BEP2O · Unit 1 test review

Economic Foundations: Test Review

Everything for the Unit 1 test on one page: the key facts from all 5 lessons, the mistakes that cost the most marks, and a practice test that points you back to the lessons you need.

Key facts

Needs, Wants, Scarcity and Choice

Need = something required to survive and live safely (food, water, shelter, clothing, health care). Want = something you would like but could live without.
Scarcity = unlimited wants but limited resources (money, time, land, workers, materials).
Scarcity forces a choice, and every choice has an opportunity cost: the value of the next-best option given up.
Opportunity cost counts only the single next-best option, and it includes time, such as wages you could have earned.
Businesses respond to scarcity and wants with new products, pricing (sales, value sizes, higher prices for scarce items) and convenience (delivery, online ordering).

Supply, Demand and Price

Law of demand: price up, quantity demanded down. Law of supply: price up, quantity supplied up.
Equilibrium: the price where $Q_{d} = Q_{s}$ ; on a graph, where the curves cross.
Price above equilibrium: surplus $= Q_{s} - Q_{d}$ . Price below equilibrium: shortage $= Q_{d} - Q_{s}$ .
A change in the product's own price is a movement along a curve; any other factor shifts the whole curve.
Demand shifters: income, trends, prices of related goods, number of buyers, expectations. Supply shifters: input costs, technology, number of sellers, weather.
Demand right: price and quantity both rise. Supply right: price falls and quantity rises.

The Economic Cycle and Market Structures

Business cycle phases in order: expansion, peak, contraction (recession), trough, recovery.
Inflation = a general rise in prices. Inflation rate $= \frac{new - old}{old} \times 100%$ .
The Bank of Canada raises its policy interest rate to slow inflation and lowers it to help a weak economy; its inflation target is 2%.
Interest for one year $= amount borrowed \times interest rate .$
Market structures from most to least competition: perfect competition, monopolistic competition, oligopoly, monopoly.
Market share $= \frac{company sales}{total market sales} \times 100% .$

Trade and Government in the Market

Export = sold to another country. Import = bought from another country.
The United States is Canada's largest trading partner. Major agreements: CUSMA (U.S. and Mexico), CETA (European Union), CPTPP (Asia-Pacific).
A tariff is a tax on imports. Cost with tariff $= price \times (1 + tariff rate)$ .
A market failure is when a free market produces a result that is bad for society, such as monopoly power, price-fixing, pollution, unsafe products or very low pay.
The Competition Bureau enforces the Competition Act (no price-fixing, no misleading ads); minimum wage, consumer protection, environmental rules, taxes and subsidies also correct failures.
The Better Business Bureau is a non-governmental, non-profit organization, not a government agency.

Business in Canada

Ownership types: sole proprietorship, partnership, corporation, co-operative, franchise, social enterprise, Crown corporation.
Sole proprietors and most partners have unlimited liability; corporation shareholders have limited liability.
Primary sector = natural resources; secondary = making products; tertiary = services. Most Canadians work in services.
Small business = 1 to 99 employees; medium = 100 to 499; large = 500 or more.
Triple bottom line: people, planet, profit. CSR means taking responsibility for effects on all three.
TRC Call to Action 92 asks the corporate sector to adopt UNDRIP as a framework for reconciliation and to ensure equitable access to jobs, training and education for Indigenous peoples.

Where marks get lost

Calling anything you really, really want a need. Ask whether your health or safety would suffer without it; if not, it is a want. (Needs, Wants, Scarcity and Choice)
Thinking scarcity only affects poor people. Everyone faces scarcity, because time and resources are always limited. (Needs, Wants, Scarcity and Choice)
Adding up every option you gave up as the opportunity cost. Only the single next-best option counts. (Needs, Wants, Scarcity and Choice)
Forgetting that time has an opportunity cost, such as the wages you could have earned during a shift you skipped. (Needs, Wants, Scarcity and Choice)
Assuming the price tag is the whole cost of a choice. The full cost is the money spent plus the opportunity cost. (Needs, Wants, Scarcity and Choice)
Saying "demand went up" when only the price fell. A price change causes a change in quantity demanded (a movement along the curve), not a shift in demand. (Supply, Demand and Price)
Shifting the wrong curve: a rise in flour prices affects the bakery's costs, so it shifts supply, not demand. (Supply, Demand and Price)
Mixing up surplus and shortage. Price too high leaves extra goods (surplus); price too low leaves buyers empty-handed (shortage). (Supply, Demand and Price)
Forgetting to check the equilibrium in both equations. If $Q_{d}$ and $Q_{s}$ do not come out equal, there is an arithmetic slip. (Supply, Demand and Price)
Thinking more supply raises the price. More supply (a shift right) lowers the equilibrium price. (Supply, Demand and Price)
Putting the phases in the wrong order. After a peak comes contraction, then the trough, then recovery and expansion. (The Economic Cycle and Market Structures)
Thinking the Bank of Canada raises interest rates to help the economy grow. Raising rates slows spending to fight inflation; lowering rates encourages growth. (The Economic Cycle and Market Structures)
Calling any big company a monopoly. A monopoly has only one seller with no close substitute; a few big firms is an oligopoly. (The Economic Cycle and Market Structures)
Blaming workers or farmers for job losses caused by market forces beyond their control, such as world prices, new technology or weather. (The Economic Cycle and Market Structures)
Calculating inflation by dividing by the new price instead of the old price. (The Economic Cycle and Market Structures)
Mixing up imports and exports. Exports go out of Canada (we sell); imports come in (we buy). (Trade and Government in the Market)
Thinking tariffs are paid by the foreign country. The importer pays the tariff, and that cost is usually passed on to shoppers. (Trade and Government in the Market)
Calling the Better Business Bureau a government agency. It is an independent non-profit with no power to fine businesses. (Trade and Government in the Market)
Thinking free trade only helps. It also brings more foreign competition, which can hurt some Canadian businesses and workers. (Trade and Government in the Market)
Mixing up which level of government does what. Business licences and zoning are municipal; minimum wage for most workers in Ontario is provincial; the Competition Act is federal. (Trade and Government in the Market)
Thinking a sole proprietor is protected from business debts. A sole proprietor has unlimited liability; their personal savings and belongings can be at risk. (Business in Canada)
Confusing a co-operative with a corporation. In a co-operative each member gets one vote; in a corporation votes usually depend on how many shares you own. (Business in Canada)
Mixing up the sectors: a bakery that makes bread is secondary (making products), but a store that only resells bread is tertiary. (Business in Canada)
Believing any "green" label without proof. Vague claims with no evidence may be greenwashing. (Business in Canada)
Describing partnerships with Indigenous communities as charity. They are business relationships that should involve consultation, shared benefits and respect for rights. (Business in Canada)

Practice test

25 questions from across the unit. Each one shows the lesson it comes from.

Needs, Wants, Scarcity and Choice
1
Which of these is a need?
Needs, Wants, Scarcity and Choice
2
Lena turns down a 5-hour shift paying $16.80 an hour so she can rest before a hockey tournament. Resting was her choice and the shift was her next-best option. What is the opportunity cost of resting, in dollars? Give your answer to the nearest cent.
$
Needs, Wants, Scarcity and Choice
3
Put the steps of the scarcity chain in order.
1. 1Resources are limited (scarcity)
2. 2The next-best option is given up (opportunity cost)
3. 3A choice must be made
4. 4Wants are unlimited
Needs, Wants, Scarcity and Choice
4
A grocery store adds self-checkout lanes and an app for curbside pickup. Which consumer problem is it mainly responding to?
Needs, Wants, Scarcity and Choice
5
Which pair is correctly labelled?
Supply, Demand and Price
6
Demand for smoothies is $Q_{d} = 90 - 3 P$ and supply is $Q_{s} = 10 + 5 P$ . Find the equilibrium price, to the nearest cent.
$
Supply, Demand and Price
7
With $Q_{d} = 90 - 3 P$ and $Q_{s} = 10 + 5 P$ , a seller charges $14. How many units of surplus or shortage are there?
units
Supply, Demand and Price
8
The price of a video game console falls. What happens to the demand for games for that console?
Supply, Demand and Price
9
When the price is set below equilibrium so that buyers want more than sellers offer, what is the situation called?
Supply, Demand and Price
10
Which change would lower the equilibrium price of sneakers?
The Economic Cycle and Market Structures
11
Put the phases of the business cycle in order, starting with expansion.
1. 1Recovery
2. 2Trough
3. 3Contraction
4. 4Expansion
5. 5Peak
The Economic Cycle and Market Structures
12
A monthly bus pass rose from $125 to $130. By what percentage did the price rise? Round to one decimal place.
%
The Economic Cycle and Market Structures
13
Match each market to its structure.
Hundreds of farmers selling identical corn
Dozens of pizza shops, each with its own style
Three or four national cellphone carriers
The only water utility in a city
The Economic Cycle and Market Structures
14
A one-industry town's paper mill closes because demand for paper has fallen worldwide. Which statement is most accurate?
The Economic Cycle and Market Structures
15
In a recession, which business is likely to see the smallest drop in sales?
Trade and Government in the Market
16
Which country is Canada's largest trading partner?
Trade and Government in the Market
17
An imported game console costs a store $500. A 20% tariff is added. What is the store's cost including the tariff, in dollars? Give your answer to the nearest dollar.
$
Trade and Government in the Market
18
Match each action to who usually does it.
Issues a local business licence
Sets Ontario's general minimum wage
Enforces the Competition Act
Rates businesses and handles customer complaints
Trade and Government in the Market
19
What is the term for a tax placed on imported goods?
Trade and Government in the Market
20
How can free trade agreements hurt some Canadian businesses?
Business in Canada
21
Match each business to its type.
A credit union owned by its members
Canada Post
A student's tutoring business run alone
A Tim Hortons restaurant run by a local owner
Business in Canada
22
Order the steps in making and selling a wooden table from primary to tertiary sector.
1. 1A workshop building the table
2. 2Cutting down trees for lumber
3. 3A furniture store selling the table
Business in Canada
23
Which action best fits the "planet" part of the triple bottom line?
Business in Canada
24
What does TRC Call to Action 92 ask the corporate sector in Canada to do?
Business in Canada
25
Which is the best example of a social enterprise?

Endless drill

Fresh numbers every time, for the calculation questions in this unit.

Endless drillnew numbers every time

Generating a problem…