TEST BANK
MICROECONOMICS
4TH CANADIAN EDITION
CHAPTER NO. 01: ECONOMICS: FOUNDATIONS AND MODELS
1.1 Explain these three key economic ideas: People are rational, people respond to incentives,
and optimal decisions are made at the margin
1) Changes in global weather patterns can lead to
A) more Canadians drinking coffee.
B) Canadians having to pay more for coffee.
C) wage increases for coffee shop employees.
D) the destruction of the Canadian coffee harvest.
E) Canadians demanding more coffee.
Answer: B
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
Special Feature: Chapter Opener: You versus Caffeine?
2) The study of economics arises due to
A) money.
B) scarcity.
C) greed.
D) unlimited resources.
E) unemployment.
Answer: B
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
3) Scarcity refers to the situation in which
,A) unlimited wants exceed limited resources.
B) unlimited resources exceed limited wants.
C) a country's population is larger than its resource base.
D) a nation's poverty level increases faster than its population.
E) our needs and wants are finite.
Answer: A
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
4) The basic economic problem of ________ has always existed and will continue to
exist.
A) scarcity
B) efficiency
C) inflation
D) recession
E) unemployment
Answer: A
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
5) Economics is the study of the ________ people make to attain their goals, given their
________ resources.
A) purchases; unlimited
B) choices; scarce
C) income; available
D) decisions; household
E) output; time
Answer: B
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
,people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
6) An economic ________ is a simplified version of some aspect of economic life used to
analyze an economic issue.
A) market
B) trade-off
C) variable
D) model
E) opportunity cost
Answer: D
Diff: 1 Type: MC
Topic: Economic Models
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
7) The term "market" in economics refers to
A) a place where money changes hands between institutions and the arrangements they
make.
B) a legal institution where exchange can take place between a group of buyers and
sellers.
C) a group of buyers and sellers and the arrangement by which they come together to
trade.
D) an organization which sells goods and services to a group of buyers who make
decisions at the margin.
E) a place where stocks are traded between a group of international buyers and sellers.
Answer: C
Diff: 1 Type: MC
Topic: Markets
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
8) The term ________ in economics refers to a group of buyers and sellers of a product
and the arrangement by which they come together to trade.
, A) collective
B) cooperative
C) market
D) trade-off
E) monopoly
Answer: C
Diff: 1 Type: MC
Topic: Markets
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
9) Economists assume that
A) individuals behave in unpredictable ways.
B) consumer behaviour is explained by the existence of unlimited resources.
C) people put other people's interests ahead of their own.
D) optimal decisions are made at the margin.
E) society's output should be equally distributed.
Answer: D
Diff: 1 Type: MC
Topic: Optimal Decisions Are Made at the Margin
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
10) Economists assume that rational behaviour is useful in explaining choices people
make
A) because irrational people do not make economic choices.
B) even though people may not behave rationally all the time.
C) because individuals act rationally all the time in all circumstances.
D) even though people rarely, if ever, behave in a rational manner.
E) because economic choices are not needed by rational people.
Answer: B
Diff: 2 Type: MC
Topic: People Are Rational
MICROECONOMICS
4TH CANADIAN EDITION
CHAPTER NO. 01: ECONOMICS: FOUNDATIONS AND MODELS
1.1 Explain these three key economic ideas: People are rational, people respond to incentives,
and optimal decisions are made at the margin
1) Changes in global weather patterns can lead to
A) more Canadians drinking coffee.
B) Canadians having to pay more for coffee.
C) wage increases for coffee shop employees.
D) the destruction of the Canadian coffee harvest.
E) Canadians demanding more coffee.
Answer: B
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
Special Feature: Chapter Opener: You versus Caffeine?
2) The study of economics arises due to
A) money.
B) scarcity.
C) greed.
D) unlimited resources.
E) unemployment.
Answer: B
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
3) Scarcity refers to the situation in which
,A) unlimited wants exceed limited resources.
B) unlimited resources exceed limited wants.
C) a country's population is larger than its resource base.
D) a nation's poverty level increases faster than its population.
E) our needs and wants are finite.
Answer: A
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
4) The basic economic problem of ________ has always existed and will continue to
exist.
A) scarcity
B) efficiency
C) inflation
D) recession
E) unemployment
Answer: A
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
5) Economics is the study of the ________ people make to attain their goals, given their
________ resources.
A) purchases; unlimited
B) choices; scarce
C) income; available
D) decisions; household
E) output; time
Answer: B
Diff: 1 Type: MC
Topic: Scarcity
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
,people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
6) An economic ________ is a simplified version of some aspect of economic life used to
analyze an economic issue.
A) market
B) trade-off
C) variable
D) model
E) opportunity cost
Answer: D
Diff: 1 Type: MC
Topic: Economic Models
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
7) The term "market" in economics refers to
A) a place where money changes hands between institutions and the arrangements they
make.
B) a legal institution where exchange can take place between a group of buyers and
sellers.
C) a group of buyers and sellers and the arrangement by which they come together to
trade.
D) an organization which sells goods and services to a group of buyers who make
decisions at the margin.
E) a place where stocks are traded between a group of international buyers and sellers.
Answer: C
Diff: 1 Type: MC
Topic: Markets
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
8) The term ________ in economics refers to a group of buyers and sellers of a product
and the arrangement by which they come together to trade.
, A) collective
B) cooperative
C) market
D) trade-off
E) monopoly
Answer: C
Diff: 1 Type: MC
Topic: Markets
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Reflective Thinking
9) Economists assume that
A) individuals behave in unpredictable ways.
B) consumer behaviour is explained by the existence of unlimited resources.
C) people put other people's interests ahead of their own.
D) optimal decisions are made at the margin.
E) society's output should be equally distributed.
Answer: D
Diff: 1 Type: MC
Topic: Optimal Decisions Are Made at the Margin
Learning Outcome: 1.1 Explain these three key economic ideas: People are rational,
people respond to incentives, optimal decisions are made at the margin
AACSB: Analytic Skills
10) Economists assume that rational behaviour is useful in explaining choices people
make
A) because irrational people do not make economic choices.
B) even though people may not behave rationally all the time.
C) because individuals act rationally all the time in all circumstances.
D) even though people rarely, if ever, behave in a rational manner.
E) because economic choices are not needed by rational people.
Answer: B
Diff: 2 Type: MC
Topic: People Are Rational
