Test bank for principles of microeconomics 4th canadian edition by frank

Page of 40 This chapter has 203 questions Scroll down to see and select individual questions or narrow the list using the checkboxes below questions at random and keep in order  Multiple Choice Questions - (203) Learning Objective: 01-06 Explain how data are used to evaluate economic theories - (9) Odd Numbered - (102) Learning Objective: 01-07 Distinguish positive economics from welfare economics - (11) Even Numbered - (101) Learning Objective: 01-08 Define an economic naturalist - (4) Difficulty: Difficult - (54) Level of Learning: Analysis - (4) Difficulty: Easy - (78) Level of Learning: Application - (114) Difficulty: Medium - (71) Level of Learning: Comprehension - (46) Gradable: automatic - (203) Level of Learning: Data Analysis - (1) Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics - (17) Level of Learning: Knowledge - (38) Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics - (6) Type: Calculation - (56) Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost - (56) Type: Data Analysis - (20) Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle - (22) Type: Graphical - (3) Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions - (78) Type: Word Problem - (124) Economics is best defined as the study of prices and quantities inflation and interest rates → how people make choices under the conditions of scarcity, and the results of the choices how to make money wages and incomes Difficulty: Easy Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics Economics is best defined as the study Level of Learning: Knowledge of Type: Word Problem Which of the following is a macroeconomic issue? Planning a price increase for daily bus fare → Predicting inflation rates for next year Determining how many permits should be issued for single homes in Montreal Negotiation a wage increase for faculty at local university Identifying the best location for future department stores in Ontario Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics Which of the following is a macroeconomic Level of Learning: Application issue? Type: Word Problem Which of the following is a macroeconomic statement? Unionized workers for Ford went on strike for higher wages The price of wheat doubled in the past month Forest fires destroyed thousands of hectares in Western Canada The demand for smart phones increased by 10% this year → National output fell by 1% last year Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics Which of the following is a macroeconomic Level of Learning: Application statemen Type: Word Problem Which of the following is a macroeconomic statement? Severe drought in the prairies has increased the price of wheat Technological improvements have lowered prices in the automobile industry The provincial government of British Columbia has increased tuition fees → The unemployment rate in Canada is expected to decline over the next two years Hurricanes in Florida lead to greater exports of soft wood lumber from Canada to the U.S Difficulty: Medium Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Type: Word Problem Multiple Choice Question Which of the following is a macroeconomic statemen Which of the following is a microeconomic statement? Interest rates in Canada are directly linked to interest rates in the United States → The Competition Bureau accuses oil companies of illegally fixing gas prices Full file at https://TestbankDirect.eu/ Page of 40 The government negotiated a trade agreement with the European Union The unemployment rate increased by 1.5% this year National output fell by 1% last year Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Type: Word Problem Multiple Choice Question Which of the following is a microeconomic statemen Which of the following is a microeconomic statement? Tariff barriers hurt all Canadians Inflation will remain low for the next two years Inflation and unemployment will remain low for the next two years → Increased gasoline prices have raised taxi fares by 10% National output remained constant last year Difficulty: Medium Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics Which of the following is a microeconomic Level of Learning: Application statemen Type: Word Problem The distinguishing feature of microeconomics is studying choices the performance of national economics the overall price level → choices made by individuals or groups in the context of individual markets how to improve the performance of national economies Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics The distinguishing feature of microeconomics is Level of Learning: Knowledge st Type: Word Problem Macroeconomics is distinguished by its concentration on choices → the performance of national economies and ways to improve upon that performance individual markets the level of prices in specific markets abstract models Difficulty: Medium Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics Macroeconomics is distinguished by its Level of Learning: Knowledge concentrati Type: Word Problem The study of individual choices and group behaviour in individual markets defines → microeconomics economics the scarcity principle macroeconomics the cost-benefit principle Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics The study of individual choices and group Level of Learning: Knowledge behaviou Type: Word Problem 10 The study of national economies, and policies to improve their performance, is known as microeconomics economics → macroeconomics intereconomics intraeconomics Multiple Choice Question The study of national economies, and policies to i Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Full file at https://TestbankDirect.eu/ Page of 40 macroeconomics Level of Learning: Knowledge Type: Word Problem 11 Which of the following decisions would NOT be part of microeconomics? What university major to select How to make the largest profit Whether to study or watch TV tonight How will an early frost in Prince Edward Island affect the price of potatoes → Should the federal budget always be balanced Difficulty: Medium Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics Which of the following decisions would NOT be Level of Learning: Application part Type: Word Problem 12 Which of the following questions would NOT be part of macroeconomics? What caused the Great Depression? At what rate does the Canadian economy typically grow? → Did the sharp increase in gasoline prices alter SUV sales? How does government spending affect the economy? Do trends exist in the national rate of unemployment? Difficulty: Medium Gradable: automatic Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics Which of the following questions would NOT be Level of Learning: Application part Type: Word Problem 13 Macroeconomics differs from microeconomics in that the concept of scarcity applies to the latter but does not apply to the former → the latter studies individual markets while the former studies groups of markets, including the whole economy rational decisions are relevant to the former but not the latter the former is the study of how people make choices under conditions of scarcity while the latter is concerned with the results of those choices for society the former explains such concepts as how prices are determined in markets while the latter explains the overall price level Multiple Choice Question Macroeconomics differs from microeconomics in that 14 Microeconomics includes the study of inflation unemployment economic growth → the distribution of income the national aggregate output Difficulty: Medium Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Type: Word Problem Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Multiple Choice Question Level of Learning: Knowledge Microeconomics includes the study of Type: Word Problem 15 How the price mechanism allocates resources in particular markets is a topic in → microeconomics macroeconomics welfare economics entrepreneurial economics positive economics Multiple Choice Question How the price mechanism allocates resources in par 16 The study of macroeconomics includes the choices made by individual consumers the production decisions of firms Difficulty: Medium Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Comprehension Type: Word Problem Full file at https://TestbankDirect.eu/ Page of 40 → the causes of poverty the determinants of the national unemployment rate individual markets Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Multiple Choice Question Level of Learning: Knowledge The study of macroeconomics includes Type: Word Problem 17 The focus of microeconomics is the study of national economies trends in consumer purchases the total value of national output → individuals and firms the determinants of the unemployment rate Difficulty: Easy Gradable: automatic Learning Objective: 01-01 Define economics; microeconomics; and Multiple Choice Question macroeconomics The focus of microeconomics is the study Level of Learning: Knowledge of Type: Word Problem 18 The Scottish economist who wrote "The Wealth of Nations" was → Adam Smith Alfred Marshall David Hume John Maynard Keynes John Stuart Mill Difficulty: Easy Gradable: automatic Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Multiple Choice Question Adam Smith; and state briefly the influence of each of them had on economics The Scottish economist who wrote The Level of Learning: Knowledge Wealth of Na Type: Word Problem 19 The economist often considered the "father of macroeconomics" is _ Adam Smith Alfred Marshall David Hume → John Maynard Keynes John Stuart Mill Difficulty: Easy Gradable: automatic Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Multiple Choice Question Smith; and state briefly the influence of each of them had on economics The economist often considered the Level of Learning: Knowledge father of macr Type: Word Problem 20 Even today, microeconomic concepts developed by _ remain influential Adam Smith → Alfred Marshall David Hume John Maynard Keynes John Stuart Mill Difficulty: Easy Gradable: automatic Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Knowledge Type: Word Problem Multiple Choice Question Even today, microeconomic concepts developed by 21 A rational person is someone that is reasonable makes choices that are easily understood → possesses clear objectives and behaves logically to achieve them does not believe what experts claim is highly cynical Multiple Choice Question A rational person is someone that Difficulty: Easy Gradable: automatic Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Full file at https://TestbankDirect.eu/ Page of 40 Level of Learning: Knowledge Type: Word Problem 22 An economic model is a representation of economic reality that highlights all possible variables and the relationships among them → highlights particular variables and the relationships among them predicts how government actions influence the private sector illustrates the difference between economic and non-economic theories focuses strictly on welfare economics Difficulty: Easy Gradable: automatic Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Multiple Choice Question Adam Smith; and state briefly the influence of each of them had on economics An economic model is a representation Level of Learning: Knowledge of economic Type: Word Problem 23 When economists make predictions using the framework of a given economic model, it is usually based on personal experiences → important relationships between particular variables mathematical abstractions political implications the profit-maximizing objective Difficulty: Easy Gradable: automatic Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Comprehension Type: Word Problem Multiple Choice Question When economists make predictions using the framewo 24 The scarcity problem indicates that no matter how much one has, it is never enough compared to 100 years ago, individuals have less time today → with limited resources, having more of "this" means having less of "that." because trade-offs must be made, resources are therefore scarce the wealthier a person is, the fewer trade-offs he must make Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to Multiple Choice Question opportunity cost The scarcity problem indicates Level of Learning: Comprehension that Type: Word Problem 25 The logical implication of the scarcity problem is that one will never be satisfied with what one has as wealth increases, making trade-offs becomes less necessary as wealth decreases, making trade-offs becomes less necessary → choices must be made resources need to be made unlimited Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost The logical implication of the scarcity Level of Learning: Comprehension problem is Type: Word Problem 26 If all the world's resources were to magically increase 100-fold, then → the scarcity problem would still govern behaviour economics would no longer be relevant the scarcity problem would disappear everyone would be satisfied trade-offs would become unnecessary Multiple Choice Question If all the world's resources were to magically inc 27 The principle of scarcity applies to the poor exclusively nations exclusively all consumers all firms Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Type: Word Problem Full file at https://TestbankDirect.eu/ Page of 40 → everyone; consumers, firms, governments, and nations Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to Multiple Choice Question opportunity cost The principle of scarcity applies Level of Learning: Application to Type: Word Problem 28 If a campus organization provides a free lunch to all students who show up, then the scarcity problem has been violated → the scarcity problem still applies to the decision to allocate the time to go and eat the lunch is completely without cost no trade-offs are involved it is a free lunch because no price was charged Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost If a campus organization provides a free Level of Learning: Application lunch to Type: Word Problem 29 Forest is a mountain man living in complete isolation in northern British Columbia He is completely self-sufficient through hunting, fishing, and farming He has not been in the city to buy anything in five years One can infer the scarcity problem does not apply to Forest Forest is not required to make choices → the scarcity problem still applies because more hunting means less fishing and so on Forest is very satisfied Forest knew the Prime Minister Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Type: Word Problem Multiple Choice Question Forest is a mountain man living in complete isolat 30 The scarcity problem applies to → all decisions only market decisions, e.g., buying a car only non-market decisions, e.g., watching a sunset only the poor only the wealthy Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to Multiple Choice Question opportunity cost The scarcity problem applies Level of Learning: Comprehension to Type: Word Problem 31 Benny has one hour before bedtime and he can either watch TV or listen to a new CD He chooses to listen to the CD The scarcity problem's influence on Benny is seen in the decision to listen to music the decision not to watch TV → the fixed amount of time before bed the decision to choose between TV and music Benny's taste in music Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost Benny has one hour before bedtime and he can Level of Learning: Application eithe Type: Word Problem 32 The cost-benefit principle indicates that an action should be taken if the total benefits exceed the total costs if the extra benefits are positive if the average benefits exceed the average costs if the resulting economic surplus is zero → if the extra benefits are greater than the extra costs Multiple Choice Question The cost-benefit principle indicates that an actio Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Full file at https://TestbankDirect.eu/ Page of 40 Level of Learning: Knowledge Type: Word Problem 33 Choosing to study for an exam until the extra benefit (improved score) equals the extra cost (mental fatigue) is not rational → an application of the cost-benefit principle an application of the scarcity principle the relevant opportunity cost less desirable than studying for the entire evening Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost Choosing to study for an exam until the extra Level of Learning: Application bene Type: Word Problem 34 For a given question to be considered an economic question, it would need to involve explicit prices making a choice money and income limited resources → limited resources and making a choice Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost For a given question to be considered an Level of Learning: Application economic Type: Word Problem 35 The range of topics, or issues, that fit within the definition of economics is limited to market activities, e.g., buying soap limited to individuals and firms → extremely wide, requiring only the ideas of choice and scarcity limited to governments and nations very limited Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost The range of topics, or issues, that fit Level of Learning: Comprehension within th Type: Word Problem 36 The scarcity problem indicates and the cost-benefit principle indicates → that choices must be made; how to make the choices how to make the choices; that choices must be made that choices must be made; just one of many possible ways to make the choices that choices must be made; that the choices will be poor that choices must be made; that the costs can never outweigh the benefits of the choices Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Type: Word Problem Multiple Choice Question The scarcity problem indicates and the 37 If there were no scarcity, it implies that benefits must be greater than costs all human desires would be irrelevant → costs would be irrelevant market prices must be low everyone probably has lots of money Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to Multiple Choice Question opportunity cost If there were no scarcity, it implies Level of Learning: Comprehension that Type: Word Problem 38 The fact that even a rich country like Canada faces the economic problem of scarcity implies that scarcity must be a problem related to the use of land and labour in Canada scarcity must be the result of mismanagement of natural resources by Canadian businesses scarcity must be largely due to the inefficiency of the government in Canada → wants and human desires in Canada exceed available resources Full file at https://TestbankDirect.eu/ Page of 40 Canada is not a rich country after all Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Type: Word Problem Multiple Choice Question The fact that even a rich country like Canada face 39 Scarcity exists in the world today because → human wants and desires are insatiable average households are too poor there is not enough money in the world people always make the wrong choices we are always producing the wrong things Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to Multiple Choice Question opportunity cost Scarcity exists in the world today Level of Learning: Comprehension because Type: Word Problem 40 Whether studying the size of the Canadian economy or the number of children a couple will choose to have, the unifying concept is wants are limited, resources are limited, and thus trade-offs must be made → wants are unlimited, resources are limited, and thus trade-offs must be made wants are unlimited, resources are limited to some but not to others, and thus some people must make tradeoffs wants are unlimited, resources are unlimited, and thus no trade-offs need to be made wants are unlimited, resources are limited, and thus government needs to more Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost Whether studying the size of the Canadian Level of Learning: Application economy Type: Word Problem 41 With banking machines, it is possible to retrieve cash from the bank at any time 100 years ago, one could only get cash from the bank during business hours, say, am to pm The difference is because flexibility was not valued 100 years ago it was impossible to provide 24 hour a day service 100 years ago → the cost of providing 24 hour a day service is much lower today the government forced banks to become more convenient cash is a more popular means of making payments today Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost With banking machines, it is possible to Level of Learning: Application retrieve Type: Word Problem 42 Deciding to pursue an activity as long as the extra benefits are at least equal to the extra costs defines the → cost-benefit principle scarcity principle No-Free-Lunch principle marginal principle extra principle Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost Deciding to pursue an activity as long as the Level of Learning: Knowledge extr Type: Word Problem 43 The existence of the cost-benefit principle stems from the limited nature of wants → the trade-offs the scarcity problem indicates must be made the necessity of government intervention opportunity costs the unlimited nature of resources Multiple Choice Question The existence of the cost-benefit principle stems Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Full file at https://TestbankDirect.eu/ Page of 40 relation to opportunity cost Level of Learning: Application Type: Word Problem 44 Imagine a world with unlimited resources, including time On that planet, personal strife would not exist the scarcity problem would not apply but the cost-benefit principle would → the cost-benefit principle would be irrelevant because trade-offs would be unnecessary the scarcity problem would still apply the discipline of economics would be more important Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost Imagine a world with unlimited resources, Level of Learning: Application includin Type: Word Problem 45 When economists say there is no such thing as a free lunch, they mean that we must pay money for everything we get it is against the law to accept goods or services without paying for them when we eat lunch, our time has no value each day we decide to eat lunch is another day we must pay out money → every choice we make involves a trade-off Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost When economists say there is no such thing Level of Learning: Comprehension as a fr Type: Word Problem 46 The concept of scarcity applies both to Bill Gates and a homeless person because both have the same legal rights they have the same access to the markets for goods and services → there are only 24 hours in the day for both of them they are both consumers both must breathe air in order to live Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Type: Word Problem Multiple Choice Question The concept of scarcity applies both to Bill Gates 47 The cost-benefit principle states that an action should be taken only if the total benefit is at least as great as the total cost implies that the cost of all alternatives should be included when choosing among alternatives → states that an action should be taken only if the extra benefit is greater than the extra cost states that an action should be taken only if the average benefit is greater than the average cost states that an action should be taken only if the extra benefit is less than the extra cost Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity Multiple Choice Question cost The cost-benefit Level of Learning: Knowledge principle Type: Word Problem 48 The Web site for this textbook can be viewed simultaneously by thousands of students around the world without paying money to view it Does this suggest that the concept of scarcity does not apply to Web sites? No, because each of the students incurs an opportunity cost, measured by the next best alternative to viewing → the Web site Yes, because an additional student viewing the Web site does not prevent another student from viewing it Yes, because the students not have to pay money to view the Web site and thus they not have to forgo something else to view it No, because the more students who view it, the slower the transmission of the information to each of the students Yes, because the technology of the internet has made the principles of economics outdated Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost The Web site for this textbook can be viewed Level of Learning: Application simul Type: Word Problem 49 In applying the cost-benefit principle, one should calculate the Full file at https://TestbankDirect.eu/ Page 10 of 40 → total cost and total benefit, and choose that quantity of an activity where they are equal average cost and average benefit, and choose that quantity of an activity where the average benefit exceeds the average cost by the greatest amount total cost and total benefit, and choose that quantity of an activity where the total cost exceeds the total benefit by the greatest amount marginal cost and marginal benefit, and choose that quantity of an activity where the marginal benefit at least equals the marginal cost marginal cost, total cost, marginal benefit, and marginal cost, and choose that quantity of an activity where the marginal cost equals the total cost and the marginal benefit equals the total benefit Difficulty: Difficult Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost In applying the cost-benefit principle, one Level of Learning: Comprehension should Type: Word Problem 50 In an economic sense, scarcity means that there are limited resources available, so consumers never have to make choices unlimited resources available, so consumers never have to make choices not many products available to consumers → limited resources available, so consumers have to make choices unlimited resources available, so consumers have to make choices Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its Multiple Choice Question relation to opportunity cost In an economic sense, scarcity means that Level of Learning: Comprehension there ar Type: Word Problem 51 The fundamental problem that is studied in economics is that consumers have limited wants in the face of unlimited resources markets should function without government interference Canada is too wealthy → consumers have unlimited wants in the face of limited resources there are unlimited resources Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Type: Word Problem Multiple Choice Question The fundamental problem that is studied in economi 52 The core problem of economics is that unemployment is too high that governments not spend enough money on education understanding the Great Depression → the scarcity problem determining the best price for oil Difficulty: Easy Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to Multiple Choice Question opportunity cost The core problem of economics Level of Learning: Comprehension is Type: Word Problem 53 The scarcity problem refers to the fact that consumers not have to make choices consumers have limited wants in the face of unlimited resources there are not many products available to consumers → consumers have unlimited needs and wants, but there are limited resources there are unlimited resources available so consumers never have to make choices Difficulty: Medium Gradable: automatic Learning Objective: 01-03 State and explain the problem of scarcity and its relation to Multiple Choice Question opportunity cost The scarcity problem refers to the fact Level of Learning: Comprehension that Type: Word Problem 54 The cost-benefit principle states that a consumer will be better off to follow a particular course of action, only if the total benefits increase total costs decrease total costs remain unchanged Full file at https://TestbankDirect.eu/ Page 26 of 40 Multiple Choice Question Reference: 01-128 The marginal benefit of upgrading from a GHz com Difficulty: Medium Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Calculation 129.The total benefit of a GHz computer is $400 $500 $800 $1900 → $2200 Multiple Choice Question Reference: 01-128 The total benefit of a GHz computer is 130.The total cost of a GHz computer is $1000 → $900 $300 $200 $100 Difficulty: Medium Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Calculation Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational economic Reference: 01-128 decisions The total cost of a GHz computer Level of Learning: Application is Type: Calculation 131.The marginal cost of upgrading from a GHz to a GHz computer is $600 $500 $400 → $200 $100 Full file at https://TestbankDirect.eu/ Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-128 economic decisions The marginal cost of upgrading from a GHz to Level of Learning: Application a Type: Calculation 132.Choosing the GHz computer would be inefficient because the extra benefit is less than the extra cost → the extra benefit is equal to the extra cost it is impossible to tell the difference compared to a GHz computer it will be surpassed by a GHz computer very soon the total cost exceeds the total benefit Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-128 cost-benefit principle Choosing the GHz computer would be Level of Learning: Application inefficient b Type: Calculation The following table shows the total benefit from painting 0, 1, 2, 3, or rooms in a home Reference: 01-133 The following table shows the total benefit from p 133.What is the marginal benefit of painting the second room? $0 $200 $300 Full file at https://TestbankDirect.eu/ Page 27 of 40 → $400 $500 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-133 economic decisions What is the marginal benefit of painting the Level of Learning: Application secon Type: Calculation 134.What is the marginal benefit of painting the third room? $0 $200 $300 → $400 $500 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-133 economic decisions What is the marginal benefit of painting the Level of Learning: Application third Type: Calculation 135.What is the marginal benefit of painting the fourth room? $0 $200 → Test $300.Bank for Principles of Microeconomics 4th Canadian Edition by Frank $400 Full file at https://TestbankDirect.eu/ $500 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-133 economic decisions What is the marginal benefit of painting the Level of Learning: Application fourt Type: Calculation 136.If the marginal cost is constant at $250, what is the optimal number of rooms to paint? → Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-133 cost-benefit principle If the marginal cost is constant at $250, what Level of Learning: Application is Type: Calculation 137.If the marginal benefit is constant at $350, what is the optimal number of rooms to paint? → Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-133 cost-benefit principle If the marginal benefit is constant at $350, Level of Learning: Application what Type: Calculation The following table provides the costs (Cost A and Cost B) and the benefits associated with each unit of activity Reference: 01-138 The following table provides the costs (Cost A and 138.The total cost of units of the activity is $260 Full file at https://TestbankDirect.eu/ Page 28 of 40 → $100 $90 $10 indeterminate Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational economic Reference: 01-138 decisions The total cost of units of the activity Level of Learning: Application is Type: Calculation 139.The average cost of units of the activity is $2 $10 $18 $20 → $50 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational economic Reference: 01-138 decisions The average cost of units of the activity Level of Learning: Application is Type: Calculation 140.Which of the following tends to diminish continuously with increasing units of the activity? Test for Principles of Microeconomics 4th Canadian Edition by Frank TotalBank Cost A Average (per unit) Cost A → Full file at https://TestbankDirect.eu/ Total Cost B Average Cost B Total Benefit Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions Which of the following tends to diminish Level of Learning: Comprehension continuou Type: Calculation 141.If the activity in question is yearly fishing trips, which of the following is the most appropriate example of Cost A? Worms and tackle for fishing Expenses, such as gasoline, for car trips Food and drinks bought during trips An annual fishing licence → Hourly wages on hired help for launching the boat each trip for the year Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions If the activity in question is yearly fishing Level of Learning: Comprehension trip Type: Data Analysis 142.If the activity in question is yearly fishing trips, which of the following is the most appropriate example of Cost A? A new, durable sun hat and a new fishing rod → Worms and tackle for fishing Food and drinks during trips Cold beer and bottled water bought during trips Expenses on boat launching and marine gasoline Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions If the activity in question is yearly fishing Level of Learning: Comprehension trip Type: Data Analysis 143.If the activity in question is yearly fishing trips, which of the following is an appropriate example of Cost B? Money spent on a new, durable summer hat The annual parking fee at the fishing port Money spent on repairing the fishing boat Money spent on worms and tackle → An annual fishing licence Multiple Choice Question Reference: 01-138 Full file at https://TestbankDirect.eu/ Difficulty: Medium Gradable: automatic Page 29 of 40 If the activity in question is yearly fishing trip Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Comprehension Type: Data Analysis 144.If the activity in question is annual skiing trips for an expert skier, which of the following is the most appropriate example for Cost B? Ski-lift tickets at different resorts → Money spent on a new ski outfit A new ski hat Wages that the ski resort spent on ski-lift operators Expenses on a winter tune up for the skier's car Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions If the activity in question is annual skiing Level of Learning: Comprehension trips Type: Data Analysis 145.If the activity in question is ski trips for a novice skier, which of the following is the most appropriate example of Cost A? Ski rental each trip Purchase of second-hand skis → Ski lift tickets Food and drinks bought at the ski resort Wages for the ski-lift operator Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Difficulty: Medium Gradable: automatic Full file at https://TestbankDirect.eu/ Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions If the activity in question is ski trips for a Level of Learning: Comprehension nov Type: Data Analysis 146.The additional cost of consuming three rather than two units of activity is $10 $20 → $30 $40 $50 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions The additional cost of consuming three rather Level of Learning: Application than Type: Calculation 147.The additional benefit of consuming two rather than just one unit of activity is $50 → $100 $110 $150 $180 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions The additional benefit of consuming two rather Level of Learning: Application tha Type: Calculation 148.Consider the Benefit column As additional units of the activity are undertaken, which of the following statements is the most appropriate? The benefit is rising by increasing marginal amounts The benefit is rising by decreasing marginal amounts → The benefit is rising by constant marginal amounts The benefit is changing erratically with no obvious pattern The benefit is falling by constant marginal amounts Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-138 economic decisions Consider the Benefit column As additional Level of Learning: Comprehension units o Type: Data Analysis 149.From the second unit of activity, the marginal benefit exceeds the marginal cost by Full file at https://TestbankDirect.eu/ Page 30 of 40 → $10 $20 $40 $50 $150 Difficulty: Difficult Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Calculation Multiple Choice Question Reference: 01-138 From the second unit of activity, the marginal ben 150.Which of the following statements is correct? → The total benefit exceeds the total cost for all units of activity Each of the five units of activity yields the same total benefit Each of the five units of activity yields the same average benefit Each additional unit of activity yields the same marginal benefit Each additional unit of activity yields more and more additional benefit Difficulty: Difficult Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Comprehension Type: Data Analysis Multiple Choice Question Reference: 01-138 Which of the following statements is correct? Test Bank for Principles of Microeconomics 151.The average benefit of units of activity is $41 → Full file at https://TestbankDirect.eu/ $50 $60 $75 $100 4th Canadian Edition by Frank Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational economic Reference: 01-138 decisions The average benefit of units of activity Level of Learning: Application is Type: Calculation 152.The average benefit of units of activity is $41 $50 $60 → $75 $100 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational economic Reference: 01-138 decisions The average benefit of units of activity Level of Learning: Application is Type: Calculation Sharon, a marketing major, has her first economics test and her first finance test to take tomorrow and she has four hours tonight to allocate to studying the two subjects The data below show her scores on the two tests based on the time spent studying (Hint: Studying economics for hours means studying finance for hours.) Reference: 01-153 Sharon, a marketing major, has her first economics 153.The benefit of spending an extra hour studying economics is the resulting test score the resulting increase in the test score → the resulting test score divided by hours spent studying increasing constant Multiple Choice Question Reference: 01-153 The benefit of spending an extra hour studying eco Difficulty: Easy Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Full file at https://TestbankDirect.eu/ Page 31 of 40 Level of Learning: Application Type: Data Analysis 154.The cost of spending an extra hour studying economics is falling the resulting test score in finance constant the resulting decrease in the finance test score → missing an hour's worth of TV Difficulty: Easy Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Data Analysis Multiple Choice Question Reference: 01-153 The cost of spending an extra hour studying econom 155.The sequence of marginal benefits from the 1st to the 4th hour of economics studying is 12, 4.5, 1, -5 77, 86, 89, 91 26, 14, 5, 12, 21, 24, 26 12, 9, 3, → Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: State how three pitfalls can undermine rational Test Bank for Principles of Microeconomics 4th01-05 Canadian Edition by Frank Reference: 01-153 economic decisions The sequence of marginal benefits from the 1st Level of Learning: Application Full file at https://TestbankDirect.eu/ to Type: Calculation st th 156.The sequence of marginal costs from the to the hour of economics studying is 30, 29, 27, 20 79, 77, 70, 50 1, 2, 7, 20 → -1, -2, -7, -20 1, 3, 10, 30 Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-153 economic decisions The sequence of marginal costs from the 1st to Level of Learning: Application the Type: Calculation 157.To efficiently allocate her hours of study time, Sharon should seek to maximize the economics test score difference in the two test scores finance test score combined test scores → economics test score first and then the finance test score Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-153 cost-benefit principle To efficiently allocate her hours of study Level of Learning: Application time, Type: Data Analysis 158.To maximize her combined test scores, Sharon should study economics for hours and finance for hours → 2; 1; 3; 0; 4; Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-153 cost-benefit principle To maximize her combined test scores, Sharon Level of Learning: Application shoul Type: Calculation 159.Spending hours on economics and hour on finance would be because the best use of resources; the economics score is higher not the best use of resources; the improvement in economics is points but the decline in finances is points → the best use of resources; the finance score is still passing Full file at https://TestbankDirect.eu/ Page 32 of 40 not the best use of resources; the economics score exceeds the finance score the best use of resources; she really understands economics Multiple Choice Question Reference: 01-153 Spending hours on economics and hour on financ Difficulty: Difficult Gradable: automatic Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Level of Learning: Application Type: Calculation Reference: 01-160 160.Total donations raised by three employees are $43,899 $45,000 $48,911 $51,963 → $57,721 Difficulty: Medium Gradable: automatic Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-160 economic decisions Full file at https://TestbankDirect.eu/ Total donations raised by three employees Level of Learning: Application are Type: Calculation 161.The average benefit (average donation) with employees is $13,222 $15,000 → $16,748 $18,883 $19,915 Multiple Choice Question Reference: 01-160 The average benefit (average donation) with empl 162.The total labour cost of employees is $21,500 $22,000 $38,000 → $43,121 $44,750 Difficulty: Medium Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Calculation Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational economic Reference: 01-160 decisions The total labour cost of employees Level of Learning: Application is Type: Calculation 163.The average labour cost of employees is $6000 $6500 $7675 $8750 $9000 → Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational economic Reference: 01-160 decisions The average labour cost of employees Level of Learning: Application is Type: Calculation 164.The President of What'sAMatterU decides to hire fundraisers as long as the average benefit exceeds the average cost, resulting in employees being hired and a "net benefit" (total donations minus total labour costs) of 5; $17,082 → Full file at https://TestbankDirect.eu/ Page 33 of 40 5; $67,082 4; $60,000 4; $22,000 5; $38,000 Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-160 economic decisions The President of What'sAMatterU decides to Level of Learning: Application hire fu Type: Calculation 165.The Dean of Finance at What'sAMatterU argues that the best number of fundraisers to hire is where average labour costs are the lowest This would mean employee(s) and a "net benefit" (total donations minus total labour costs) of 1; $36,000 1; $22,000 → 2; $21,213 2; $8,500 1; $8,000 Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-160 economic decisions The Dean of Finance at What'sAMatterU argues Level of Learning: Application that Test Bank for Principles of Microeconomics 4th Canadian Edition by FrankType: Calculation 166.The marginal benefit (extra donations) of the 2nd employee is Full file at https://TestbankDirect.eu/ $42,426 $21,213 $12,426 → $11,337 $9,766 Difficulty: Medium Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Calculation Multiple Choice Question Reference: 01-160 The marginal benefit (extra donations) of the 2nd 167.The marginal labour cost (extra labour cost) of the 4th employee is $9500 $10,000 $10,750 $11,000 → $12,000 Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-160 economic decisions The marginal labour cost (extra labour cost) of Level of Learning: Application th Type: Calculation 168.The Chairman of the Economics Department at What'sAMatterU says that fundraisers should be hired as long as their marginal donations exceed their marginal labour costs Following this criterion, employees are hired and the "net benefit" (total donations minus total labour costs) is 1; $22,000 2; $25,426 → 3; $25,426 2; $3476 2; $42,426 Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-160 cost-benefit principle The Chairman of the Economics Department at Level of Learning: Application What's Type: Calculation 169.The "net benefit" (total donations minus total labour costs) from hiring fundraisers is largest when employees are hired Full file at https://TestbankDirect.eu/ Page 34 of 40 → Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-160 cost-benefit principle The net benefit (total donations minus total Level of Learning: Application lab Type: Calculation 170.In general, to make optimal decisions, one needs information on the average benefits and marginal costs marginal benefits and marginal costs → marginal benefits and average costs average benefits and average costs benefits and costs, which can be either average or marginal Difficulty: Easy Gradable: automatic Learning Objective: 01-04 Explain how a rational decision maker applies the Multiple Choice Question cost-benefit principle In general, to make optimal decisions, one Level of Learning: Application needs i Type: Word Problem 171.When units of an activity are chosen, the average benefits are $13 and the average costs are $12 One can infer that more units should be chosen is the optimal amount Test for Principles fewerBank units should be chosen of Microeconomics 4th Canadian Edition by Frank total benefits are less than total costs Full file at https://TestbankDirect.eu/ insufficient information is available to judge if units are optimal or not → Difficulty: Difficult Gradable: automatic Learning Objective: 01-04 Explain how a rational decision maker applies the Multiple Choice Question cost-benefit principle When units of an activity are chosen, the Level of Learning: Application averag Type: Data Analysis 172.When making a decision, the important costs to identify and consider are the costs and the costs opportunity; marginal → opportunity; variable sunk; marginal marginal; average marginal; fixed Difficulty: Easy Gradable: automatic Learning Objective: 01-04 Explain how a rational decision maker applies the Multiple Choice Question cost-benefit principle When making a decision, the important costs Level of Learning: Comprehension to ide Type: Word Problem Jason studied hours for his first History test and his test score was 85; hours for his second History test and scored 90; and hours for his third History test and scored 95 He also studied hours for his first Math test and his test score was 68; hours for his second Math test and scored 78; and hours for his third Math test and scored 88 Reference: 01-173 Jason studied hours for his first History test a 173.The average benefit per hour studied for the History tests was and the average benefit per hour studied for the Math tests was _ 15; 13 → 5; 10 90; 78 13; 15 10: Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-173 economic decisions The average benefit per hour studied for the Level of Learning: Application Histo Type: Calculation 174.The marginal benefit of the last hour of History studied was and the marginal benefit of the last hour of Math studied was _ 15; 13 5; 10 → 90; 78 Full file at https://TestbankDirect.eu/ Page 35 of 40 13; 15 10: Difficulty: Difficult Gradable: automatic Multiple Choice Question Learning Objective: 01-05 State how three pitfalls can undermine rational Reference: 01-173 economic decisions The marginal benefit of the last hour of Level of Learning: Application History s Type: Calculation 175.Which of the following costs should be included when analyzing choices within a cost-benefit framework? Average costs Sunk costs Marginal costs → Sunk costs and marginal costs Average costs and opportunity costs Difficulty: Medium Gradable: automatic Learning Objective: 01-04 Explain how a rational decision maker applies the Multiple Choice Question cost-benefit principle Which of the following costs should be Level of Learning: Comprehension included wh Type: Word Problem 176.You have just purchased a car for $20,000 and realized that you still have to pay for insurance, licence, monthly parking and gasoline The marginal cost of driving an additional kilometre is the additional money that you have to spend on insurance, licence, monthly parking and gasoline Test Banklicence, for Principles of Microeconomics 4th$20,000 Canadian Edition bytheFrank insurance, monthly parking and gasoline plus the purchase price of car insurance and licence Full file at https://TestbankDirect.eu/ monthly parking and gasoline gasoline → Difficulty: Easy Gradable: automatic Learning Objective: 01-05 State how three pitfalls can undermine rational Multiple Choice Question economic decisions You have just purchased a car for $20,000 and Level of Learning: Comprehension real Type: Word Problem 177.Chuck offers $122,000 for a house The seller turns down the offer but says she will sell the house for $129,000 However, Chuck refuses to pay the higher price If both Chuck and the seller are rational, then marginal analysis implies that the marginal benefit to the house to → Chuck must be less than $129,000 Chuck must be greater than $129,000 Chuck must be greater than $122,000 the seller must be less than $129,000 the seller must be less than $122,000 Multiple Choice Question Chuck offers $122,000 for a house The seller turn Difficulty: Difficult Gradable: automatic Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Level of Learning: Application Type: Data Analysis The figure above shows the marginal benefit of additional minutes in a cell-phone plan The marginal cost is constant at $0.10 per minute Reference: 01-178 The figure above shows the marginal be 178.It is optimal to buy more cell-phone time as long as marginal benefit exceeds marginal cost → marginal cost exceeds marginal benefit average benefit exceeds average cost Full file at https://TestbankDirect.eu/ Page 36 of 40 average cost exceeds average benefit marginal benefit exceeds zero Difficulty: Easy Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-178 cost-benefit principle It is optimal to buy more cell-phone time as Level of Learning: Application long Type: Graphical 179.What is the optimal number of minutes to purchase? 100 200 300 400 → Difficulty: Medium Gradable: automatic Multiple Choice Question Learning Objective: 01-04 Explain how a rational decision maker applies the Reference: 01-178 cost-benefit principle What is the optimal number of minutes to Level of Learning: Application purchase? Type: Graphical 180.The Latin expression for "all else equal" is ad infinitum carpe diem Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank ceteris paribus → de facto Full file at https://TestbankDirect.eu/ prima facie Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic Multiple Choice Question theories The Latin expression for all else equal is Level of Learning: Knowledge _ Type: Word Problem 181.The Latin expression "ceteris paribus": is essential in collecting data identifying sunk costs evaluating theories → recognizing scarcity developing spurious relationships Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic Multiple Choice Question theories The Latin expression ceteris paribus: is Level of Learning: Knowledge essenti Type: Word Problem 182.The branch of economics that involves the application of statistical techniques to economic data is macroeconomics microeconomics positive economics welfare economics econometrics → Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Comprehension Type: Word Problem Multiple Choice Question The branch of economics that involves the applicat 183.Econometrics is the branch of economics that studies individual choices under scarcity studies the performance of national economies examines the role of opportunity costs in rational behaviour applies statistical techniques to economic data → offers cause-and-effect relationships which can be confirmed or refuted by data Multiple Choice Question Econometrics is the branch of economics that Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic theories Full file at https://TestbankDirect.eu/ Page 37 of 40 Level of Learning: Comprehension Type: Word Problem 184.To avoid spurious correlation, one must recognize that what is true for a part must also be true for the whole what is true for a part is not necessarily true for the whole because one event precedes another, the first event necessarily caused the second because one event precedes another, the first event did not necessarily cause the second → correlation implies causation Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic Multiple Choice Question theories To avoid spurious correlation, one must Level of Learning: Comprehension recognize Type: Word Problem 185.To avoid spurious correlation, one must recognize that what is true for a part must also be true for the whole what is true for a part is not necessarily true for the whole because two variables move together, one causes the other because two variables move together, one does not necessarily causes the other → correlation implies causation Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Multiple Choice Question theories To avoid spurious correlation, one must Level of Learning: Comprehension Full file at https://TestbankDirect.eu/ recognize Type: Word Problem 186.If two variables move together but are otherwise unrelated, we have a fallacy of composition an econometric model a spurious correlation → an efficiency problem evidence of a weak correlation but strong causation Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic Multiple Choice Question theories If two variables move together but are otherwise Level of Learning: Comprehension u Type: Word Problem 187.To avoid the fallacy of composition, one must recognize that what is true for a part must also be true for the whole what is true for a part is not necessarily true for the whole → because one event precedes another, the first event necessarily caused the second because one event precedes another, the first event did not necessarily cause the second correlation implies causation Difficulty: Easy Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic Multiple Choice Question theories To avoid the fallacy of composition, one must Level of Learning: Comprehension reco Type: Word Problem 188.Which of the following is an example of the fallacy of composition? If one bar offers cheaper drinks, it will increase its revenue; therefore, if all bars offer cheaper drinks, all bars → will increase their revenue If one shop hires more employees, it will provide better service; therefore, if all shops hire more employees, all shops will provide better service If one bookstore stocks more books, it will have a better selection; therefore, if all bookstores stock more books, all bookstores will have a better selection If one TV station cuts down on commercials, it can provide more programming; therefore, if all TV stations cut down on commercials, all TV stations can provide more programming If one factory buys more equipment, it can produce more; therefore, if all factories buy more equipment, all factories can produce more Multiple Choice Question Which of the following is an example of the fallac 189 Difficulty: Difficult Gradable: automatic Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Application Type: Word Problem Full file at https://TestbankDirect.eu/ Page 38 of 40 "The Canadian government should not interfere with the free market system at all Individuals should be allowed to fend for themselves." This statement is an example of cost-benefit analysis an economic model spurious correlation positive economic analysis normative economic analysis → Difficulty: Medium Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics The Canadian government should not interfere Level of Learning: Application with Type: Word Problem 190.Which of the following statements is an example of positive economics? The minimum wage should be increased to allow minimum-wage workers to earn decent incomes In a free market environment, wages should be set by the market A higher minimum wage will reduce the number of workers hired → A higher minimum wage will be fairer to skilled workers A higher minimum wage is good for the economy Difficulty: Medium Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Which of the following statements is an example Level of Learning: Application of Type: Word Problem Full file at https://TestbankDirect.eu/ 191.The statement, "The Canadian Government should increase the operating grants to all Canadian universities and colleges," is an example of an empirical statement a positive statement a value-free statement a normative statement → an unfair statement Difficulty: Medium Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics The statement, The Canadian Government should Level of Learning: Application inc Type: Word Problem 192.Which of the following statements is an example of positive economics? Unemployment is a more serious problem than inflation because we all need to work for money to survive Inflation is a more serious problem than unemployment, because we not want our income to shrink with rising prices Immigration is bad for the economy because we allow new immigrants to get some of the better jobs Growth in income should be accomplished through government intervention If wages increase, firms may have to fire some of their workers → Difficulty: Medium Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics Which of the following statements is an example Level of Learning: Application of Type: Word Problem 193.We not expect economists to agree on economic issues that involve positive analysis normative analysis → microeconomic analysis cost and benefit analysis factual analysis Difficulty: Medium Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Comprehension Type: Word Problem Multiple Choice Question We not expect economists to agree on economic i 194.Welfare economics reflects society's ethical standards economic analysis based on facts society's ethical standards and economic analysis based on facts → Full file at https://TestbankDirect.eu/ Page 39 of 40 value-free observations on economic relationships subjective values Difficulty: Easy Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare economics Multiple Choice Question Level of Learning: Knowledge Welfare economics reflects Type: Word Problem 195.Economic analysis that is concerned with both facts and ethical standards is called _ positive economics normative economics econometrics welfare economics → ceteris paribus Difficulty: Easy Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics Economic analysis that is concerned with both Level of Learning: Knowledge fact Type: Word Problem 196.Ethical or value standards are important for the analysis of positive economics the fallacy of composition econometrics Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank spurious correlation welfare economics → Full file at https://TestbankDirect.eu/ Difficulty: Easy Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics Ethical or value standards are important for the Level of Learning: Knowledge a Type: Word Problem 197."We should support government intervention because the market produces undesirable outcomes" is an example of positive economics normative economics → comparative economics negative economics formative economics Difficulty: Easy Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics We should support government intervention Level of Learning: Knowledge because Type: Word Problem 198."Reducing the price of prescription drugs in Canada may reduce the quantity of these drugs available" is an example of positive economics → normative economics comparative economics classical economics neoclassical economics Difficulty: Easy Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare Multiple Choice Question economics Reducing the price of prescription drugs in Level of Learning: Knowledge Canad Type: Word Problem 199."Economic development reduces environmental quality and should be restricted" is an example of positive economics normative economics → comparative economics neoclassical economics classical economics Multiple Choice Question Economic development reduces environmental qualit Difficulty: Easy Gradable: automatic Learning Objective: 01-07 Distinguish positive economics from welfare economics Full file at https://TestbankDirect.eu/ Page 40 of 40 Level of Learning: Knowledge Type: Word Problem 200.The number of Canadian households with access to the Internet is growing rapidly As an economic naturalist, one could predict that when a major purchase is being considered, families will collect as much information as humanly possible beforehand always buy online never buy online collect more information beforehand because the cost of finding and acquiring it is lower → collect more information beforehand because the benefit of information is now larger Difficulty: Medium Gradable: automatic Learning Objective: 01-08 Define an economic naturalist Level of Learning: Application Type: Word Problem Multiple Choice Question The number of Canadian households with access to t 201.An economic naturalist is described as someone who uses economic arguments to protect forests and wetlands from development has a natural talent for drawing graphs applies economic insights to everyday life → studies the process of natural selection in a marginal cost and marginal benefit framework is considered a mainstream economist Difficulty: Medium Gradable: automatic Learning Objective: 01-08 Define an economic naturalist Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank Multiple Choice Question Level of Learning: Knowledge An economic naturalist is described as someone who Type: Word Problem Full file at https://TestbankDirect.eu/ 202.With ATMs it is possible to retrieve cash from the bank at any time One hundred years ago, one could only get cash from the bank during business hours, say, am to pm The difference is because flexibility was not valued 100 years ago it was impossible to provide 24 hour a day service 100 years ago the cost of providing 24 hour a day service is much lower today → government forced banks to become more convenient the value of money has increased in the past century Difficulty: Medium Gradable: automatic Learning Objective: 01-08 Define an economic naturalist Multiple Choice Question Level of Learning: Application With ATMs it is possible to retrieve cash from the Type: Word Problem 203.Every time you go to the grocery store, you try to choose the shortest line But all of the lines always seem to be the same length Why? Everyone else is trying to choose the shortest line, too → The store manager tells the cashiers to speed up or slow down to maintain equal line lengths The union tells the cashiers to speed up or slow down to maintain equal line lengths The cashiers all work at the same speed The cashiers not have an incentive to work faster, Multiple Choice Question Every time you go to the grocery store, you try to Full file at https://TestbankDirect.eu/ Difficulty: Medium Gradable: automatic Learning Objective: 01-08 Define an economic naturalist Level of Learning: Application Type: Word Problem ... of an activity is the value of an alternative forgone → the next-best alternative forgone Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank the least-best alternative forgone... opportunity cost of a new national park Level of Learning: Application Test Bank for Principles of Microeconomics 4th Canadian Edition by Frank is the Type: Word Problem 77 The opportunity cost of a new... cost-benefit principle Suppose that, instead of the first day of the Level of Learning: Application Test Bank for Principles of Microeconomics 4th Canadian Edition by FrankType: Calculation seme 82 Jack