Question 1

Economics is the study of how fairly goods and services are distributed within society.

Accepted Answer

Economics is the study of how goods and services are produced, distributed, and consumed in society. While fairness and equity do play a role in economic theories, they are not the sole focus of the field.

Question 2

Tuition is the single-largest cost of attending college for most students.

Accepted Answer

While tuition is a significant expense, for many students, room and board (housing and food costs) can equal or surpass the cost of tuition, especially at residential colleges.

Question 3

Mike has spent $500 purchasing and repairing an old fishing boat,which he expects to sell for $800.He discovers that he needs an additional repair,which will cost $600.He can sell the boat as it is now for $300.What should he do

Accepted Answer

The answer of Mike has spent $500 purchasing and repairing...

Question 4

With careful planning,we can usually get something that we like without having to give up something else that we like.

Accepted Answer

This statement contradicts the economic principle of opportunity cost, which posits that in order to obtain something we desire, we often have to forego something else we value.

Question 5

Why are gasoline prices in Canada higher than in the United States

Accepted Answer

The main reason for higher gasoline prices in Canada is higher taxes imposed by the federal and provincial governments. In Canada, a significant portion of the gasoline price goes towards taxes, which includes sales tax, carbon tax, and excise tax. In contrast, the taxes on gasoline in the United States are comparatively lower.

Question 6

Equity means everyone in the economy should receive an equal share of the goods and services produced.

Accepted Answer

Equity means fairness and impartiality, not necessarily giving equal shares to everyone. Different individuals may require different levels of resources and support to achieve a fair outcome. Therefore, equity often involves giving more to those who need more, rather than an equal share to everyone.

Question 7

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

Scarcity occurs when the demand for a good or resource exceeds its supply, resulting in its limited availability. This can lead to competition for the resource and potentially higher prices.

Question 8

Equity refers to how the pie is divided,and efficiency refers to the size of the economic pie.

Accepted Answer

Equity is concerned with the distribution of resources, while efficiency is concerned with how productive and prosperous the economy as a whole is.

Question 9

A rational decision maker takes an action if and only if the marginal cost exceeds the marginal benefit.

Accepted Answer

A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost. If the marginal cost exceeds the marginal benefit, then the decision maker should not take the action.

Question 10

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Accepted Answer

While individuals in a market economy may be motivated by their own self-interest, the competition and interaction within the market can lead to socially desirable outcomes such as efficiency, innovation, and a better allocation of resources. However, it is important to note that government intervention and regulation may be necessary to address certain market shortcomings, such as externalities or market power.

Question 11

What happened to the opportunity cost of gasoline from 1997 to 2014

Accepted Answer

The answer of What happened to the opportunity cost of...

Question 12

Since taxes affect only the price paid by the buyer,they cannot have an adverse impact on the allocation of society's resources.

Accepted Answer

Taxes can have an adverse impact on the allocation of society's resources. For example, high taxes on cigarettes may discourage smokers from purchasing them and lead to a decrease in demand for tobacco products. This could result in reduced production of tobacco and a shift in resources away from tobacco farming and towards other industries. Additionally, taxes on certain goods or services may disproportionately affect certain groups, leading to unequal resource allocation.

Question 13

What is the best way to measure the opportunity cost of gasoline

Accepted Answer

The opportunity cost of gasoline refers to what else could have been purchased or done with the money spent on gasoline. Therefore, option D, measuring the number of minutes of work needed to pay for 1 km of driving, provides a clear indication of the opportunity cost because it represents the value of the time and effort needed to earn the money to purchase the gasoline. Option A only considers the monetary cost of gasoline, while option B only focuses on fuel efficiency, which is not directly related to opportunity cost. Option C is relevant to environmental concerns but does not directly relate to the opportunity cost of gasoline.

Question 14

If the average cost of transporting a passenger on the train from Brockville to Toronto is $75,it would be irrational for the railroad to allow any passenger to ride for less than $75.

Accepted Answer

The average cost of transporting a passenger does not necessarily reflect the actual cost for each individual ride. The railroad may offer discounts, promotions or variable prices depending on factors such as time of day, day of week, demand, etc. Therefore, it is not necessarily irrational for the railroad to allow some passengers to ride for less than $75.

Question 15

Why is the opportunity cost of gasoline in Canada higher than in the United States when measured by "Minutes Worked per Kilometre Driven"

Accepted Answer

Gas prices in Canada are generally higher than in the United States, while average wages are lower. Therefore, the opportunity cost of gasoline, measured by "Minutes Worked per Kilometre Driven," is higher in Canada because it takes more minutes of work to earn the money to pay for a litre of gas in Canada compared to the United States.

Question 16

Trade allows each person to specialize in the activities he or she does best,thus increasing each individual's productivity.

Accepted Answer

Trade allows individuals to focus on tasks that they are good at, which can lead to increased productivity and efficiency. This is one of the benefits of trade according to classical economic theory.

Question 17

Trade with any nation can be mutually beneficial.

Accepted Answer

Trade allows nations to specialize in producing goods and services that they are good at and to import goods and services that they are not. This leads to efficiency gains and can benefit both trading partners.

Question 18

Monica has spent $30,000 purchasing and repairing an old cabin,which she expects to sell for $40,000.She discovers that she needs an additional repair,which will cost $15,000.She can sell the cabin as it is now for $25,000.What should she do

Accepted Answer

The answer of Monica has spent $30,000 purchasing and repairing...

Question 19

The cost of an action is measured in terms of foregone opportunities.

Accepted Answer

The cost of an action, also known as opportunity cost, is the value of the next best alternative that has to be given up in order to pursue a certain action. Therefore, it is measured in terms of foregone opportunities.

Question 20

A marginal change is a small incremental adjustment to an existing plan of action.

Accepted Answer

A marginal change is indeed a small incremental adjustment to an existing plan of action.

Quiz 1: Ten Principles of Economics