ECON 1020 Study Guide - Final Guide: Economic Equilibrium, Marginal Cost, Marginal Utility
ECON 1020 D01 Final Exam Practice Questions (Not to be handed in)
1. 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.
Ans: C
2. 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 the above are correct.
Ans: D
3. 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.
Ans: D
4. One of the basic economic defences of economic growth rests on the conclusion that:
A) growth makes workers less obsolete and more secure in employment.
B) growth reduces the cost of "common property" resources to society.
C) growth makes the gap between unlimited wants and scarce resources less acute.
D) a growth-oriented society confers a "work and look to the future" attitude on the
members of society.
Ans: C
5. Refer to the budget line shown in the diagram below. If the consumer's money income is $20,
the:
A) prices of C and D cannot be determined.
B) price of C is $2 and the price of D is $4.
C) consumer can obtain a combination of 5 units of both C and D.
D) price of C is $4 and the price of D is $2.
Ans: D
6. In moving along a given budget line:
A) the prices of both products and money income are assumed to be constant.
B) each point on the line will be equally satisfactory to consumers.
C) money income varies, but the prices of the two goods are constant.
D) the prices of both products are assumed to vary, but money income is constant.
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ECON 1020 Full Course Notes
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