Download Practice Test Answer Key

CIE3M, October 15, 2014
Student Name: _____________________________________
Grade 11 Economics
Unit #1 Practice Test: Foundational Economic Theory
Section D - Graphing
(7 marks)
1. In the space provided below, construct a Production Possibility Curve for computers and lamps. (1 mark)
(a) Indicate, using the letter “A,” a point of maximum efficiency of resources. (1 mark)
(b) Indicate, using the letter “B,” a point of unattainable production. (1 mark)
(c) Indicate, using the letter “C,” a point of inefficient use of resources. (1 mark)
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2. To begin, draw a basic Production-Possibility Curve for the production of flowers and tanks in Canada within all
three of the following graphs. Be sure to properly label all three graphs. (2 marks)
Graph A
Graph B
Graph C
Then draw new points, curves, and arrows to illustrate the following scenarios:
(a)
Indicate on Graph “A” the effect of 20,000 immigrant workers arriving from the US. (1 mark)
(b)
Indicate on Graph “B” the effect of a nation-wide labour strike. (1 mark)
(c)
Indicate on Graph “C” the effect of a recent technological discovery in steel production. (1 mark)
3. To begin, draw basic supply and demand curves for the green apple market. Be sure to properly label all three
graphs. (2 marks)
Graph A
Graph B
Graph C
Then draw new points, curves, and arrows to illustrate the changes to both market price and market quantity
resulting from the following scenarios:
a) Indicate on Graph “A” the effect of an article suggesting that green apples improve health. (3 marks)
b) Indicate on Graph “B” the effect of an increase in the cost of apple pesticides. (3 marks)
c) Indicate on Graph “C” the effect of a recent technological improvement in apple picking. (3 marks)
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Section F – Written Response
(12 marks)
Instructions:
Answer any three (3) of the following five questions in complete sentences. Please limit your selection to just three
questions. If you answer more than three questions, I will only mark the first three answers. Please note that the
mark value for each question is the same.
1. Identify the three “Economic Questions.” What type of society must answer these questions? (4 marks)
2. Which of the three “economic systems” would best describe the Canadian economy? Provide two points to
support your answer. (4 marks)
3. Explain what is meant by the “law of increasing costs.” (4 marks)
4. Explain what is meant by the “law of demand.” Why does demand behave in this way? (4 marks)
5. Explain what is meant by “market equilibrium.” Where is it found? Describe the forces that push the market
towards equilibrium. (4 marks)
Written Response Answers
1. The three economic questions that societies must
Question # ___: ______________________________________________________________
answer are: i) what to produce, ii) how to produce, and iii) for whom
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to produce. All societies and all economic systems must answer
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these questions; it is only the answers that would change (depending
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on the economic system).
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law of demand states that as the price of a good/service
Question #2.
___:The
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increases, the quantity purchased will decrease, and vice versa. The law of
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demand works this way because, if all of other things are equal, people
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would rather pay less for a good or service in order to leave them with
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more money to buy other things. Buying anything is an economic choice,
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and an economic choice is easier to accept if the opportunity cost is low.
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The lower the price of a good, the easier it is to buy it because it will have
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a lower opportunity cost (i.e. you wouldn't be able to by as much of
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something else with the money).
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3. As you trade off resources from producing Product A
Question # ___: ______________________________________________________________
toward producing Product B, you will first move your least productive
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resources away from producing Product A. As you seek to move more
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and more resources away from Product A and toward Product B, you
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will be forced to dig into increasingly valuable resources. This is why
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producing more of any one good or service comes at an increasing
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cost.
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