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Chapter 1—Ten Principles of Economics
MULTIPLE CHOICE
1. What is the word that comes from the Greek word for "one who manages a household"?
a. market
b. consumer
c. producer
d. economy
ANS: D PTS: 1 DIF: Easy REF: p.3
BLM: Remember NOT: Macro TB_1-1
2. From which Greek words is the word economy derived?

a. "environment"
b. "one who manages a household"
c. "one who participates in a market"
d. "conservation"
ANS: B PTS: 1 DIF: Easy REF: p.3
3. Which of the following statements is NOT true? Households and economies both
a. must allocate scarce resources.
b. face many decisions.
c. must allocate the goods and services they produce.
d. must have a central decision maker.
ANS: D PTS: 1 DIF: Average REF: p.3
4. With what concept does economics deal primarily with?

a. scarcity
b. poverty
c. change
d. power
ANS: A PTS: 1 DIF: Easy REF: p.4
5. Which of the following is NOT included in the decisions that every society must make?
a. what goods will be produced
b. who will produce the goods
c. what determines consumer preferences
d. who will consume the goods
ANS: C PTS: 1 DIF: Average REF: p.4
6. For what reason do both households and societies face many decisions?
a. because resources are scarce
b. because populations may increase or decrease over time
c. because wages for households and therefore society fluctuate with business cycles
d. because people, by nature, tend to disagree
ANS: A PTS: 1 DIF: Average REF: p.4
7. When is a good considered scarce in a society?

a. when more output of the good is possible
b. when everyone in that society cannot have all they want of the good
c. when the government restricts production of the good
d. when only the richest people in the economy can buy all they want of the good
ANS: B PTS: 1 DIF: Average REF: p.4
8. When does scarcity exist?

a. when there is less than an infinite amount of a resource or good
b. when society can meet the wants of every individual
c. when there is less of a good or resource available than people wish to have
d. when the government fails to produce goods
9. Which of the following would NOT be true in a world without scarcity?

a. There would be no need for the science of economics.
b. Everyone would have all the goods and services they wanted.
c. There would have to be an infinite supply of every resource.
d. There would be opportunity costs.
BLM: Higher Order NOT: Macro TB_1-9
10. Approximately what percentage of the world's economies experience scarcity?

a. 25%
b. 50%
c. 75%
d. 100%
1-2
Copyright © 2012 Nelson Education Limited Copyright © 2012 Nelson Education Limited
1-2
11. What is the economy experiencing when a society cannot produce all the goods and services people
wish to have?
a. scarcity
b. communism
c. externalities
d. market failure
12. For society, when is a good NOT scarce?

a. if at least one individual in society can obtain all he or she wants of the good
b. if firms are producing at full capacity
c. if all members of society can have all they want of it
d. if those who have enough income can buy all they want of the good
13. Which of the following goods best meets the definition of scarcity?
a. air
b. water in the ocean
c. water in a city
d. wood in a forest
14. What does economics study?

a. business
b. how society manages its scarce resources
c. central planning
d. government regulation
15. What does economics study?

a. how society manages its scarce resources
b. the government's role in society
c. how to increase production
d. How firms make profits
1-3
1-3
16. In most societies, who allocates resources?
a. a single central planner
b. those who own the resources
c. those firms that use resources to provide goods and services
d. the combined actions of millions of households and firms
17. Economists study

a. how people make decisions.
b. how governments interact with one another.
c. the forces and trends that affect only the economy as a whole.
d. how societies change over time.
18. Which of the following is NOT a major area of study for economists?
a. how people make decisions
b. how countries choose national leaders
c. how people interact with each other
d. how forces and trends affect the overall economy
19. What concept is illustrated by the adage, "There is no such thing as a free lunch"?
a. tradeoffs
b. scarcity
c. productivity
d. efficiency
20. What does the adage, "There is no such thing as a free lunch," mean?
a. Even people on welfare have to pay for food.
b. The cost of living is always increasing.
c. To get something we like, we usually have to give up another thing we like.
d. All costs are included in the price of a product.
21. What do economists illustrate when they use the phrase "There is no such thing as a free lunch"?
a. how inflation increases prices
b. that to get one thing, we must give up something else
c. that nothing is free in a market economy
d. that if something looks too good to be true, it probably is
1-4
1-4
22. Which best represents the concept represented by the adage, "There is no such thing as a free lunch"?
a. Melissa can only attend the concert if she takes her sister with her.
b. Greg is hungry and homeless.
c. Brian must repair the tire on his bike before he can ride it to class.
d. Kendra must decide between going to Miami or Cancun for spring break.
ANS: D PTS: 1 DIF: Challenging REF: p.4
23. Guns and butter are used to represent the classic societal tradeoff between spending on which two
items?
a. durable and nondurable goods
b. imports and exports
c. national defense and consumer goods
d. law enforcement and agriculture
ANS: C PTS: 1 DIF: Average REF: p.4-5
24. Henry decides to spend 2 hours playing golf rather than working at his job which pays $8 per hour.
What is Henry's tradeoff?
a. the $16 he could have earned working for 2 hours
b. nothing, because he enjoys playing golf more than working
c. the increase in skill he obtains from playing golf for those 2 hours
d. nothing, because he spent $16 for green fees to play golf
ANS: A PTS: 1 DIF: Average REF: p.4-5
25. When society requires that firms reduce pollution, what happens?
a. There is a tradeoff because of reduced incomes to the firms' owners, workers, and
customers.
b. There is no tradeoff, since everyone benefits from reduced pollution.
c. There is no tradeoff for society as a whole, since the cost of reducing pollution falls only
on the firms affected by the requirements.
d. There is a tradeoff only if some firms are forced to close.
ANS: A PTS: 1 DIF: Challenging REF: p.4-5
26. Daniel decides to spend the last two hours of the night before his economics exam studying instead of
sleeping. For Daniel, what would his tradeoff be?
a. nothing, since no dollar value can be put on sleep
b. nothing, since studying would be more beneficial than sleep
c. the six hours of sleep he could have had if he had gone to bed before midnight
d. the two hours of rest he would have gotten
ANS: D PTS: 1 DIF: Average REF: p.4-5
1-5
1-5
27. How does a tradeoff exist between a clean environment and a higher level of income?
a. Studies show that individuals with higher levels of income actually pollute less than
low-income individuals.
b. To pay for pollution clean-up, the government must increase taxes which lowers income.
c. Laws that reduce pollution raise costs of production and reduce incomes.
d. By employing individuals to clean up pollution, employment and income both rise.
ANS: C PTS: 1 DIF: Challenging REF: p.4-5
28. Which of the following would NOT be a result of laws that require firms to reduce pollution?
a. lower spending by government
b. higher prices to consumers
c. lower wages to workers
d. smaller profit to firms
29. What will pollution regulations do?

a. increase profit to firms
b. impose a tradeoff on society
c. allow firms to raise workers' wages
d. lower prices for consumers
ANS: B PTS: 1 DIF: Average REF: p.4-5
30. Which of the following best defines efficiency?

a. absolute fairness
b. equal distribution
c. minimum waste
d. consumer sovereignty
ANS: C PTS: 1 DIF: Easy REF: p.5
31. What does efficiency mean?

a. Society is conserving resources in order to save them for the future.
b. Society’s goods and services are distributed fairly among society's members.
c. Society has lessened its dependence on foreign energy sources.
d. Society is getting the most it can from its scarce resources.
1-6
1-6
32. In which of the following situations would economists use the word equity?
a. Each member of society has the same income.
b. Society is getting the most it can from its scarce resources.
c. Those in society who have the least will receive the most.
d. The benefits of society's resources are distributed fairly among society's members.
33. What is one definition of equity?

a. equality
b. efficiency
c. fairness
d. similarity
34. What happens when government policies are being designed?

a. There is usually a tradeoff between equity and efficiency.
b. Equity and efficiency goals are usually independent of each other.
c. Equity can usually be achieved without an efficiency loss.
d. Increasing efficiency usually results in more equity.
35. When government policies such as the welfare system try to help the neediest members of society,
what happens?
a. It increases equity and reduces efficiency.
b. It reduces charitable contributions in an economy.
c. It increases the productivity of the needy in the society.
d. It causes market failure to occur.
36. When the government implements programs such as progressive income tax rates, which of the
following is likely to occur?
a. Equity is increased and efficiency is increased.
b. Equity is increased and efficiency is decreased.
c. Equity is decreased and efficiency is increased.
d. Equity is decreased and efficiency is decreased.
1-7
1-7
37. When the government attempts to cut the economic pie into more equal slices, what happens?
a. It is easier to cut the pie, and therefore the economy can produce a larger pie.
b. The government can more easily allocate the pie to those most in need.
c. The pie gets smaller, and there will be less pie for everyone.
d. The economy will spend too much time cutting and loses the ability to produce enough pie
for everyone.
ANS: C PTS: 1 DIF: Challenging REF: p.5
38. When the government attempts to improve equity in an economy, what is often the result?
a. an increase in overall output in the economy
b. additional government revenue since overall income will increase
c. an actual reduction in equity
d. reduced efficiency in the economy
39. When the government redistributes income from the rich to the poor, what is the result?
a. Efficiency is improved, but equity is not.
b. Both rich people and poor people benefit directly.
c. People work less and produce fewer goods and services.
d. Rich people consume fewer goods, but poor people consume more goods, resulting in no
real change.
40. In economics, what is the cost of something?

a. the dollar amount of obtaining it
b. always measured in units of time given up to get it
c. what you give up to get it
d. usually higher than people think it will be
41. What is the term for what you give up to obtain an item?
a. opportunity cost
b. explicit cost
c. true cost
d. direct cost
1-8
1-8
42. Paul receives $300 as a birthday gift. In deciding how to spend the money, he narrows his options
down to four choices, Option A, Option B, Option C, and Option D. Each option costs $200. Finally he
decides on Option B. What is the opportunity cost of Option B?
a. the value to him of the Option he would have chosen if Option B were not available
b. the value to him of Options A, C, and D combined
c. $300
d. $200
43. What is the opportunity cost of going to college?

a. the total spent on food, clothing, books, transportation, tuition, lodging, and other
expenses
b. the value of the best opportunity a student gives up to attend college
c. zero for students who are fortunate enough to have all of their college expenses paid by
someone else
d. zero, since a college education will allow a student to earn a larger income after
graduation
44. For most students, what is the largest single cost of a university education?
a. the wages given up to attend school
b. tuition, fees, and books
c. room and board
d. transportation, parking, and entertainment
45. What is the largest single cost of going to university?

a. books
b. room and board
c. tuition
d. lost wages
46. What is the opportunity cost of an item?

a. the number of hours needed to earn money to buy it
b. what you give up to get that item
c. usually more than the dollar value of the item
d. usually less than the dollar value of the item
1-9
1-9
47. Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options
down to four choices, Option A, Option B, Option C, and Option D. Each option costs $100. Finally he
decides on Option B. What is the opportunity cost of Option B?
a. the value to him of the Option he would have chosen if Option B were not available
b. the value to him of Options A, C, and D combined
c. $300
d. $100
48. Mallory decides to spend 3 hours working overtime rather than watching a video with her friends. She
earns $8 an hour. What is her opportunity cost of working?
a. the $24 she earns working
b. the $24 minus the enjoyment she would have received from watching the video
c. the enjoyment she would have received had she watched the video
d. nothing, since she would have received less than $24 of enjoyment from the video
49. Russell spends an hour studying instead of playing tennis. What is the opportunity cost to him of
studying?
a. the improvement in his grades from studying for the hour
b. the difference between the improvement in his grades from studying minus the enjoyment
of playing tennis
c. the enjoyment and exercise he would have received had he played tennis
d. Zero, Since Russell chose to study rather than to play tennis, the value of studying must
have been greater than the value of playing tennis
50. What do we know about college-age athletes who drop out of college to play professional sports?
a. They are not rational decision makers.
b. They are well aware that their opportunity cost of attending college is very high.
c. They are concerned more about present circumstances than their future.
d. They underestimate the value of a college education.
51. How do people make decisions at the margin?

a. by following tradition
b. by experience
c. by calculating dollar costs
d. by comparing costs and benefits
1-10
1-10
52. What does the word "margin" mean?
a. edge
b. distance
c. space
d. measure
53. What does making decisions "at the margin" mean?

a. that people make those decisions that do not impose a marginal cost
b. that people evaluate how easily a decision can be reversed if problems arise
c. that people compare the marginal costs and marginal benefits of each decision
d. that people always calculate the marginal dollar costs for each decision
54. What is a marginal change?

a. a long-term trend
b. a large, significant adjustment
c. a change for the worse, and so is usually short-term
d. a small incremental adjustment
55. Which of the following is the best example of a marginal change?

a. After graduating from university, Audrey's income increases from $500 per month to
$3,000 per month.
b. Morgan gets a raise at her part-time job and is now paid $7.25 per hour instead of $7.00.
c. Housing prices in an area increase by 40% when a new highway is built in a small town.
d. A hard freeze wipes out half of the tobacco crop in Ontario and the price of cigarettes
doubles.
ANS: B PTS: 1 DIF: Challenging REF: p.6-7

a. After graduating from university, Neville’s income increases from $1,000 per month to
$1,100 per month.
b. Marliss is granted a raise at her part-time job and is now paid $8.25 per hour instead of
$8.00.
c. Housing prices in an area increase by 50% when a new freeway is built in a small town.
d. A hard freeze wipes out half of the potato crop in Prince Edward Island and the price of
potatoes doubles.
1-11
1-11
a. The price of water rose in Calgary by 2% last year.
b. Kim gets a big promotion at work. She also gets a raise from $25,000 per year to $40,000
per year.
c. Mark graduates from university and takes a job. His income increases from $10,000 per
year to $50,000 per year.
d. A drought hits Saskatchewan and the price of wheat increases from $4.00 per bushel to
$8.00 per bushel.
ANS: A PTS: 1 DIF: Challenging REF: p.6
58. A marginal change is illustrated by which of the following?

a. Nancy retires and takes a part-time job. She was working 40 hours per week and now
works 10 hours per week.
b. Provincial University has announced that due to provincial budget deficits, tuition must
rise by 25% next year.
c. Ryan moved to a new apartment and now pays 40% more rent than before.
d. Vancouver, which usually receives 10 inches of rain per year, received 11 inches last year.
ANS: D PTS: 1 DIF: Challenging REF: p.6
59. After much consideration, you have chosen Cancun over Ft. Lauderdale for your Spring Break trip this
year. For this decision to change, which of the following must occur?
a. The marginal benefit of Cancun must increase.
b. The marginal cost of Cancun must decrease.
c. The marginal benefit of Ft. Lauderdale must increase.
d. The marginal cost of Ft. Lauderdale must increase.
60. The average cost per seat on a bus trip from Montreal to Toronto is $140. Suppose no refreshments are
served and 3 seats are empty. How could the bus company increase its profit?
a. if it charged no less than $140 for the 3 remaining seats
b. if it charged more than $140 for the 3 remaining seats
c. if it charged any ticket price above $0 for the remaining seats
d. if it left the seats empty
61. The average cost per seat on an airplane trip from Calgary to Edmonton is $105. Suppose no
refreshments are served and 7 seats are empty. How could the airline company increase its profit?
a. if it charged no less than $105 for the 7 remaining seats
b. if it charged more than $105 for the 7 remaining seats
c. if it charged any ticket price above $0 for the remaining seats
d. if it left the seats empty
1-12
1-12
62. When does a rational decision maker take an action?
a. only if the marginal benefit is less than the marginal cost
b. only if the marginal benefit is greater than the marginal cost
c. only if the average benefit is greater than the average cost
d. only if the marginal benefit is greater than both the average cost and the marginal cost
63. Mike has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800
once the repairs are complete. He discovers that he needs an additional repair, which will cost $400, in
order to complete the repairs. He can sell the boat as it is now for $300. What should he do?
a. He should cut his losses and take the $300.
b. He should never sell something for less than it cost.
c. He should complete the repairs and sell the boat.
d. It doesn't matter which action he takes; the outcome is the same either way.
64. Mike has spent $800 purchasing and repairing an old motorcycle, which he expects to sell for $1200
once the repairs are complete. He discovers that he needs an additional repair, which will cost $200, in
order to complete the repairs. He can sell the motorcycle as it is now for $400. What should he do?
c. He should complete the repairs and sell the motorcycle.
65. Carol has spent $2,000 purchasing and repairing an old car, which she expects to sell for $2,400 once
the repairs are complete. She discovers that she needs an additional repair, which will cost $400, in
order to complete the repairs. She can sell the car as it is now for $2,000. What should she do?
a. She should cut her losses and take the $2,400.
b. She should never sell something for less than it cost.
c. She should complete the repairs and sell the car.
d. It doesn't matter which action she takes; the outcome is the same either way.
ANS: D PTS: 1 DIF: Challenging REF: p.6-7
66. Tim has spent $2,500 purchasing and repairing a Hummer, which he expects to sell for $3,500 once
the repairs are complete. He discovers that he needs an additional repair, which will cost $1,100, in
order to complete the repairs. He can sell the Hummer as it is now for $900. What should he do?
c. He should complete the repairs and sell the Hummer.
1-13
1-13
67. Monica has spent $30,000 purchasing and repairing an old cabin, which she expects to sell for $40,000
once the repairs are complete. She discovers that she needs an additional repair, which will cost
$20,000, in order to complete the repairs. She can sell the cabin as it is now for $25,000. What should
she do?
a. She should cut her losses and take the $25,000.
b. She should never sell something for less than it cost.
c. She should complete the repairs and sell the cabin.
d. It doesn't matter which action she takes; the outcome is the same either way.
68. Stan buys a 1966 Mustang, which he plans to restore and sell. He anticipates that the cost of the car
and the repairs will be $10,000 and that he can sell it for $13,000. When he has spent $10,000, he
discovers he needs to replace the engine, which will cost $4,000. He can sell the car without the new
engine for $9,000. What should Stan do?
a. complete the repairs and sell the car for $13,000
b. cut his losses and sell the car now for $9,000
c. never try such an expensive project again
d. be totally indifferent between finishing the project and selling the car now
69. Stan buys a 1966 Mustang, which he plans to restore and sell. He anticipates that the cost of the car
and the repairs will be $8,000 and that he can sell it for $10,000. When he has spent $7,000, he
discovers he needs to replace the engine, which will cost $4,000. He can sell the car without the new
engine for $9,000. What should Stan do?
b. cut his losses and sell the car now for $9,000
70. Lisa buys a 1982 BMW, which she plans to restore and sell. She anticipates that the cost of the car and
the repairs will be $14,000 and that she can sell it for $20,000. When she has spent $11,000, she
discovers she needs to replace the engine, which will cost $5,000. She can sell the car without the new
engine for $14,000. What should Lisa do?
b. cut her losses and sell the car now for $14,000
1-14
1-14
71. Lisa buys a 1982 BMW, which she plans to restore and sell. She anticipates that the cost of the car and
the repairs will be $14,000 and that she can sell it for $15,000. When she has spent $10,000, she
discovers she needs to replace the engine, which will cost $4,000. She can sell the car without the new
engine for $11,000. What should Lisa do?
b. cut her losses and sell the car now for $11,000
72. A donut shop sells fresh baked donuts from 5 a.m. until 3 p.m. every day but Sunday. The cost of
making and selling a dozen glazed donuts is $1.00. Since this shop does not sell day-old donuts the
next day, what should the manager do if he still has 10 dozen left at 2:30 p.m.?
a. lower the price of the remaining donuts even if the price falls below $1.00
b. lower the price of the remaining donuts as long as it's more than $1.00
c. lower the price on all donuts so they will all be sold earlier in the day
d. throw them away and produce 10 fewer dozen tomorrow
73. A donut shop sells fresh baked donuts from 5 a.m. until 3 p.m. every day but Sunday. The cost of
making and selling a dozen glazed donuts is $2.00. Since this shop does not sell day-old donuts the
next day, what should the manager do if she still has 10 dozen left at 2:30 p.m.?
a. lower the price of the remaining donuts even if the price falls below $2.00
b. lower the price of the remaining donuts as long as it's more than $2.00
c. lower the price on all donuts so they will all be sold earlier in the day
d. throw them away and produce 10 fewer dozen tomorrow
74. A furniture maker currently produces 100 tables per week and sells them for a profit. She is
considering expanding her operation in order to make more tables. Should she expand?
a. Yes, because making tables is profitable.
b. No, because she may not be able to sell the additional tables.
c. It depends on the marginal cost of producing more tables and the marginal revenue she
will earn from selling more tables.
d. It depends on the average cost of producing more tables and the average revenue she will
earn from selling more tables.
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1-15
75. In the nation of Dictatorland, farmers traditionally feed grain to their livestock. Central planners,
however, decided to increase the price of grain to make grain farmers happy and to reduce the price of
bread made from that grain to make city dwellers happy. Now the price of bread is lower than the price
of grain. What might we now expect?
a. farmers to continue to feed grain to their livestock
b. farmers to start feeding bread to their livestock
c. city dwellers to start buying grain to make bread to eat
d. city dwellers to start buying grain to make bread to sell
76. Your professor loves her work, teaching economics. She has been offered other positions in the
corporate world making 25 percent more, but has decided to stay in teaching. What might change her
decision?
a. if the marginal cost of teaching increased
b. if the marginal benefit of teaching increased
c. if the marginal cost of teaching decreased
d. if the marginal cost of a corporate job increased
77. Suppose your management professor has been offered a corporate job with a 30% pay increase. He has
decided to take the job. What happened for him?
a. The marginal cost of leaving was greater than the marginal benefit.
b. The marginal benefit of leaving was greater than the marginal cost.
c. The marginal benefit of teaching was greater than the marginal cost.
d. The marginal cost of teaching was greater than the marginal benefit.
78. Suppose your management professor has been offered a corporate job with a 30% pay increase. He has
decided not to take the job. What happened for him?
a. The marginal cost of leaving was greater than the marginal benefit.
b. The marginal benefit of leaving was greater than the marginal cost.
c. The marginal benefit of leaving was less than the marginal cost.
d. The marginal benefit of teaching was greater than the marginal cost.
79. When policymakers make policies that change the costs and benefits that people face, what can the
policymakers do?
a. alter behaviours
b. make people ignore incentives
c. create inflation
d. reduce government revenue
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1-16
80. According to economists, what do people respond to?
a. laws
b. incentives
c. threats more than rewards
d. positives, but not negatives
81. What did Ralph Nader's book Unsafe at Any Speed cause the U.S. government to require?
a. safety glass in all new cars
b. seat belts in all new cars
c. air bags in all new cars
d. stricter drunk driving laws
82. What has been the result of laws requiring that drivers wear seat belts?
a. a reduction in both driver deaths and pedestrian deaths
b. fewer accidents and fewer deaths per accident
c. fewer driver deaths, fewer accidents, and fewer pedestrian deaths
d. little change in the number of driver deaths, but more accidents and more pedestrian
deaths
83. What has been one effect of a government-imposed seat belt law?
a. fewer pedestrian deaths
b. safer driving
c. an increase in the number of accidents
d. everyone now wears seat belts
84. Which of the following does NOT result when seat belt laws alter a driver's cost-benefit calculation?
a. Fewer drivers are killed
b. More pedestrians are killed
c. Drivers drive faster
d. More accidents occur
1-17
1-17
85. In the former Soviet Union, producers were paid for meeting output targets, not for selling products.
Under those circumstances, what were the economic incentives for producers?
a. to produce good quality products so that society benefits from the resources used
b. to conserve on costs, so as to maintain efficiency in the economy
c. to produce enough to meet the output target, without regard for quality or cost
d. to produce those products that society desires most
86. How can trade benefit a family?

a. by allowing the family to buy a greater variety of goods and services at a lower cost
b. by allowing each person to buy only the goods and services they want most
c. it can benefit only if the family is not in economic competition with other families
d. trade can only benefit entire nations, not individuals
87. Which is the most accurate statement about trade?

a. Trade can make every nation better off.
b. Trade makes some nations better off and others worse off.
c. Trading for a good can make a nation better off only if the nation cannot produce that
good itself.
d. Trade helps rich nations and hurts poor nations.
88. Which of the following statements about trade is NOT true?

a. Trade increases competition.
b. One country wins and one country loses.
c. Canada can benefit from trade with any country.
d. Trade allows people to buy a greater variety of goods and services at lower cost.
89. What is NOT a benefit from trade?

a. the ability to specialize
b. a greater variety of goods and services becoming available
c. less competition
d. lower prices
1-18
1-18
90. What does trade between Canada and India do?
a. benefits both Canada and India
b. is a losing proposition for Canada because India has cheaper labour
c. is like a sports contest: one side wins and the other side loses
d. is a losing proposition for India because Canadian workers are more productive
91. How can Canada benefit from trade?

a. only with nations that can produce goods Canada cannot produce
b. with any nation
c. with any nation not in economic competition with Canada
d. only with less developed nations
92. What happens if Japan chooses to engage in trade?

a. It will only benefit if it trades with countries that produce goods it cannot produce.
b. It cannot benefit if it trades with less developed countries.
c. It should first attempt to produce the good itself.
d. It can benefit by trading with any other country.
93. If Canada decides to trade with Mexico, what do we know?

a. Mexico will be better off, but trade with a less developed country could not help Canada.
b. It will not benefit Mexico because workers in Canada are more productive.
c. It will benefit Mexico because workers in Canada are more productive.
d. Mexico and Canada can both be better off.
94. If France is better than Belarus at producing wine, but Belarus is better than France at producing
crystal, what should happen?
a. Belarus should sell crystal to France, and should buy French wine.
b. Belarus should impose a tariff on French wine in order to protect jobs in the Belarusian
crystal industry.
c. Belarus should subsidize its wine industry so that it can compete with French wine.
d. Belarus should put a quota on the amount of French wine imported.
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1-19
95. Which of the following is the best statement about markets?
a. Markets are usually a good way to organize economic activity.
b. Markets are usually inferior to central planning as a way to organize economic activity.
c. Markets fail and are therefore not an acceptable way to organize economic activity.
d. Markets are a good way to organize economic activity in developed nations, but not in less
developed nations.
96. Which would NOT be true in a market economy?

a. Firms decide whom to hire and what to produce.
b. Government policies do not affect the decisions of firms and households.
c. Households decide which firms to work for and what to buy with their incomes.
d. Profit and self-interest guide the decisions of firms and households.
97. In what economy are the decisions of firms and households guided by profit and self-interest?
a. a command economy
b. a traditional economy
c. a market economy
d. in every economy
98. A friend of yours asks you why market prices are better than government-determined prices. What do
you say?
a. because they generally reflect the value of a good to society, but not the cost of making it
b. because they generally reflect the cost of making a good to society, but not its value
c. because they generally reflect both the value of a good to society and the cost of making it
d. because they generally reflect neither the value of a good to society nor the cost of making
it
99. In a market economy, what guides economic activity?

a. the government
b. corporations
c. central planners
d. prices
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1-20
100. In a market economy, decisions are guided by individual self-interest. What impact does this have?
a. There is still the ability to achieve desirable economic well-being for society as a whole.
b. There is a strong need for government intervention in the market.
c. There is less efficiency in market economies than in command economies.
d. There is more need for a strong legal system to control individual greed.
101. How do prices direct economic activity in a market economy?

a. by influencing the actions of buyers and sellers
b. by reducing scarcity of the goods and services produced
c. by eliminating the need for government intervention
d. by allocating goods and services produced in the most equitable way
102. In a market economy, what do prices reflect?

a. the popularity of a good in society
b. the cost to society of making the good
c. the quantity society will ultimately choose to produce
d. the level of wealth in society
103. What is one advantage that market economies have over central planning?
a. Market economies provide an equal distribution of goods and services to consumers.
b. Market economies establish government economic control.
c. Market economies solve the problem of scarcity.
d. Market economies are more efficient.
104. Which is the most correct statement about the invisible hand?
a. The invisible hand always ensures both equity and efficiency.
b. The invisible hand cannot ensure either equity or efficiency.
c. The invisible hand is more effective at ensuring efficiency than it is at ensuring equity.
d. The invisible hand is more effective at ensuring equity than it is at ensuring efficiency.
105. According to Adam Smith, what is the success of decentralized market economies primarily due to?
a. the basic benevolence of society
b. society's justice (legal) system
c. individuals' self-interest
d. basic human survival instincts
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1-21
106. How is the self-interest of the participants in an economy guided into promoting general economic
self-interest?
a. by the invisible hand
b. by market power
c. by government intervention
d. by property rights
ANS: A PTS: 1 DIF: Easy REF: p.9-10
107. Which of the following observations was made famous by Adam Smith in his book The Wealth of
Nations?
a. There is no such thing as a free lunch.
b. People buy more when prices are low than when prices are high.
c. No matter how much people earn, they tend to spend more than they earn.
d. Households and firms interacting in markets are guided by an "invisible hand" that leads
them to desirable market outcomes.
108. Who coined the term "invisible hand"?

a. Adam Smith.
b. David Ricardo.
c. John Maynard Keynes.
d. Milton Friedman.
ANS: A PTS: 1 DIF: Easy REF: p.9-10
109. How does the "invisible hand" direct economic activity?

a. through advertising
b. through prices
c. through central planning
d. through government regulations
110. How does a market economy reward people?

a. according to their need for goods and services
b. according to how willing they are to work
c. according to their ability to produce things that other people are willing to pay for
d. according to their ability to produce things of cultural importance
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1-22
111. What can hinder the invisible hand's ability to coordinate the decisions of the firms and households in
the economy?
a. government actions that distort prices
b. increased competition in the market
c. extended periods of unemployment
d. a dramatic reduction in consumer spending
112. When was Adam Smith's book The Wealth of Nations published?
a. 1692.
b. 1776.
c. 1816.
d. 1936.
113. When people act in their own self-interest, what typically happens in a market system according to
Adam Smith?
a. They help only themselves.
b. They harm others.
c. They help others, but not as much as they would have if they were not self-interested.
d. They help others even more than when they seek to help others.
114. How does the invisible hand primarily work to promote general well-being in the economy?
a. through government intervention
b. through the political process
c. through self interest
d. through altruism
115. Why do taxes adversely affect the allocation of resources in society?

a. because they do not always fall more heavily on the rich
b. because the taxes collected are not enough to finance government spending
c. because not everyone pays taxes
d. because they distort prices and thus the decisions of households and firms
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1-23
116. What is a primary function of prices in a market economy?
a. to provide participants with economic information
b. to provide participants with spending limits
c. to provide participants with accounting capabilities
d. to provide participants with an equitable distribution of goods
117. What happens when the government prevents prices from adjusting naturally to supply and demand?
a. It stabilizes the economy by reducing market uncertainties.
b. It adversely affects the allocation of resources.
c. The improvement in equity justifies the reduction in efficiency.
d. The improvement in efficiency justifies the reduction in equity.
ANS: B PTS: 1 DIF: Challenging REF: p.10
118. What is one component necessary for markets to work?

a. government intervention
b. a benevolent society
c. property rights
d. abundant resources
119. What is one necessary role of government in a market economy?

a. to tax goods and services that are most desired by consumers
b. to maintain welfare programs for the poor
c. to provide services such as pensions
d. to enforce property rights
120. How does the government enforce property rights?

a. by requiring property owners to pay property taxes
b. by providing police and courts
c. by allowing people to decide whether or not they wish to own property
d. by providing a system of recording property deeds
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1-24
121. What would happen without government's protection of property rights?
a. Businesses would have less incentive to provide goods and services.
b. There would be less government regulation of businesses and prices would be lower for
consumers.
c. Taxes would be lower causing less market inefficiencies.
d. Businesses would have more freedom with production processes.
122. What does the term market failure refer to?

a. a situation in which the market on its own fails to allocate resources efficiently
b. an unsuccessful advertising campaign that reduces buyer demand
c. a situation in which competition among firms becomes ruthless
d. a firm that is forced out of business because of losses
123. Which of the following is NOT a reason for the government to intervene in the market?
a. to promote efficiency
b. to enforce property rights
c. to promote equity
d. to protect an industry
124. What are two reasons for a government to intervene in a market?

a. to raise revenues and to promote stability
b. to promote equity and to promote efficiency
c. to promote equity and to promote stability
d. to promote efficiency and to promote stability
125. What are two causes of market failure?

a. externalities and market power
b. market power and incorrect forecasts of consumer demand
c. externalities and foreign competition
d. incorrect forecasts of consumer demand and foreign competition
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1-25
126. What is the term used to describe a situation in which markets fail to allocate resources efficiently?
a. economic meltdown
b. market failure
c. corporate bankruptcy
d. disequilibrium
127. What is an example of market power?

a. a fast food restaurant in a university town
b. a wheat farmer in Saskatchewan
c. the last gas station in Manitoba for 100 miles
d. a shoe store in Ontario
128. What is an example of a firm with market power?

a. a deli in Winnipeg
b. a cable TV provider in Victoria
c. a clothing store in Vancouver
d. a farmer in Quebec
129. What can cause market failure?

a. low consumer demand
b. government intervention and price controls
c. externalities and market power
d. high prices and foreign competition
130. What is an externality?

a. the impact of one person's actions on the well-being of a bystander
b. the impact of a person's actions on that person's well-being
c. the impact of society's decisions on the well-being of society
d. the impact of society's decisions on the well-being of one person in the society
131. What is an example of an externality?

a. the impact of bad weather on the income of farmers
b. the impact of the personal income tax on a person's ability to purchase goods and services
c. the impact of pollution from a factory on the health of people in the vicinity of the factory
d. the impact of increases in health care costs on the health of individuals in society
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1-26
132. Which of the following is most likely to generate an externality?
a. Teachers at a local high school have pizza delivered every Friday for lunch.
b. A young man from a small town attends medical school to become a doctor.
c. A newlywed couple buys a TV for their family room.
d. John buys a tractor to mow his newly purchased 5-acre lot.
ANS: B PTS: 1 DIF: Challenging REF: p.13
133. If an externality is present in a market, what may enhance economic efficiency?

a. government intervention
b. increased competition
c. better informed market participants
d. more defined property rights
134. If a copper refinery does NOT bear the entire cost of the smoke it emits, what will happen?
a. It will not emit any smoke so as to avoid the entire cost of the smoke.
b. It will emit lower levels of smoke.
c. It will emit an acceptable level of smoke.
d. It will emit too much smoke.
135. Which of these consumption activities will most likely impose an external cost?
a. An executive plays a vigorous game of golf.
b. A student in a dorm plays her CDs at 120 decibels late at night.
c. A young mother exercises to an aerobics video.
d. A construction worker eats a sandwich during his lunch break.
136. Which of these activities will most likely result in an external benefit?
a. A university student buys a deck of cards to play solitaire in her dorm room.
b. An elderly woman plants a flower garden on the vacant lot next to her house.
c. An executive purchases a book to read on a business trip.
d. A ten-year-old buys new Nikes with his allowance money he has saved.
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1-27
137. If education produces external benefits for society, which of the following might NOT be an
appropriate policy for society to establish regarding education?
a. tax incentives for schooling
b. mandatory minimum levels of education
c. programs that promote the hiring of high school dropouts
d. public subsidies of education
138. Complete the following statement: In the presence of a market failure,

a. government action might not improve on the market outcome because sometimes public
policies simply reward the politically powerful.
b. government action might not improve on the market outcome because some leaders are
not fully informed about the effects of their actions.
c. government action can sometimes improve on the market outcome.
d. government action will always improve on the market outcome.
139. What happens if a sawmill creates too much air pollution?

a. Interference by the government will surely make the matter worse.
b. A sense of social responsibility will cause the owners of the mill to reduce pollution.
c. The government can raise economic well-being by providing health care to those affected
by the pollution.
d. The government can raise economic well-being through environmental regulation.
140. What is the term when a single entity has the ability to influence market prices?
a. competition
b. market power
c. efficiency
d. productivity
141. What is market power?

a. the power of a single person or group to influence market prices
b. the ability of a person or group of people to successfully market new products
c. the power of the government to regulate a market
d. the relative importance of a market to the overall economy
1-28
1-28
142. What is an example of a monopoly?
a. a jewellery store in Burnaby, British Columbia
b. a souvenir shop in Cancun, Mexico
c. an electric company in Outlook, Saskatchewan
d. a doctor in St. John’s, New Brunswick
143. Which of the following businesses most likely has market power?
a. a furniture store in Kingston
b. a vineyard in the Okanagan Valley
c. a maple sugar candy store in Sherbrooke, Quebec
d. a hospital in Nelson, British Columbia
144. What could justify higher income tax rates on rich people in Canada?
a. on the basis of market efficiency
b. on the basis of the lack of other sources of government revenue
c. on the basis of equity for society
d. on the basis of government bias against the wealthy
145. What is the primary determinant of a country's standard of living?

a. the ability to reduce foreign competition b.
the ability to produce goods and services c.
the total supply of money in the economy
d. the average age of the country's labour force
146. In 2003, what was the average Canadian income?

a. $25,368.
b. $29,000.
c. $36,800
d. $41,240
1-29
1-29
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[Contents]
CHAPTER VI
The religion, customs, manners, and fashions of dress of the various

tribes composing the population of Nepal vary to quite a considerable
extent, and I have here not the space to go into them fully. But I will quote
a few.
The Brahmins differ little from their co-religionists of India, except that they
are not so strict in the observance of prejudices; the form of Buddhism
practised closely resembles that of Tibet. Superstitions are rampant, both
among Brahmins and Buddhists, and of course even more so among the
wilder tribes.
The Gurkhas, on the occasion of the birth of a child, indulge in rejoicings

for eleven consecutive days, the father being restricted to the company of
his relatives only. On the eleventh day a name is given to the offspring.
The child is suckled by the mother for a comparatively [56]short period of
time, when a festival and dinner are given, the child being made to
swallow a grain of rice from each friend.
Marriages are, as in India, arranged at a very early age, sometimes when

children are not more than six or seven years old, the betrothal taking
place a year or two before. Widows cannot marry again, but a widower
can. Divorces can be obtained in some tribes, by somewhat simple
methods, but fidelity is one of the chief virtues of Nepalese women, and it
is seldom that separation takes place. Besides, divorces are a very
expensive luxury. Moreover, an unfaithful wife may find herself in prison
for life, whereas the co-respondent is handed to the mercy of the
husband, who is expected to “chop him up” in public with his vicious-
looking kukri. They say that the offender’s life may be spared if he submits
to crawl under the husband’s leg, raised for the occasion, a most
humiliating alternative seldom accepted.
As in India, among Brahmin tribes, a great many misdeeds of vanity or

breaches of caste-rules are forgiven on payments in cash to the priests, or
the giving of the usual feast and feed.
The custom of shaving the head, moustache, [57]and eyebrows in sign of

mourning at the death of near relations is followed by the Brahmin tribes,
and the body of the deceased is buried and not cremated. Several non-
Brahmin tribes, however, cremate their dead.
The Gurkhas who are recruited for the British army are nearly all Magars
and Gurungs, they being considered the best fighting material. Members
of the Khas tribe are enlisted solely for the 9th Gurkha regiment.
Recruiting parties are sent out from every regiment which recruits for
itself, and these bring down their recruits to the dépôt at Garakpur. Here a
primary medical inspection takes place, and clothing is issued to the men
before they are despatched to their future corps. They wear a dark green
uniform with black or red facings, and are armed with Martini-Henry rifles,
a bayonet, and a kukri.
The Gurkha Brigade consisted in 1899 of the 1st, 2nd, 3rd, 4th, 5th, 9th,
42nd, 43rd, and 44th Regiments. The first five regiments have two
battalions; the 9th, 42nd, 43rd, 44th are single battalions. There are eight
British officers to each battalion (plus some others attached), a medical
officer, and sixteen Gurkha officers.
The men are, as a rule, excellent shots, fond of [58]sport of all kinds, and
passionate fishermen and shikaris, knowing instinctively and intimately the
habits of most animals. They are hardy, cheery, and willing to obey, but
detest “nagging.” They are devoted to their officers and proud of their
corps; and, taking things all round, possibly they may be put down as the
most loyal native troops we have in India. They know no fear. If an orderly
were by chance to leave an officer dead or wounded, either in the field or
out on a sporting expedition, he would lose his caste, be generally
boycotted, and very likely killed by his comrades.
The Gurkhas are inveterate gamblers and fond of all games, showing
great quickness in learning British games, at which they become quite
proficient—football particularly.
They are superstitious beyond measure, good or evil spirits playing an
important part in every day’s occurrences. Thus astrologers find plenty of
remunerative occupation in predicting events and showing how to
propitiate certain demons rather than others.
A Nepalese Woman
A curious feature of these fighters is their tender affection for flowers.

Indeed, there are many tender strings to the heart of a Gurkha. They are
devoted to their families, and most gentle and suave [59]in their home
manners. They are jealous of their women, whom they do not beat nor
usually turn into beasts of burden like the natives of India, and they show
great pride in displaying their women-folks loaded with jewellery from
head to foot. The women are quite pretty, cheery, and do not exhibit the
affected shyness of the women of the Indian plains, for instance.
One of the most notable features about a Gurkha is the marvellous skill
with which he handles his heavy-bladed kukri. It may be said that from the
days of his childhood, since as soon as his little hands become strong
enough to lift one, he is never without one; hence, when older, he is very
adept in its manifold uses. With one of those knives Gurkhas can cut a
buffalo’s head off at one stroke; and they can make fairly good shots, at
considerable distance, when throwing the kukri. They can use it in such
delicate work as shaping a toothpick or sharpening a pencil. With it they
chop firewood, and use it freely as a cooking utensil.
When going bear-hunting they wind a blanket round the left arm and carry
a loaded stick in the right hand, the kukri being held between the teeth or
thrust in the girdle in front. When the bear gets on his hind-legs to close
with them, they hit [60]him on the nose (being the tenderest spot), and,
before he has time to recover from the pain and astonishment, they polish
him off with their knives.
They delight in the company of tame animals, such as dogs or birds. They
are fond of smoking and drinking—and they can stand a lot—a fact which
makes them great chums with British white soldiers. They simply adore
Tommy Atkins, especially if he be a Highlander or a rifleman, and they
delight in his company; but they show the utmost contempt—racial and
general—for the natives of India. Their unbounded conceit is easily
forgiven and counterbalanced by their extreme truthfulness and honesty,
especially when first recruited.
A Typical Native of N.W. Nepal
Many Gurkha regiments have for some years taken up the system of
training a few picked men of good physique and sight, and of unusual
agility and sporting instincts, as recognised scouts. They are clad more
lightly than ordinary soldiers—generally in “cut short” football knickers.
Besides the scouts’ duty of discovering the enemy’s strength and position,
they are also used as sharpshooters, and specially instructed for stalking
“snipers” at night. When in India I had the pleasure of [61]inspecting the
scouts commanded by Lieutenant G. Kendall Channer, of the 1st Battalion
3rd Gurkhas, and I was much impressed by them and by the business-like
qualities of the officers and men. [62]
[Contents]
CHAPTER VII
At the village of Chongur in Nepal I was able to purchase some extra blankets
and shoes for my men, as from this point we should soon come among the
snows, where we should remain for some time. Up to an altitude of 11,000 feet
we travelled among firs, and on very sharp, slippery slopes without a trail. On a
bit of level pasture-land we came across two Jumli annuals or shepherds with
some sheep. They were curious types, wild and unkempt, with shaggy hair
flowing upon their face and shoulders. I do not think that I have ever seen men
more abruti—to use a French expression which fits them perfectly—than those
two. Shivering from cold, ill-clad, living on roots and whatever they could pick up,
which was not much, they were indeed the very picture of misery and
wretchedness. When they had recovered from their fright at our approach, I
gave them some food which would last [63]them some time, and their gratitude
knew no bounds.
Farther on we met a Nepalese woman carrying a child slung in a basket upon

her back, while the husband walked peacefully behind. When the camera was
pointed at the couple they were so disturbed that the woman dropped basket
and child and took to her heels down a most precipitous slope, while her better
half ran away from us, also full speed, but on a less dangerous route.
Farther on, as we got higher up, we encountered more shepherds, in as pitiable

a condition as the first we had seen, having nearly lost their power of speech
through leading a lonely life among these mountains. They all suffered from
fever and rheumatism; some from goitre through drinking snow water.
The marching was very heavy, especially for my men who carried loads; my
pony, of course, had to be abandoned long before this, and I had sent him down
to lower elevations in charge of my sayce.
We were now nearing the magnificent Api Mountain, and we soon came to the
moraine of the glacier. We reached the glacier—which I named the Elfrida
Landor Glacier—at sunset, and it was indeed a most beautiful sight with its huge
walls [64]of clear ice in irregular terraces, portions only being in broken-up heaps.
At the sides, mud of a greyish colour and broken ice bordered the worn, eroded
rock down to the level of the valley where the glacier lies.
The glacier lies from N.E.E. to S.W.W., with two high peaks, one to the N.N.W.,
the other to the S.S.E., the latter being known as the Api Mountain. Two snow-
fed streams descend from the glacier, and, joining into a rapid torrent, become a
tributary of the Lumpa River. The natives call all these glaciers by the generic
term Sho-gal, or “snow glacier.”
Elfrida Landor Glacier, Nepal
The village of Chongur could be distinguished in the far distance to the N.W. of
us, down, down below in the valley of the Kali; and to the N.N.W. we obtained a
panoramic view of the Kuti River valley, with the conical Bitroegoar Mountain
and a high peak to the N.N.E. Even below 13,000 feet the vegetation had
become very sparse, but patches of short grass were found up to 16,000 feet.
Above that all was absolutely barren, and generally covered with snow. In the
high valley we had followed, whatever trees we found were weather-beaten and
half-burnt by the snow and cold winds of the winter months. For long distances
we occasionally [65]walked on thick beds of wild strawberries. These high valleys
are considered good pasture-land by the Shokas, who send their sheep for
grazing in charge of annuals, such as those we had met.
The foot of the glacier where we pitched our tent was at an elevation of 13,900
feet, and the temperature shortly before sunset not higher than 33° Fahrenheit.
Perhaps to those who have never slept on the ice of a glacier it may be
interesting to know what it feels like. Barring a certain chilliness which anybody
can imagine, a first night on a glacier has many surprises. I say “first night,”
because we spent a great many, and we got accustomed to the weird noises
which kept us awake and in some suspense on the first visit. Indeed, a
Himahlyan glacier seems to be the home of noises of all kinds. The wind blowing
among the pinnacles and recesses produces weird melodies like solos and
immense choruses of human voices; you can hear shrill whistling all round you
when sharper blades of ice cut the current of air, and roars like those of wild
beasts, only stronger, when the wind penetrates into some deep cavity. No
sooner were you closing your eyes again for a much-wanted sleep than thunder,
so loud that it made you jump, startled [66]you, but when you peeped out of the
tent there were brilliant stars and a limpid sky everywhere above you. Sleepy as
you were, you could not resist—at least, I could not, and I am not much of a star-
gazer—the temptation to gaze at the stars and planets. In the rarefied and limpid
air they showed like huge diamonds, and gave quite enough light to see all
round one, even when there was no moon. Indeed, no one who has never been
to exceptionally high elevations has an idea of the beauty of stars. They appear
several times larger than they do when seen from London or Paris, for instance,
and the magnificence of their ever-changing colours is indescribable.
Well, there was poetry enough in that, but you were soon awakened from your
contemplation by some unexpected explosion which made you think the whole
landscape before you must have been blown up. But no, there were no visible
signs of commotion around. It was merely a new crevasse, some hundreds of
feet deep, splitting, for some reason, climatic or other, in the ice. Constant
rumblings you heard, near and distant; and you only had to close your eyes and
you could imagine yourself in a forest with the wind rustling among the trees, or
the pleasant sound of a waterfall close [67]by, or an æolian harp being played by
a divine hand.
Echoes, of course, there are by the dozen on mountains, and each sound is
repeated over and over again till it fades away. An occasional boulder gets loose
from the rotted rock up on the mountain side, and is precipitated with bounding
leaps on to the ice of the glacier; a huge one weighing some tons came down
that night and missed our tent by not very many yards. My men said the spirits of
the mountains were doing all this for our special benefit, to see whether we were
brave or not! The big boulder they had flung at and purposely missed us to show
us their powers, but not to hurt us. This was a good sign. “The gods are with us,”
they stated; but internally I heartily prayed that we might have no more “good
signs” of that nature.
While I was trying to make some hot chocolate with a small spirit-stove, my men
were busy packing up, they bearing the discomfort with some considerable
pluck. We had not been able to make a fire, and we had not the prospect of
seeing many for some weeks to come. I always found chocolate the most useful
and sustaining food for mountaineering purposes, and I carried any number
[68]of tablets in my pockets. On the march I constantly ate it; food, I found,
keeping one’s strength up and being more easily digested under those
circumstances, if spread in small quantities over the entire day, than if eaten in
large quantities twice or three times a day at given hours. I had my chocolate
specially prepared with a percentage of meat and fat, which gave it additional
nourishment. For days and days at a time I lived on chocolate only, it being
impossible to cook food, and deeming it rather dangerous to eat tinned meats
cold.
Funnels in the Moraine Ice
I was able to overcome the caste scruples of my men, and they, too, partook
freely of my chocolate, although I never let them know that it contained beef.
Had they known this, most of them would have lost their caste. They ate it
because they believed it entirely prepared by machinery and not touched by
unclean hands!
I was sorry when we struck camp and left behind the beautiful glacier and Api
Mt., 19,919 feet. We soon rose over a pass (13,050 feet) where we obtained a
view of a second glacier, almost as fine as the first, in precipitous terraces, and
with a gigantic terminal moraine, covered in great part by débris and rotten rock,
fallen from [69]the mountain at the side. This I called the Armida Glacier. It
spread in a direction from N.E. to S.W. To the west of the glacier on the
mountain side there was hardly any snow up to 16,000 feet, but to the east, as
one looked towards it, there were huge masses.
The entire valley of the Lumpa river along which we were travelling made part of
a gigantic glacier, with side glaciers such as those we have seen. In the lower
portion of the valley the ice was covered with débris.
At the foot of the Armida Glacier were some immense parallel crevasses in the
ice. The upper portion of these was a mixture of dark grey mud and rock
embedded in the ice, showing vertical streaks and corrugations. Then there
were some curious pits in the moraine, such as the one shown in the illustration,
funnel-shaped and of great depth, some 60 feet deep and more, and about 100
feet in diameter. These funnels, cone-shaped, had a great fascination—quite an
irresistible attraction—when one looked into them. The ice, of a beautiful light
green colour, was corrugated into grooves converging towards the centre at the
bottom, where a deep hole was generally to be found. The ridges of the myriads
of grooves [70]reflected in a line of silver the rays of the sun, and these many
dazzling luminous streaks all converging towards one point had quite an
hypnotic effect on some of my more highly strung men. One man became quite
giddy in looking down, and very nearly went over, and several other men
experienced a strong desire to precipitate themselves into these pits.
The Armida Landor Glacier, Nepal
I puzzled my head a great deal to find out exactly how these funnels were
produced, and the only plausible explanation seemed that some boulder fallen
from the mountain side had, owing to its sun-absorbed high temperature,
gradually bored a hole into the ice. The walls of the cylindrical hole, becoming in
their turn exposed to the strong sunlight, went through a process of melting, the
heat affecting the upper portion to a much greater extent than farther down,
where the strength of the sun’s rays would be mitigated by the influence on the
temperature of the air by the surrounding ice. Thus the quicker melting of the
upper portion compared with the lower would at once have a tendency to
produce the conical shape of the funnels.
Then, of course, the grooves in the ice are produced by the water of the melting
surface ice [71]flowing down. In fact, in the daytime, the lower centre hole, which
had vertical walls, was almost invariably filled with water.
Perhaps, to avoid the absurd criticisms of fault-discovering critics (which

criticisms arise merely from their own appalling and fantastic ignorance), it may
be as well to remind the reader that the sun’s rays, even at very great elevations
and among quantities of snow and ice, can be very powerful—85°, 90°, and
even more. This particularly if the region in which one is travelling is, as was that
where we were, in a latitude north of 30° 4′ 0″ only from the Equator. Naturally,
the drop in the temperature when the sun disappears is enormous, from 60° to
100° being nothing very exceptional. This also applies in a lesser degree
between the sun and shade in the daytime. When marching, for instance, due
north or south in those regions, it is not unusual to have one’s anatomy roasting
on the side where it is struck by the sun, and to be half-frozen on the other side.
We continued our journey upon the moraine of the main glacier, avoiding as
much as we could the dangerous cracks and treacherous holes. Half-way up the
main glacier we were at an altitude of 13,600 feet. On descending some 400
feet we [72]came to a plain wherein grew rhubarb and some turnips, the former
wild, the latter planted by Nepalese shepherds. There were, in fact, three tiny
shelters of stones and mud where the poor wretches had lived. We were much
rejoiced at finding some shrubs we could use as fuel. The glacier we were
leaving behind was separated from this valley by a high dune of mud and débris.
After crossing a stream we came to a third, the Martia Glacier, some 15,500 feet
above sea-level. This glacier was not quite so impressive as the other two, but it
was, nevertheless, a most beautiful basin filled with masses of clear ice in
irregular terraces. A great moraine extended here across the valley from the
glacier, forming a ridge which we had to climb in order to proceed on our
journey. There seemed to be traces of iron in the débris of the moraine as well
as in the rocks of the mountains around, and upon the gigantic boulders which
had been shot down upon the ice.
On the opposite side of the Lumpa stream to the one on which we stood, just
before reaching the third glacier, were high vertical rocks of brilliant colouring. To
the south-east of the glacier at the foot was the usual dune, and we again found
a great many gigantic pits, all with water at the bottom. [73]
We came to a very dangerous crevasse which we could not cross, and we had
to make a considerable detour. The edge on which we had got seemed on the
point of giving way, and might have collapsed at any moment. Where the surface
ice was covered by débris it showed graceful undulations and well-rounded
mounds, but occasionally there were higher hillocks of conical shape and quite
pointed.
Still travelling upon the moraine of the Lumpa Glacier we arrived at last at the
spot where the Lumpa river has its birth, dripping gently from the glacier. Here,
too, the ice with the overlying débris showed in its general lines the peculiar
sweeping curves noticeable in all these glaciers, the section to the east being, in
this particular glacier, an exception to the rule, and exhibiting a disorderly mass
of débris and huge blocks of ice.
We had reached a point where a bifurcation occurred, one arm of the glacier
extending to 160° bearings magnetic (S.S.E.), the other and principal one to
120° bearings magnetic, towards the Lumpa Mountain.
We selected this spot to make our camp, and a very cold camp it was, too. We
pitched our tent alongside a big rock, and with fuel we had brought [74]up, tried,
after sundown, to make a fire inside the tent in order to keep ourselves warm.
But we were nearly suffocated by the smoke. During the night, while my men
were asleep—and the fire gone out—I changed the plates in three magazine
cameras, forty-eight plates altogether; a job which with semi-frozen and
trembling fingers, and careful packing of negatives already exposed, took me
the best part of two hours. Indeed, one of the great tortures of exploration in cold
climates, is the immense care with which one must nurse one’s surveying and
other instruments under most adverse circumstances, and the inexpressible
trouble which photography, if done seriously, involves. For similar kind of work I
always found plates infinitely more reliable than films; but, of course, with them
the use of a red lantern becomes imperative, and often leads to the use of a
good deal of bad language. If you adopt an oil-lantern the oil gets frozen into a
solid mass, and it is somewhat troublesome to keep the lantern burning,
whereas candles have other disadvantages. As for feeling the film side with your
fingers, and changing plates in the dark, it is, of course, out of the question when
your hands are too cold.
Author’s Camp, Nepal
Maybe another hint when mountaineering at [75]great altitudes will be useful to

you. Never use a waterproof sleeping-bag, such as those you see advertised
and recommended, as the very thing you want on a mountain. If you do, and the
night is a cold one, you will find yourself and your blankets soaked in condensed
moisture from the heat of your body coming in contact with the cold waterproof
sheet, through which it is unable to escape. Of course it is wise to use a
waterproof sheet to lie on under one’s blankets.
On that particular night, feeling extra cold and not thinking of consequences, I
wrapped myself up, over my blankets, in a waterproof. The results were
disastrous. Everything got drenched, and, when I got up, blankets and clothes
became solid sheets of ice! [76]
[Contents]
CHAPTER VIII
Having seen that all my instruments were in good condition, I selected about a
dozen of my strongest men to accompany me on my ascent on one of the
Lumpa peaks. It had been sleeting and snowing during the night, and when I
roused my men shortly before five in the morning there was a thick mist which
seemed to penetrate to the very marrow of one’s bones. With chattering teeth
and a chilly nose, we got all things ready, and brewed a parting cup of hot tea,
after which we set out on our errand, the other men remaining to take care of the
camp.
Every now and then the wind cleared the mist, and we could see a bright, clear
sky above us which gave us hope that we might have a fine day. I am not a
believer in early rising; as a rule eight or nine o’clock is my favourite hour for
starting on a [77]march, when the sun is already high above the horizon. You
then start off in comfort, instead of waking with an angry feeling that you are
being done out of some hours’ sleep. On this occasion, however, we had such a
long distance to cover, and in all probability troublesome and dangerous
marching before us, that I wished to have as many hours of daylight before me
as possible.
No sooner had we started, following the main glacier in a direction of 120°, than
a thick fog set in which made progress somewhat troublesome. It seemed to get
thicker and thicker as we were rising higher upon the glacier. We had to find our
way among numerous pits and crevasses. We kept as close together as was
practicable, but we were not roped together. It has ever been my rule when
mountaineering that every man must look after himself. I take all sensible
precautions to avoid all accidents, and collective accidents in particular. If there
has to be a mishap, which is not likely, and some unfortunate man slips into a
crevasse, do not let him by any means drag down the whole party, as is
frequently the case when roped together. Besides, the rope in itself is a great
hindrance to one’s progress, and on very rough marching exhausts much of the
traveller’s strength, [78]being either too tight or too slack, and always getting in
the way when it should not.

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Chapter 1—Ten Principles of Economics

2. From which Greek words is the word economy derived?

4. With what concept does economics deal primarily with?

7. When is a good considered scarce in a society?

8. When does scarcity exist?

9. Which of the following would NOT be true in a world without scarcity?

10. Approximately what percentage of the world's economies experience scarcity?

12. For society, when is a good NOT scarce?

14. What does economics study?

15. What does economics study?

17. Economists study

29. What will pollution regulations do?

30. Which of the following best defines efficiency?

31. What does efficiency mean?

33. What is one definition of equity?

34. What happens when government policies are being designed?

40. In economics, what is the cost of something?

43. What is the opportunity cost of going to college?

45. What is the largest single cost of going to university?

46. What is the opportunity cost of an item?

51. How do people make decisions at the margin?

53. What does making decisions "at the margin" mean?

54. What is a marginal change?

55. Which of the following is the best example of a marginal change?

56. Which of the following is the best example of a marginal change?

58. A marginal change is illustrated by which of the following?

86. How can trade benefit a family?

87. Which is the most accurate statement about trade?

88. Which of the following statements about trade is NOT true?

89. What is NOT a benefit from trade?

91. How can Canada benefit from trade?

92. What happens if Japan chooses to engage in trade?

93. If Canada decides to trade with Mexico, what do we know?

96. Which would NOT be true in a market economy?

99. In a market economy, what guides economic activity?

101. How do prices direct economic activity in a market economy?

102. In a market economy, what do prices reflect?

108. Who coined the term "invisible hand"?

109. How does the "invisible hand" direct economic activity?

110. How does a market economy reward people?

115. Why do taxes adversely affect the allocation of resources in society?

118. What is one component necessary for markets to work?

119. What is one necessary role of government in a market economy?

120. How does the government enforce property rights?

122. What does the term market failure refer to?

124. What are two reasons for a government to intervene in a market?

125. What are two causes of market failure?

127. What is an example of market power?

128. What is an example of a firm with market power?

129. What can cause market failure?

130. What is an externality?

131. What is an example of an externality?

133. If an externality is present in a market, what may enhance economic efficiency?

138. Complete the following statement: In the presence of a market failure,