Microeconomics Question Paper

Topics: Planned economy, Mixed economy, Market economy Pages: 26 (6267 words) Published: February 3, 2015
Microeconomics 12e, Ragan - Ch 1
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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A modern economy like Canada's is largely organized by

1)

A) governments at all levels coordinating the activities of firms and citizens. B) benevolent individuals pursuing the public interest.
C) the directions of international economic consortiums.
D) individuals forming cooperative enterprises and labour unions. E) individuals following their own self interest, doing what seems best for themselves. 2) An insight first fully developed by Adam Smith is that

2)

A) benevolence in society is unimportant.
B) individual self-interest is the only necessary force for social order. C) self-interest undermines effective economic order.
D) self-interest, not benevolence, is the foundation of economic order. E) without benevolence production would not occur.
3) Karl Marx argued that

3)

A) benevolence, not self-interest, produced an effective economic order. B) centrally planned economies could provide a more equitable distribution of total output than capitalist economies.
C) the unfettered market system driven by self-interest leads to the best social outcome. D) technological change was not important in improving living standards. E) a free-market system would produce a low level of total output. 4) In the Canadian economy, most decisions regarding resource allocation are made by A) the various levels of government.

B) business firms only.
C) consumers and producers interacting in the price system.
D) legal contract.
E) negotiation between unions and firms.

1

4)

5) A basic underlying point in economics is that

5)

A) people have unlimited wants in the face of limited resources. B) governments should never interfere in the workings of a market economy. C) governments should satisfy the needs of the people.
D) people have limited wants in the face of limited resources. E) there are unlimited resources.
6) Economics is the study of

6)

A) how to best help the poor.
B) why resources are scarce.
C) the allocation of scarce resources among alternative uses. D) how to plan an economy.
E) how to distribute income as equally as possible.
7) Economics is generally NOT concerned with

7)

A) the concept of opportunity cost.
B) the rate of growth of productive capacity.
C) the distribution of income among households.
D) restricting the level of human wants.
E) the allocation of resources among alternative uses.
8) Economics can best be described as

8)

A) the study of the use of scarce resources to satisfy unlimited human wants. B) the study of how a society ought to allocate its resources. C) the application of sophisticated mathematical models to address social problems. D) the study of how to reduce inflation and unemployment.

E) a normative science.
9) Scarcity is likely to be

9)

A) a problem that will always exist.
B) eliminated with a better understanding of economics.
C) unique to the twentieth century.
D) a problem that will be solved by the proper use of available resources. E) a result of the work ethic.

2

10) The concept of scarcity in economics usually refers to a condition

10)

A) where too many frivolous goods and services are produced at the expense of socially desirable goods and services.
B) where production is efficient, but distribution is inefficient. C) where society is not employing all of its available resources in an efficient manner. D) that afflicts only poor countries.
E) where people's wants can never be satisfied by the available resources. 11) Which of the following statements describe the underlying feature in most economic problems?

11)

A) Our country is rich; we just don't realize it.
B) People have limited wants in the face of limited resources. C) Governments should never interfere in the workings of a market economy. D) There are...
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