OT 1 Flashcards
Russell spends an hour studying instead of playing tennis. What is the opportunity cost to him of studying?
a. nothing, since Russell chose to study rather than to play tennis, the value of studying must have been greater than the value of playing tennis
b. the difference between the improvement in his grades from studying minus the enjoyment of playing tennis
c. the enjoyment and exercise he would have received had he played tennis
d. the improvement in his grades from studying for the hour
c. the enjoyment and exercise he would have received had he played tennis
For economists, what are the two types of statements about the world?
a. true statements and false statements
b. specific statements and general statements
c. positive statements and normative statements
d. assumptions and theories
c. positive statements and normative statements
What is the goal of theories?
a. to provide an interesting, but not useful, framework of analysis
b. to help scientists understand how the world works
c. to provoke stimulating debates in scientific journals
d. to demonstrate that the developer of the theory is capable of logical thinking
b. to help scientists understand how the world works
Because it is difficult for economists to use experiments to generate data, what must they generally do?
a. use whatever data the world gives them
b. use hypothetical, computer-generated data
c. select a committee of economists to make up data for all economists to use
d. do without data
a. use whatever data the world gives them
Which of the following is included in Canadian GDP?
a. Canadian exports of goods and services
b. Canadian imports of goods and services
c. the sale of used goods
d. CPP/QPP payments
a. Canadian exports of goods and services
Which word comes from the Greek word for “one who manages a household”?
a. producer
b. market
c. consumer
d. Economy
d. Economy
When does scarcity exist?
a. when the government fails to produce goods
b. when society can meet the wants of every individual
c. when there is less of a good or resource available than people wish to have
d. when there is less than an infinite amount of a resource or good
c. when there is less of a good or resource available than people wish to have
What is the economy experiencing when a society cannot produce all the goods and services people wish to have?
a. scarcity
b. communism
c. externalities
d. market failure
a. scarcity
Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. What would this change do by itself?
a. It would make GDP fall over time.
b. It would change GDP, but in an uncertain direction.
c. It would make GDP rise over time.
d. It would not make any change in GDP over time.
c. It would make GDP rise over time.
How are intermediate goods treated in GDP computations?
a. They are excluded because they are too difficult to measure.
b. They are included so we can get a measure of sales.
c. They are excluded because their value is already counted in the value of final goods.
d. They are included because they are final goods for the firm producing them.
c. They are excluded because their value is already counted in the value of final goods.
When does a rational decision maker take an action?
a. only if the marginal benefit is less than the marginal cost
b. only if the average benefit is greater than the average cost
c. only if the marginal benefit is greater than the marginal cost
d. only if the marginal benefit is greater than both the average cost and the marginal cost
c. only if the marginal benefit is greater than the marginal cost
Which of the following is NOT a common characteristic of economic models?
a. They are built using assumptions.
b. They are useful to economists, but not to policymakers.
c. They include only the important features of an economy.
d. They are often built using the tools of mathematics.
b. They are useful to economists, but not to policymakers.
In an economy consisting of only households and firms, how can GDP be computed?
a. by adding up the total expenditures of households and subtracting savings
b. by adding up either total income paid by firms or total expenditures of households, but not both
c. by adding up the income paid by firms only in exchange for labour
d. by adding up both the total expenditures of households and the total income paid by firms
b. by adding up either total income paid by firms or total expenditures of households, but not both
What is the difference between nominal and real GDP?
a. Nominal GDP values production at constant prices, while real GDP values production at current prices.
b. Nominal GDP values production at market prices, while real GDP values production at the cost of the resources used in the production process.
c. Nominal GDP consistently underestimates the value of production, while real GDP consistently overestimates the value of production.
d. Nominal GDP values production at current prices, while real GDP values production at constant prices.
d. Nominal GDP values production at current prices, while real GDP values production at constant prices.
What does it mean if an economy is producing efficiently?
a. There is no way to produce more of one good without producing less of the other.
b. It is not possible to produce more of one good at any cost.
c. It is possible to produce more of one good without producing less of the other.
d. It is possible to produce more of both goods.
a. There is no way to produce more of one good without producing less of the other.
