.

D) the money cost of an economic decision.

Ans: C Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: The individual Type: Application

5. Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to

fly to another city to attend the concert of her favourite music group. The cost of

transportation for the trip is $250. The cost of the concert ticket is $50. The opportunity

cost of Tammie's trip to the concert is:

A) $300.

B) $450.

C) $500.

D) $600.

Ans: D Level: Moderate Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: The individual Type: Calculation

hzzled

find more resources at oneclass.com

Unlock document

This preview shows pages 1-3 of the document.
Unlock all 76 pages and 3 million more documents.

Already have an account? Log in

Chapter1Limits,Alternatives,andChoices

Page3

6. When a provincial government chooses to build more roads, the required resources are no

longer available for spending on public education. This dilemma illustrates the concept

of:

A) marginal analysis.

B) full employment.

C) full production.

D) opportunity cost.

Ans: D Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: The individual Type: Application

7. Specialization and trade are beneficial to society because:

A) the output of economic goods may be increased with no increase in resources.

B) scarce resources are utilized more efficiently.

C) a division of labour lowers prices for products.

D) all of the above are correct.

Ans: D Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: Interaction among individuals Type: Application

8. When economists describe "a market," they mean:

A) a place where stocks and bonds are traded.

B) information networks that allow individuals to keep in touch with each other.

C) a hypothetical place where the production of goods and services takes place.

D) a mechanism which coordinates actions of consumers and producers to establish

equilibrium prices and quantities.

Ans: D Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: Interaction among individuals Type: Definition

9. The institution that coordinates actions of consumers and producers to establish prices for

goods and services is known as:

A) a market.

B) a monopoly.

C) an economic system.

D) consumer sovereignty.

Ans: A Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: Interaction among individuals Type: Definition

10. A major argument for economic growth is that it:

A) creates an equal distribution of income.

B) protects common property resources.

C) leads to a higher standard of living.

D) reduces the amount of taxation.

Ans: C Level: Easy Main Topic: 1.1 Ten key concepts to retain for a life time

Page: 2 Subtopic: Economy as a whole and the standard of living

Type: Application

hzzled

find more resources at oneclass.com

Unlock document

This preview shows pages 1-3 of the document.
Unlock all 76 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Ten key concepts to retain for a lifetime. Economy as a whole and the standard of living. The production possibilities model and increasing opportunity cost e. Copyright ( c ) 2010 mcgraw-hill ryerson limited. Chapter 1 limits, alternatives, and choices: the key economic concept that serves as the basis for the study of economics is: inflation. unemployment. Ans: b level: easy main topic: 1. 1 ten key concepts to retain for a life time. Page: 2 subtopic: the individual type: application z z: opportunity cost is best defined as: l, marginal cost minus marginal benefit. the time spent on an economic activity. B) the value of the best foregone alternative. D) the money cost of an economic decision. Page: 2 subtopic: the individual type: application d e: tammie makes a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favourite music group.

Related Questions

QUESTION 1

Assume there are two basic goods produced in a nation, consumer goods and capital goods. The production possibilities graph for these two goods is bowed out from the origin. This reason for this shape of the graph is because of:

	A.	the other-things-equal assumption.
	B.	the law of increasing opportunity costs.
	C.	diminishing marginal utility.
	D.	present choices and future possibilities.

1 points

QUESTION 2

From an economic perspective, when a student decides to attend another year of college, the student has concluded that the:

	A.	marginal costs of attending college are reduced by the availability of grants and subsidies.
	B.	marginal benefits of attending college have increased because the future is brighter.
	C.	marginal benefits of attending college are greater than the marginal costs.
	D.	marginal costs of attending college have decreased to make college affordable.

1 points

QUESTION 3

A person observes that as consumer prices fall, economic growth increases. The person concludes that fall consumer prices leads to economic growth. This conclusion would be an example of:

	A.	confusing correlation with causation.
	B.	the fallacy of composition.
	C.	trade-offs among economic goals.
	D.	the other-things-equal assumption.

1 points

QUESTION 4

The problem of unlimited wants and limited income is known as

	A.	the scientific method.
	B.	unequal wealth distribution.
	C.	normative economics.
	D.	the economizing problem.

1 points

QUESTION 5

A point outside the production possibilities curve is:

	A.	unattainable without economic growth.
	B.	attainable and the economy is efficient.
	C.	unattainable without inflation.
	D.	attainable, but the economy is inefficient.

1 points

QUESTION 6

Which one of the following would be an example of loaded terminology?

	A.	market forces
	B.	tentative hypothesis
	C.	entrepreneurial functions
	D.	creeping socialism

1 points

QUESTION 7

Suppose there are two economies, Alpha and Beta, both of which have the same production possibilities curves. If Beta devotes more resources to produce investment goods than consumer goods as compared to Alpha, then in the future:

	A.	Alpha will not be able to achieve full employment.
	B.	Beta will not be able to achieve full employment.
	C.	Alpha will experience greater economic growth than Beta.
	D.	Beta will experience greater economic growth than Alpha.

1 points

QUESTION 8

Macroeconomics, as opposed to microeconomics, is concerned with

	A.	individual businesses.
	B.	new computer technology.
	C.	the stock market.
	D.	the economy as a whole.

1 points

QUESTION 9

Which one of the following is an example of a positive economic statement?

	A.	The size of the Federal government should be reduced.
	B.	Midwest states affected by drought should be given more federal disaster aid.
	C.	Education and income are highly correlated.
	D.	The minimum wage for workers should be raised to help low-income workers.

1 points

QUESTION 10

Economics is primarily concerned with

	A.	interactions between the government and market participants.
	B.	how scarce resources are used.
	C.	the production and distribution of capital goods.
	D.	how income is divided among individuals.

1 points

QUESTION 11

The production possibilities table below shows the hypothetical relationship between the production of guns (national defense) and butter (social goods) in an economy.

A B C D E

Guns 0 4 7 9 10

Butter 4 3 2 1 0

If the economy is producing at alternative C, what is the opportunity cost of producing another unit of butter?

	A.	3 units of guns.
	B.	1 units of guns.
	C.	2 units of guns.
	D.	4 units of guns.

1 points

QUESTION 12

Assume that a consumer can buy only two goods X and Y, and has an income of $120. The price of X is $10 and the price of Y is $20. If the consumer spends all of her money on X and Y, which of the following would be a possible combination:

	A.	4X and 2Y
	B.	5X and 3Y
	C.	6X and 3Y
	D.	8X and 1Y

1 points

QUESTION 13

In the production possibilities model of an economy, when there is full employment of resources

		a nation will be operating at an interior point within its production possibilities curve.
		a nation will be operating on the production possibilities curve.
		the production possibilities curve will shift outward to the right.
		the production possibilies curve will shift inward to the left.

1 points

QUESTION 14

In economics the concept that there is "no free lunch" means

	A.	scarce resources were used to produce these "free" goods so there is an opportunity cost to producing them.
	B.	consumers are irrational when they ask for a free lunch unless they can make the case that the free lunch benefits business.
	C.	the marginal cost of the "lunch" is greater than the marginal benefit.
	D.	businesses could not make a profit if they gave away free goods to consumers.

1 points

QUESTION 15

Assume that a consumer can only purchase two goods with her income. A straight-line budget constraint indicates that the opportunity cost of obtaining an additional unit of one good is:

	A.	negative.
	B.	constant.
	C.	increasing.
	D.	decreasing.

carmineferret43

QUESTION 1

	A.	the other-things-equal assumption.
	B.	the law of increasing opportunity costs.
	C.	diminishing marginal utility.
	D.	present choices and future possibilities.

1 points

QUESTION 2

From an economic perspective, when a student decides to attend another year of college, the student has concluded that the:

	A.	marginal costs of attending college are reduced by the availability of grants and subsidies.
	B.	marginal benefits of attending college have increased because the future is brighter.
	C.	marginal benefits of attending college are greater than the marginal costs.
	D.	marginal costs of attending college have decreased to make college affordable.

1 points

QUESTION 3

A person observes that as consumer prices fall, economic growth increases. The person concludes that fall consumer prices leads to economic growth. This conclusion would be an example of:

	A.	confusing correlation with causation.
	B.	the fallacy of composition.
	C.	trade-offs among economic goals.
	D.	the other-things-equal assumption.

1 points

QUESTION 4

The problem of unlimited wants and limited income is known as

	A.	the scientific method.
	B.	unequal wealth distribution.
	C.	normative economics.
	D.	the economizing problem.

1 points

QUESTION 5

A point outside the production possibilities curve is:

	A.	unattainable without economic growth.
	B.	attainable and the economy is efficient.
	C.	unattainable without inflation.
	D.	attainable, but the economy is inefficient.

1 points

QUESTION 6

Which one of the following would be an example of loaded terminology?

	A.	market forces
	B.	tentative hypothesis
	C.	entrepreneurial functions
	D.	creeping socialism

1 points

QUESTION 7

	A.	Alpha will not be able to achieve full employment.
	B.	Beta will not be able to achieve full employment.
	C.	Alpha will experience greater economic growth than Beta.
	D.	Beta will experience greater economic growth than Alpha.

1 points

QUESTION 8

Macroeconomics, as opposed to microeconomics, is concerned with

	A.	individual businesses.
	B.	new computer technology.
	C.	the stock market.
	D.	the economy as a whole.

1 points

QUESTION 9

Which one of the following is an example of a positive economic statement?

	A.	The size of the Federal government should be reduced.
	B.	Midwest states affected by drought should be given more federal disaster aid.
	C.	Education and income are highly correlated.
	D.	The minimum wage for workers should be raised to help low-income workers.

1 points

QUESTION 10

Economics is primarily concerned with

	A.	interactions between the government and market participants.
	B.	how scarce resources are used.
	C.	the production and distribution of capital goods.
	D.	how income is divided among individuals.

1 points

QUESTION 11

The production possibilities table below shows the hypothetical relationship between the production of guns (national defense) and butter (social goods) in an economy.

A B C D E

Guns 0 4 7 9 10

Butter 4 3 2 1 0

If the economy is producing at alternative C, what is the opportunity cost of producing another unit of butter?

	A.	3 units of guns.
	B.	1 units of guns.
	C.	2 units of guns.
	D.	4 units of guns.

1 points

QUESTION 12

	A.	4X and 2Y
	B.	5X and 3Y
	C.	6X and 3Y
	D.	8X and 1Y

1 points

QUESTION 13

In the production possibilities model of an economy, when there is full employment of resources

		a nation will be operating at an interior point within its production possibilities curve.
		a nation will be operating on the production possibilities curve.
		the production possibilities curve will shift outward to the right.
		the production possibilies curve will shift inward to the left.

1 points

QUESTION 14

In economics the concept that there is "no free lunch" means

	A.	scarce resources were used to produce these "free" goods so there is an opportunity cost to producing them.
	B.	consumers are irrational when they ask for a free lunch unless they can make the case that the free lunch benefits business.
	C.	the marginal cost of the "lunch" is greater than the marginal benefit.
	D.	businesses could not make a profit if they gave away free goods to consumers.

1 points

QUESTION 15

Assume that a consumer can only purchase two goods with her income. A straight-line budget constraint indicates that the opportunity cost of obtaining an additional unit of one good is:

	A.	negative.
	B.	constant.
	C.	increasing.
	D.	decreasing.

Comment

ambermacaw358

ECN 104 Lecture Notes - Lecture 8: Scientific Method, Moral Hazard, Savings Account

Document Summary

Get access

Related Documents

ECN 104 Chapter Notes - Chapter 1: Allocative Efficiency, Productive Efficiency, Marginal Cost

ECN 104 Chapter Notes - Chapter 1: Marginal Utility, Opportunity Cost, International Trade

ECN 104 Lecture Notes - Opportunity Cost, Decision-Making, Full Employment

Related Questions