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:

Multiple Choice

• marginal analysis.
• full employment.
• opportunity cost.
• full production.

Consumers might leave a fast-food restaurant without being served because:

Multiple Choice

• the lines waiting for service are not of equal length.
• the environment is not conducive to a rational choice.
• they are misinformed about the marginal cost and marginal benefits of the food being served.
• they conclude that the marginal cost (monetary plus time costs) exceeds the marginal benefit.

The assertion that "There is no free lunch" means:

Multiple Choice

• marginal analysis is not used in economic reasoning.
• choices do not need be made if behaviour is rational.
• there are always tradeoffs between economic goals.
• all production involves the use of scarce resources and thus the sacrifice of alternative goods.

From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?

Multiple Choice

• a hypothesis
• an assumption
• an economic principle or a law
• a fact

Economic models:

Multiple Choice

• are of limited use because they cannot be tested empirically.
• emphasize basic economic relationships by abstracting from the complexities of the real world.
• are limited to variables which are directly related to one another.
• are unrealistic and therefore of no practical consequence.

The basic purpose of the "other things equal" assumption is to:

Multiple Choice

• determine whether X causes Y or vice versa.
• allow one to focus upon micro variables by ignoring macro variables.
• allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.
• allow one to focus upon macro variables by ignoring micro variables.

The term "ceteris paribus" means:

Multiple Choice

• that if event A precedes event B, A has caused B.
• prosperity inevitably follows recession.
• other things equal.
• that economics deals with facts, not values.

Which of the following is a positive statement?

Multiple Choice

• The humidity is too high today.
• It is too hot to jog today.
• I enjoy summer evenings when it cools off.
• The temperature is 30 degrees today.

A major argument for economic growth is that it:

Multiple Choice

• protects common property resources.
• creates an equal distribution of income.
• leads to a higher standard of living.
• reduces the amount of taxation.

Which of the following is a normative statement?

Multiple Choice

• It will cool off later this evening.
• The temperature is high today.
• It is too hot to play tennis today.
• The humidity is high today.

Normative statements are concerned with:

Multiple Choice

• what is.
• rational choice involving costs and benefits.
• what ought to be.
• facts and theories.

Concern about the general level of prices in an economy is primarily a concern about the economic goal of:

Multiple Choice

• economic security.
• price-level stability.
• economic efficiency.
• equity.

Most of the disagreement among economists involves:

Multiple Choice

• normative statements.
• theories.
• facts.
• positive statements.

When an economist says that material wants are insatiable, this means that:

Multiple Choice

• these wants are virtually unlimited and therefore incapable of complete satisfaction.
• economic resourcesland, labour, capital, and entrepreneurial abilityare scarce.
• economic resources are valuable only because they can be used to produce consumer goods.
• the structure of consumer demand varies from time to time and from country to country.