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A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units
of medical services or 5 units of secretarial services a day. One day, the firm decides it
would like to produce 16 units of medical services and 5 units of secretarial services.
This output level is
A) efficient.
B) unattainable.
C) inefficient.
D) costless.
E) attainable and efficient.
According to public choice theory, a voter will favour a candidate whose political
program is
A) perceived by the voter to be in his self-interest.
B) best for the majority of the people.
C) closest to efficiency.
D) favoured by the median voter.
E) efficient.
A tax that is imposed by the importing country when an imported good crosses its
international boundary is called
A) an import quota.
B) dumping.
C) a voluntary export restraint.
D) a tariff.
E) a sales tax.
Marginal utility theory derives
A) an upward-sloping demand curve.
B) a downward-sloping demand curve.
C) an upward-sloping supply curve.
D) a downward-sloping supply curve.
E) a vertical supply curve.
Use the figure below to answer the following questions.
Figure 13.4.6
Prime Pharmaceuticals has developed a new asthma medicine, for which it has a patent.
An inhaler can be produced at a constant marginal cost of $2 per inhaler. The demand
curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are
shown in Figure 13.4.6. The patent gives Prime Pharmaceuticals a monopoly for its new
inhaler. If Prime Pharmaceuticals can perfectly price discriminate, then it
A) sells 16 million inhalers.
B) charges a price of $2 for each inhaler it sells.
C) sells inhalers for $6 each.
D) makes zero economic profit.
E) Both A and B are correct.
Use the figure below to answer the following questions.
Figure 1A.2.1
Refer to Figure 1A.2.1. The variables x and y
A) are negatively related.
B) have a nonlinear relationship.
C) have a negative linear relationship.
D) are unrelated.
E) are positively related.
The price elasticity of demand for airplane travel one week in advance of the departure
date is most likely to be
A) equal to infinity.
B) equal to zero.
C) between zero and 1.
D) equal to 1.
E) greater than 1.
Suppose the inflation rate is 2.5 percent, and the output gap is 1 percent. Using the
Taylor rule, the Bank of Canada sets the overnight loans rate equal to
A) 3 percent.
B) 3.5 percent.
C) 5.25 percent.
D) 5.5 percent.
E) 5.75 percent.
According to ________ theory, governments make choices that result in an ________
provision of public goods. This outcome occurs in ________.
A) public choice; efficient; political markets in which voters are rationally ignorant
B) social interest; efficient; a perfect political system in which voters are fully informed
about the effects of policies
C) social interest; efficient; political markets in which voters are rationally ignorant
D) public choice; inefficient; a perfect political system in which voters are full informed
about the effects of policies
E) social interest; inefficient; political markets in which voters are rationally ignorant
If good A is a complement of good B, then the cross elasticity of demand is
A) 12.
B) infinity.
C) positive.
D) zero.
E) negative.
A natural monopoly exists when
A) the government protects the firm by granting an exclusive franchise.
B) production can take place with constant returns to scale.
C) there are no rivals in the market.
D) one firm can supply the entire market at a lower cost than two or more firms.
E) the average total cost curve is upward sloping.
The inflation rate measures
A) the annual change in the price level.
B) the annual percentage change in the price level.
C) the average price level.
D) the annual percentage change in the wage rate.
E) the annual percentage change in production.
Complete the following sentence. Capital is
A) money in the bank.
B) the "gifts of nature."
C) the tools, instruments, machines, buildings, and other constructions that businesses
use to produce goods and services.
D) land.
E) stocks and bonds.
Use the figure below to answer the following questions.
Figure 6.3.3
Refer to Figure 6.3.3. Suppose a tax of $1 is imposed. In which market would the seller
pay the highest portion of the tax?
A) (a)
B) (b)
C) (c)
D) (d)
E) all markets equally
If a firm practises perfect price discrimination,
A) its marginal cost curve is horizontal.
B) it will maximize total revenue.
C) it does not produce the quantity at which marginal revenue equals marginal cost.
D) it will produce the quantity at which the marginal revenue curve intersects the
average total cost curve.
E) it will produce the quantity at which the marginal cost curve intersects the demand
curve.
If the economy is at full employment,
A) the entire population is employed.
B) the entire labour force is employed.
C) the only unemployment is frictional unemployment plus discouraged searchers.
D) real GDP equals potential GDP.
E) all unemployment is cyclical and structural.
The vertical distance between the two supply curves in Figure 19.3.1
A) is the compensation for the cost of acquiring human capital.
B) is the VMP of skill.
C) is the result of discrimination against low-skilled workers.
D) is the result of subsidies for high-skilled workers.
E) will disappear if there is free entry in the high-skilled market.
Suppose your province raises the provincial sales tax by 1 percent. You predict that the
prices of taxed goods (including the tax) will
A) rise by 1 percent.
B) rise by more than 1 percent.
C) rise by an amount between zero and 1 percent.
D) not change at all.
E) fall by an amount between zero and 1 percent.
Use the table below to answer the following questions.
Table 12.2.3
Refer to Table 12.2.3, which gives the total cost schedule for Brenda's Balloon Shop, a
perfectly competitive firm. Brenda's total fixed cost is
A) $3 an hour.
B) $4 an hour.
C) $7 an hour.
D) $29 an hour.
E) zero.
A monopolistically competitive firm is like an oligopolistic firm insofar as
A) both face perfectly elastic demand.
B) both can earn an economic profit in the long run.
C) both have MR curves that lie beneath their demand curves.
D) neither is protected by high barriers to entry.
E) both are price takers.
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. If production is left to the private market, then at the
profit-maximizing output level, marginal
A) social cost equals marginal private benefit.
B) private cost is less than marginal private benefit.
C) social cost is less than marginal private benefit.
D) social cost is greater than marginal private benefit.
E) social benefit is less than marginal private benefit.
Suppose Canada spends more on foreign goods and services than foreigners spend on
our goods and services. Then
A) Canada must borrow an amount equal to national saving.
B) Canada must borrow an amount equal to imports minus exports.
C) the rest of the world may or may not finance Canada's trade deficit.
D) Canada must borrow an amount equal to consumption expenditure plus investment.
E) the Bank of Canada will raise the foreign exchange rate of the Canadian dollar.
Real GDP equals
A) nominal GDP minus the value of intermediate goods.
B) nominal GDP adjusted for the depreciation of capital.
C) the value of final goods and services produced in a given year when valued at the
prices of a reference base year.
D) nominal GDP minus the value of goods exported to foreign countries.
E) nominal GDP minus the rate of inflation.
Suppose that a country's government expenditures are $500 billion, net taxes are $400
billion, saving is $200 billion, and investment is $250 billion. Net exports are a
A) surplus of $150 billion.
B) surplus of $50 billion.
C) deficit of $150 billion.
D) deficit of $50 billion.
E) deficit of $250 billion.
The inequality in the distribution of wealth is
A) less than the inequality in the distribution of income.
B) decreased by the existence of assortative mating.
C) a better measure of the inequality in the distribution of economic resources than is
the inequality in the distribution of income.
D) shown by a Lorenz curve that is farther away from the line of equality than the
Lorenz curve for income.
E) the result of an increasing Gini coefficient.
Refer to Figure 12.4.3, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive market. In the long run,
A) firms that remain in the market will expand production.
B) market demand will increase.
C) firms will adopt labour-saving technology.
D) industry output will remain constant.
E) firms will enter the market.
If we observe a fall in the equilibrium price of good A, we know that the demand for A
has
A) increased or the supply of A has decreased or both.
B) increased or the supply of A has increased or both.
C) decreased or the supply of A has increased or both.
D) decreased or the supply of A has decreased or both.
E) not changed.
A change in income changes ________ of the budget line.
A) the slope and y-intercept
B) the slope and x-intercept
C) the x- and y-intercepts but not the slope
D) only the slope
E) only the y-intercept
Use the figure below to answer the following questions.
Figure 13.3.2
Consider Figure 13.3.2. Consider a perfectly competitive market. If the light grey area
shows the consumer surplus, and the dark grey area shows the producer surplus, which
graph correctly represents this market?
A) (a)
B) (b)
C) (c)
D) (d)
E) (b) and (d)
The proposition that protection is necessary to allow an infant industry to grow into a
mature industry so that it can compete in world markets is the
A) infant-maturity argument.
B) infant-industry argument.
C) new industry proposition.
D) growth proposition.
E) dynamic comparative advantage argument.
Which one of the following would lead to an increase in the demand for hamburgers?
A) a new fad hamburger diet
B) a decrease in population size
C) a rise in the price of French fries, a complement of hamburgers
D) a decrease in consumer income if hamburgers are a normal good
E) a news report that hamburgers can cause skin diseases
In Figure 31.1.2, Canada ________ helicopters per year.
A) exports 480
B) exports 720
C) imports 480
D) imports 240
E) exports 240
Choose the statement that is incorrect.
A) Wage differences drive international trade.
B) High-wage workers have high productivity.
C) International trade can improve the opportunities of people in developing countries
and increase their incomes.
D) By trading with poor countries, we increase the demand for the goods that these
countries produce and increase the demand for their labour.
E) Free trade creates some jobs and destroys other jobs.
Which of the following factors are fixed in the long run?
A) labour
B) capital
C) land
D) entrepreneurship
E) No factors of production are fixed in the long run.
Which of the following does not occur as a result of the Bank of Canada lowering the
overnight loans rate?
A) The supply of loanable funds increases.
B) The long-term real interest rate falls.
C) Exports increase.
D) The inflation rate decreases.
E) Imports decrease.
