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Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic 1-colour pinstriping job is $35,and she charges $95 for this service.For a total price of $175,Allison will apply a fancier 3-colour pinstripe to an automobile,a service that adds an additional $40 to the total cost of the package.What is Allison's marginal benefit if she sells a basic 1-colour job?


A) $35
B) $60
C) $95
D) The marginal benefit cannot be determined.

E) None of the above
F) All of the above

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Which of the following is not an example of an economic trade-off that a firm has to make?


A) Whether it is cheaper to produce with more machines or with more workers.
B) Whether it is cheaper to outsource the production of a good or service.
C) Whether or not consumers will buy its products.
D) Whether it should produce more of its product.

E) All of the above
F) A) and C)

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Figure 1-1 Figure 1-1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2008 and 2011. A) 23.1% B) 23.8% C) 30% D) 42.9% -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in sales of alcoholic beverages between 2008 and 2011.


A) 23.1%
B) 23.8%
C) 30%
D) 42.9%

E) A) and B)
F) None of the above

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'An increase in the price of petrol will increase the demand for hybrid vehicles'.This statement is an example of a positive economic statement.

A) True
B) False

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________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.


A) Two-dimensional graphs
B) One-dimensional graphs
C) Pie charts
D) Bar graphs

E) B) and D)
F) A) and D)

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Making 'how much' decisions involves


A) calculating the total benefits of the activity and determining if you are satisfied with that amount.
B) calculating the total costs of the activity and determining if you can afford to incur that expenditure.
C) calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity.
D) determining the additional benefits and the additional costs of that activity.

E) B) and C)
F) A) and B)

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The decision about what goods and services will be produced in a market economy is made by


A) lawmakers in the government voting on what will be produced.
B) workers deciding to produce only what the boss says must be produced.
C) producers deciding what society wants most.
D) consumers and firms choosing which goods and services to buy or produce.

E) None of the above
F) B) and C)

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The three fundamental questions that any economy must address are


A) what will be the prices of goods and services; how will these goods and services be produced; and who will receive them.
B) what goods and services will be produced; how will these goods and services be produced; and who receives them.
C) who gets jobs; what wages do workers earn; and who owns what property.
D) how much will be saved; what will be produced; and how can these goods and services be fairly distributed.

E) B) and C)
F) None of the above

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DeShawn's Detailing is a service that details cars at customers' homes or places of work.DeShawn's cost for a basic detailing package is $40,and he charges $75 for this service.For a total price of $90,DeShawn will also detail the car's engine,a service that adds an additional $20 to the total cost of the package.Should DeShawn continue to offer the engine detailing service?


A) Yes, he still makes a profit by selling the engine detailing service with the basic detailing package.
B) Yes, but only if he raises the price of the basic detailing package.
C) No, his marginal benefit is less than his marginal cost.
D) More information is needed for DeShawn to make this decision.

E) C) and D)
F) B) and D)

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Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be


A) allocatively efficient.
B) productively efficient.
C) guaranteed to make a profit.
D) all of the above.

E) A) and B)
F) B) and C)

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Which of the following is a normative economic statement?


A) The price of petrol is too high.
B) The current high price of petrol is the result of strong worldwide demand.
C) When the price of petrol rises, the quantity of petrol purchased falls.
D) When the price of petrol rises, transportation costs rise.

E) A) and D)
F) All of the above

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Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic 1-colour pinstriping job is $35,and she charges $95 for this service.For a total price of $175,Allison will apply a fancier 3-colour pinstripe to an automobile,a service that adds an additional $40 to the total cost of the package.Should Allison continue to offer the 3-colour pinstripe application?


A) Yes, she still makes a profit by selling the 3-colour application.
B) Yes, but only if she lowers the price of the 1-colour application.
C) No, her marginal benefit is less than her marginal cost.
D) More information is needed for Allison to make this decision.

E) All of the above
F) None of the above

Correct Answer

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In economics,choices must be made because we live in a world of


A) unemployment.
B) scarcity.
C) greed.
D) unlimited resources.

E) None of the above
F) C) and D)

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Who receives the most of what is produced in a market economy?


A) Lawmakers and other politically favoured groups.
B) Those who are willing and able to buy it.
C) People who earn the highest incomes.
D) Everyone receives an equal amount.

E) All of the above
F) A) and B)

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What is a centrally planned economy?

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A centrally planned economy is...

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Microeconomics is the study of


A) how households and firms make choices.
B) the economy as a whole.
C) the global economy.
D) topics such as unemployment, inflation and economic growth.

E) B) and D)
F) C) and D)

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What is equity,and how does it differ from efficiency?

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Equity refers to the fair distribution o...

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Examining the conditions that could lead to a recession in an economy is an example of a macroeconomics topic.

A) True
B) False

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What is a mixed economy?

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A mixed economy is an economy in which m...

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If the marginal cost of keeping a doctor's office open one additional hour per day is $200,then the doctor should keep the office open for one extra hour


A) only if the marginal benefit she receives is greater than $200 plus an acceptable profit margin.
B) as long as the marginal benefit she receives is just equal to or greater than $200.
C) as long as the marginal cost does not rise.
D) until the marginal benefit she receives reaches zero.

E) C) and D)
F) A) and C)

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