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Principles of Microeconomics, 8th Canadian Edition, 8e Gregory Mankiw, Ronald Kneebone, Kenneth McKenzie
(Test Bank all Chapters)
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Chapter 1 - Ten Principles of Economics
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- Which word comes from the Greek word for “one who manages a household”?
- market b. bank
- government d. economy
ANSWER: d
- From which of the following is the word “economy” derived?
- one who consumes goods b. one who manages a household
- one who participates in a market d. one who governs a country
ANSWER: b
- What do households and economies have in common?
- They both must allocate scarce resources.
- They both face difficulties saving money.
- They both must sell the goods and services they produce.
- They both must have a central decision maker.
ANSWER: a
- What concept does economics primarily deal with?
- scarcity b. poverty
- change d. power
ANSWER: a
- What is NOT included in the decisions that every society must make?
- what goods will be produced b. who will produce the goods
- what determines consumer preferences d. who will consume the goods
ANSWER: c
- Why do both households and societies face many decisions?
- Resources are scarce.
- Populations may fluctuate over time.
- Wages for households and therefore society fluctuate with business cycles.
- People, by nature, tend to disagree.
ANSWER: a
- When is a good considered scarce in a society?
- when more output of the good is possible
- when everyone in that society cannot have all they want of the good
- when the government restricts production of the good
- when only the richest people in the economy can buy all they want of the good
ANSWER: b
- When does scarcity exist?
- when there is less than an infinite amount of a resource or good
- when society can meet the wants of every individual 2 / 4
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Chapter 1 - Ten Principles of Economics
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- when there is less of a good or resource available than people wish to have
- when the government fails to produce goods
ANSWER: c
- How are goods and services allocated in a market economy?
- by government decisions
- by giving each individual just enough for a decent standard of living
- by the actions of all firms and consumers
- by inherited rights and properties
ANSWER: c
- Approximately what percentage of the world’s economies experience scarcity?
- 30 b. 45
- 60 d. 100
ANSWER: d
- What is an economy experiencing when a society cannot produce all the goods and services people wish to have?
- scarcity b. economic growth
- competition d. market failure
ANSWER: a
- For society, when is a good NOT scarce?
- if at least one individual in society can obtain all he or she wants of the good
- if firms are producing at full capacity
- if all members of society can have all they want of the good
- if those who have enough income can buy all they want of the good
ANSWER: c
- Which good best meets the definition of scarcity?
- air b. water in the ocean
- electricity in a city d. wood in a forest
ANSWER: c
- What does economics study?
- finance
- how society manages its scarce resources
- central planning
- government regulation
ANSWER: b
- What does economics study?
- how society manages its scarce resources
- the government’s role in society
- how to increase production 3 / 4
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Chapter 1 - Ten Principles of Economics
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- how firms make profits
ANSWER: a
- In most societies, who allocates resources?
- a single central planner
- those who own the resources
- those firms that use resources to provide goods and services
- the combined actions of millions of households and firms
ANSWER: d
- What do economists study?
- how people make decisions
- how governments interact with one another
- the forces and trends that affect only the economy as a whole
- how societies change over time
ANSWER: a
- Which of the following is NOT a major area of study for economists?
- how people make decisions
- how countries choose national leaders
- how people interact with each other
- how forces and trends affect the overall economy
ANSWER: b
- What concept is illustrated by the adage, “There is no such thing as a free lunch”?
- tradeoffs b. scarcity
- productivity d. efficiency
ANSWER: a
- What does the saying “There is no such thing as a free lunch” mean?
- Even people on welfare have to pay for food.
- The cost of living is always increasing.
- To get something we like, we usually have to give up another thing we like.
- All costs are included in the price of a product.
ANSWER: c
- What are economists illustrating when they use the phrase “There is no such thing as a free lunch”?
- how inflation increases prices
- that to get one thing, we must give up something else
- that nothing is free in a market economy
- that if something looks too good to be true, it probably is
ANSWER: b
- Which statement best describes the concept represented by the adage “There is no such thing as a free lunch”?
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