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

Answer: an economic principle or a law

Question: The production possibilities curve:

Answer: is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced.

Question: The individual's limited income problem:

Answer: exists because material wants are limited.

Question: what is a macroeconomic statement?

Answer: The gross profits of all Canadian businesses were $70 billion last year.

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

Answer: price-level stability.

Question: If we say that two variables are inversely related, this means that:

Answer: an increase in one variable is associated with a decrease in the other.

Question: The production possibilities curve has

Answer: a negative slope which increases as we move along it from left to right.

Question: Normative statements are concerned with:

Answer: what ought to be.

Question: The law of increasing opportunity costs exists because:

Answer: resources are not equally efficient in producing various goods.

Question: An economic model is:

Answer: built using theory.

Question: The typical production possibilities curve is:

Answer: a downward sloping line which is concave to the origin.

Question: Which of the following is not correct? A typical production possibilities curve:

Answer: specifies how much of each product society should produce.

Question: Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Answer: an increase in the supply of resources

Question: The slope of a line parallel to the horizontal axis is:

Answer: zero.

Question: Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of:

Answer: purposeful behaviour.

Question: If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it:

Answer: can produce more of both consumer goods and capital goods by using its resources more efficiently.

Question: Deltonia produces both consumer and capital goods. If it reduces the percentage of its output devoted to capital goods, then:

Answer: its rate of growth will tend to decline.

Question: Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favourite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's trip to the concert is:

Answer: 600

Question: Opportunity cost

Answer: emphasises the problem of scarcity and choice by measuring the cost of obtaining a unit of one commodity in terms of the number of units of other commodities that could have been obtained instead

Question: Production possibilities boundary

Answer: separates the combinations that can be obtained from those that cannot

Question: Points to the right of the PPB

Answer: Unattainable

Question: points to the left of the PPB

Answer: are attainable with excess resources

Question: Why does the PPB slope downward?

Answer: resources are scarce

Question: what 3 concepts does the PPB illustrate

Answer: Scarcity- unattainable combinations lie above the boundaryChoice-the need to choose among attainable pointsOpportunity cost- downward slope of boundary