If a quota is set at the same quantity of imports that results from a tariff in Country A,
A) the quantity consumed in Country A is less under the quota than under the tariff.
B) the quantity consumed in Country A is the same under the quota and under the tariff.
C) the quantity consumed in Country A is more under the quota than under the tariff.
D) the government tariff revenue is greater than the importers’ profit from the import
quota.
E) the government tariff revenue is less than the importers’ profit from the import quota.
Suppose that a country’s government expenditures are $400 billion, net taxes are $300
billion, saving is $300 billion, and investment is $250 billion. This country has a
government budget
A) surplus and a private sector surplus.
B) surplus and a private sector deficit.
C) deficit and a private sector surplus.
D) deficit and a private sector deficit.
E) surplus and a private sector balance.
When the marginal product of labour is less than the average product of labour,
A) the average product of labour is increasing.
B) the marginal product of labour is increasing.
C) the total product curve is negatively sloped.
D) the firm is experiencing diminishing marginal returns.
E) the average product of labour is at its maximum.
Suppose that a 20 percent increase in income increases the quantity of good A
demanded from 19,200 to 20,800 units. The income elasticity of demand for good A is
A) 0.05.
B) 0.8.
C) 0.4.
D) 1.2.
E) 2.0.
The fact that imports increase as real GDP increases implies that imports are part of
A) marginal expenditure.
B) autonomous expenditure.
C) consumption expenditure.
D) equilibrium expenditure.
E) induced expenditure.
A stock is
A) a certificate of ownership and claim to the firm’s profits.
B) a promise to make specified payments on specified dates.
C) a document which entitles its holder to the income from a package of mortgages.
D) a financial market.
E) available from a bank in the form of a loan.
People buy more of good 1 when the price of good 2 rises. Good 1 and good 2 are
A) complements.
B) substitutes.
C) normal goods.
D) inferior goods.
E) substitutes in production
Refer to Table 16.3.1. The table shows marginal private benefit and the marginal social
benefit from the consumption of chemical fertilizer and the marginal social cost of the
production of fertilizer. An efficient quantity is produced if the government
A) subsidizes production by $20 per unit.
B) subsidizes production by $10 per unit.
C) provides vouchers for consumption of $20 per unit.
D) taxes production by $10 per unit.
E) either A or C.
If a bank’s net worth is negative, then the bank is
A) liquid.
B) insolvent.
C) illiquid.
D) solvent.
E) none of the above
Which one of the following is always true of the price effect?
A) It leads to a positive income effect.
B) It is positive.
C) It decreases consumption.
D) It leads to a negative income effect.
E) None of the above
Refer to Table 11.2.2 which gives Tania’s total product schedule. The marginal product
when the number of workers increases from 2 to 3 is
A) 1 teapot.
B) 2 teapots.
C) 3 teapots.
D) 4 teapots.
E) 3.75 teapots.
If A and B are complements and the cost of a factor of production used in the
production of A decreases, then the price of
A) both A and B will rise.
B) both A and B will fall.
C) A will fall and the price of B will rise.
D) A will rise and the price of B will fall.
E) A will fall and the price of B will remain unchanged.
All games share four common features. They are
A) costs, prices, profit, and strategies.
B) revenues, elasticity, profit, and payoffs.
C) rules, strategies, profit, and outcome.
D) patents, copyrights, barriers to entry, and rules.
E) rules, strategies, payoffs, and outcome.
Use the table below to answer the following questions.
Table 20.2.5
Data from Southton
Refer to Table 20.2.5. From the data in the table, compute Southton’s nominal GDP in
the current year.
A) $197
B) $208
C) $209
D) $226
E) It cannot be calculated given the data.
Refer to Fact 27.5.1. What is consumption expenditure in equilibrium in this economy?
A) 298
B) 106
C) 38.8
D) 114
E) none of the above
Use the table below to answer the following questions.
Table 13.4.1
Refer to Table 13.4.1. If a perfect price-discriminating monopoly faces the demand
schedule shown in Table 13.4.1 and if marginal cost is constant at $3, output is
A) 2 units.
B) 3 units.
C) 4 units.
D) 5 units.
E) 6 units.
The fundamental force that drives international trade is
A) absolute advantage.
B) importation duties.
C) the advantage of execution.
D) export advantage.
E) comparative advantage.
Refer to Table 6.2.2. What is the equilibrium wage rate in an unregulated market?
A) $5.00 per hour
B) $5.50 per hour
C) $6.00 per hour
D) $6.50 per hour
E) $7.50 per hour
Which of the following is an example of a fiscal restraint policy?
A) increasing government expenditure
B) increasing taxes
C) cutting transfer payments
D) both A and B
E) both B and C
Refer to Table 21.3.1. The reference base period is 2002. The CPI in 2002 is
A) 1,340.
B) 158.
C) 100.
D) 96.
E) 63.
As the sole issuer of Canadian money, the Bank of Canada can set any one of three
variables:
A) the monetary base, the exchange rate, and the short-term interest rate.
B) the money base, the interest rate, and the unemployment rate.
C) the rate of inflation, the interest rate, and the unemployment rate.
D) the exchange rate, the interest rate, and the inflation rate.
E) the inflation rate, the unemployment rate, and the real economic growth rate.
If a change in wealth is induced by a change in the price level, then this would be
shown as a
A) movement along the aggregate demand curve.
B) shift of the aggregate demand curve due to the substitution effects.
C) movement along the aggregate demand curve due to the substitution effects.
D) movement along the aggregate supply curve.
E) shift of the aggregate demand curve due to the wealth effect.
Use the figure below to answer the following questions.
Figure 2.1.3
Figure 2.1.3 illustrates Mary’s production possibilities frontier. If Mary wants to move
from point B to point C,
A) it will be necessary to improve technology.
B) it will be necessary to increase the accumulation of capital.
C) it will be necessary to give up some of good X to obtain more of good Y.
D) it will be necessary to give up some of good Y to obtain more of good X.
E) she can accomplish this without any opportunity cost.
A duopoly is
A) a market where three dominant firms collude to decide the profit-maximizing price.
B) a market where two firms compete for profit and market share.
C) the same as a monopoly.
D) not an oligopoly.
E) a market with two distinct products.
Regulation of a natural monopoly will maximize the sum of consumer surplus and
producer surplus if the firm is regulated with
A) an average cost pricing rule.
B) a rate of return regulation.
C) a price cap.
D) capture theory.
E) a marginal cost pricing rule.
The value of marginal product is
A) the value to the firm of hiring one more unit of a factor of production.
B) the price of a unit of output multiplied by the marginal product of the factor of
production.
C) calculated as total revenue divided by the total quantity employed.
D) calculated as marginal product divided by marginal benefit.
E) calculated as marginal product divided by the price of a unit of output .
Suppose the quantity of root beer demanded decreases from 105,000 litres per week to
95,000 litres per week when the price rises by 5 percent. The price elasticity of demand
A) is 2.0.
B) is 0.5.
C) is 10.
D) is inelastic.
E) cannot be computed unless we know the original price and the new price.
The CPIC
A) does not overcome the source of bias in the CPI.
B) overcomes the sources of bias in the CPI by eliminating measures of the goods and
services with the most volatile prices.
C) overcomes the sources of bias in the CPI by incorporating substitutions and using
current and previous period quantities.
D) overcomes the sources of bias in the CPI by giving extra weight to the measures of
the goods and services with the most volatile prices.
E) overcomes the sources of bias in the CPI by always using discount store prices.
There are two goods, X and Y. If the opportunity cost of producing good X is lower for
Pam than for Gino, then
A) Pam has an absolute advantage in the production of X.
B) Gino has an absolute advantage in the production of Y.
C) Pam has a comparative advantage in the production of X.
D) Gino has a comparative advantage in the production of Y.
E) C and D
Gerald is a freelance writer who could work for a newspaper at $25,000 a year but
instead runs his own business making revenue of $40,000 a year. His only business
expenses are $1,000 for writing materials and $12,000 for rent. What is Gerald’s
economic profit from working as a freelance writer?
A) $2,000
B) $28,000
C) $15,000
D) $25,000
E) $27,000