Student name:__________

1)    The economic concept that serves as the basis for the study of economics is:

      
       A) inflation.
       B) unemployment.
       C) money.
       D) scarcity.
      

 

2)    As a consequence of the condition of scarcity:

      
       A) there is always enough of everything.    
       B) production has to be centrally planned.
       C) things which are plentiful have relatively high prices.
       D) individuals and communities have to make choices among alternatives.
      

 

3)    In every economic system, choices must be made because resources are:

      
       A) infinite, but economic wants are finite.  
       B) finite, but economic wants are insatiable.
       C) unlimited, but economic wants are limited.
       D) limited, and so are economic wants.
      

 

4)    Opportunity cost is best defined as:

      
       A) marginal cost minus marginal benefit.   
       B) the time spent on an economic activity.
       C) the value of the best foregone alternative.
       D) the money cost of an economic decision.
      

 

5)    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:

      
       A) $300
       B) $450
       C) $500
       D) $600
      

 

6)    When a provincial government chooses to build more roads, the required resources are no longer available for spending on public education. This dilemma illustrates the concept of:

      
       A) marginal analysis.
       B) full employment.
       C) full production.
       D) opportunity cost.
      

 

7)    Specialization and trade are beneficial to society because:

      
       A) the output of economic goods may be increased with no increase in resources.  
       B) scarce resources are utilized more efficiently.
       C) a division of labour lowers prices for products.
       D) all of these are correct.
      

 

8)    When economists describe "a market," they mean:

      
       A) a place where stocks and bonds are traded.   
       B) information networks that allow individuals to keep in touch with each other.
       C) a hypothetical place where the production of goods and services takes place.
       D) a mechanism which coordinates actions of consumers and producers to establish equilibrium prices and quantities.