Chapter 1 VF

Question 1

1. The economic problem is essentially one of deciding how to make the best use of

Answer 1

limited resources to satisfy unlimited wants

Question 2

Economists assume that people customarily behave rationally, meaning that people:

Answer 2

virtually always weigh the personal benefits and costs of every available action and choose an action
on the basis of their individual wants

Question 3

An economist who says that consumer wants are inexhaustible means that:

Answer 3

consumers wants are virtually unlimited and, therefore, incapable of being fully satisfied

Question 4

The fundamental problem of economics is:

Answer 4

the scarcity of productive resources relative to consumer wants

Question 5

The economic problem stems from the fact that

Answer 5

resources are scarce relative to people’s demand for goods and services

Question 6

The study of economics is carried out because:

Answer 6

resources are scarce in relation to consumer wants

Question 7

The scarcity problem:

Answer 7

persists because a society’s consumer wants exceed its available economic resources

Question 8

Because of scarcity, the efficient use of resources is:

Answer 8

an important economic goal in all economies

Question 9

As used in economics, the notion of scarcity means that:

Answer 9

resources are not so plentiful that all consumer wants can be fulfilled

Question 10

Stocks and bonds are not considered to be an economic resource because they:

Answer 10

do not add to the economy’s stock of real capital

Question 11

The money payments made to owners of human resources are:

Answer 11

wages, salaries, or profit

Question 12

Economic resources do NOT include:

Answer 12

stocks and bonds

Question 13

Which of the following is a capital resource?

Answer 13

a dump truck

Question 14

The role of the entrepreneur involves:

Answer 14

bearing risks

Question 15

Economics can best be described as the study of how:

Answer 15

to distribute limited resources among alternative ends

Question 16

Economics is primarily the study of

Answer 16

how to use scarce resources among alternative ends

Question 17

Microeconomics is concerned with the

Answer 17

) behaviour of individual participants in various markets

Question 18

Which of the following is a microeconomic statement?

Answer 18

The price of wheat declined last year.

Question 19

Macroeconomics approaches the study of economics from the viewpoint of:

Answer 19

entire economic sectors

Question 20

Which of the following is a macroeconomic statement?

Answer 20

The gross profits of all Canadian businesses were $60 billion last year

Question 21

Economic models:

Answer 21

are generalizations of economic reality

Question 22

Economic models:

Answer 22

emphasize basic economic relationships by abstracting from the complexities of the real world

Question 23

Which of the following is a correct statement?

Answer 23

Though not quantitatively exact, economic laws are useful because they allow us to predict and,
therefore, to control or to adjust to events

Question 24

An economic model usually includes:

Answer 24

two or more factors that have measurable values

Question 25

Which of the following statements is correct?

Answer 25

The value of the dependent variable is determined by the value of the independent variable.