Which one of the following will yield a measured price elasticity of demand of 5.0? A
10 percent rise in price results in a
A) 10 percent decrease in quantity demanded.
B) 5 percent decrease in quantity demanded.
C) 2 percent decrease in quantity demanded.
D) 50 percent decrease in quantity demanded.
E) 0.5 percent decrease in quantity demanded.
Use the figure below to answer the following question.
Figure 15.1.1
In the figure, D is the demand curve for taxi rides in a town, and ATC is the average
total cost curve of a taxi company.
Refer to Figure 15.1.1. In the scenario above, the market is
A) a natural duopoly.
B) a natural oligopoly with three firms.
C) a natural monopoly.
D) monopolistically competitive.
E) perfectly competitive.
During the last 10 years, which of the following had the lowest level of real GDP per
person?
A) Eastern Europe
B) Central and South America
C) Africa
D) Japan
E) China
Public goods are provided by government because
A) governments are more efficient than private firms at producing public goods.
B) free-rider problems result in underproduction by private markets.
C) people value national defence very highly.
D) private firms will make an economic profit.
E) private firms do not take into account the impact of external costs.
Suppose that a country’s government expenditures are $400 billion, net taxes are $300
billion, saving is $300 billion, and investment is $250 billion. There is a private sector
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.
If a perfectly competitive firm’s marginal revenue is less than its marginal cost, the firm
A) cannot increase its economic profit.
B) must be making an economic profit.
C) will decrease its output to increase economic profit.
D) will increase its output to increase economic profit.
E) must raise the price.
The key difference between the neoclassical growth theory and the classical growth
theory is that
A) capital is not subject to diminishing returns under classical growth theory.
B) capital is subject to diminishing returns under classical growth theory.
C) increases in population drive workers’ incomes back down to the subsistence level in
classical growth theory.
D) growth in the neoclassical growth theory ends with a population explosion.
E) in classical growth theory, the pace of technological change influences the economic
growth rate but economic growth does not influence the pace of technological change.
Ted chooses to study for his economics exam instead of going to the concert. The
concert he will miss is Ted’s ________ of studying for the exam.
A) monetary cost
B) absolute cost
C) opportunity cost
D) discretionary cost
E) comparative cost
Refer to Table 8.2.3. If income is $13, then utility is maximized when consumption is
A) 6 units of X and 1 unit of Y.
B) 5 units of X and 3 units of Y.
C) 4 units of X and 5 units of Y.
D) 3 units of X and 7 units of Y.
E) 2 units of X and 9 units of Y.
In the neoclassical growth theory, economic growth eventually stops after a
technological advance when
A) the return on capital falls and the incentive to invest weakens.
B) knowledge capital is replicated.
C) the subsistence real wage rate falls.
D) the real wage rate increases.
E) high population growth occurs.
When the Canadian government imposes a tariff,
A) Canadian consumers gain and Canadian producers lose, and the gain exceeds the
loss.
B) the tariff revenue earned by the government is a social loss.
C) a social loss occurs because increased domestic production could have been obtained
at a lower cost as an import.
D) Canadian producers lose.
E) A and B are both correct.
Use the table below to answer the following questions.
Table 8.2.3
Refer to Table 8.2.3. To attain consumer equilibrium, the first $4 of income is used to
purchase
A) 2 units of good X.
B) 3 units of good X.
C) 4 units of good Y.
D) an amount of X and Y that cannot be determined from the table.
E) 2 units of good Y and 1 unit of X.
If the economy is at full employment, then
A) the entire population is employed.
B) the entire labour force is employed.
C) the only unemployment is frictional unemployment plus discouraged workers.
D) the unemployment rate is less than 3 percent.
E) all unemployment arises from normal frictions and structural change.
Refer to the table below to answer the following questions.
Table 7.1.1
Glazeland’s Doughnut Market
Table 7.1.1 shows Glazeland’s doughnut market before international trade. Glazeland
opens up to international trade. If the world price is $0.60 a doughnut then Glazeland
will produce ________ doughnuts and will ________ doughnuts.
A) 2 million; import 3 million
B) 4 million; import 1 million
C) 4 million; export 1 million
D) 5 million; import 3 million
E) 5 million; export 3 million
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. The production possibilities
frontier of this firm would show
A) increasing opportunity cost.
B) decreasing opportunity cost.
C) constant opportunity cost.
D) zero opportunity cost.
E) infinite opportunity cost.
Assortative mating means that
A) poor men tend to marry rich women.
B) people tend to marry within their own socioeconomic class.
C) people tend to marry above their own socioeconomic class.
D) same sex marriages occur because “like attracts like.”
E) people with different values will marry.
Refer to Table 3.5.4. In Region 1, potatoes and hamburgers are
A) substitutes.
B) complements.
C) normal goods.
D) unrelated goods.
E) inferior goods.
Which one of the following people is structurally unemployed?
A) a Saskatchewan welder who lost her job when her company relocated to B. C. and is
currently looking for a job
B) a Nova Scotia fishery worker who is searching for a better job closer to home
C) a steel worker who is laid off but who expects to be called back soon
D) an office worker who has lost her job because of a general slowdown in economic
activity
E) a student who recently graduated and is looking for work
Consider an economy starting from a position of full employment. Which one of the
following changes does not occur as a result of a decrease in aggregate demand?
A) The price level decreases.
B) The level of real GDP decreases in the short run.
C) A recessionary gap arises.
D) Factor prices decrease in the long run, shifting the short-run aggregate supply curve
rightward.
E) The long-run aggregate supply curve shifts leftward to create the new long-run
equilibrium.
In Table 3.4.1, the equilibrium price is
A) $7 a unit.
B) $5 a unit.
C) $4 a unit.
D) $3 a unit.
E) $1 a unit.
Refer to Figure 14.2.3. Assume this firm faces demand curve D2. If this firm in
monopolistic competition is maximizing economic profit,
A) there will be entry of rival firms into the industry.
B) rival firms will exit the industry.
C) it is producing the efficient quantity.
D) the number of firms in the industry will remain constant.
E) economic profit will fall over time.
Your total wealth is $1,000, which you are holding in your savings account. If the price
level rises by 10 percent, your wealth
A) increases by an unknown amount.
B) is unchanged.
C) decreases to $990.
D) is worth 10 percent less than before the price level change.
E) increases to $1,100.
Choose the statement that is incorrect.
A) A firm coordinates a particular set of activities if it can do so at a lower cost than a
market.
B) Firms can achieve economies of scale.
C) Firms can achieve economies of scope.
D) Firms can eliminate transactions costs.
E) Firms do not practice outsourcing.
A rise in the real interest rate
A) shifts the demand for loanable funds curve rightward.
B) shifts the demand for loanable funds curve leftward.
C) creates a movement up along the demand for loanable funds curve.
D) creates a movement down along the demand for loanable funds curve.
E) increases the inflation rate.
The flows in the market economy that go from firms to households are ________.
The flows in the market economy that go from households to firms are ________.
A) all flowing through goods markets; all flowing through factor markets
B) the real flows of goods and services and the income flows of wages, rent, interest
and profits; the real flows of labour, land, capital and entrepreneurship and the flow of
expenditure on goods and services
C) the income flows of wages, rent, interest, and profits and the flow of expenditure on
goods and services; the real flows of goods and services and the real flows of labour,
land, capital and entrepreneurship
D) the real flows of goods and services and the real flows of labour, land, capital and
entrepreneurship; the income flows of wages, rent, interest, and profits and the flow of
expenditure on goods and services
E) all flowing through factor markets; all flowing through goods markets
Refer to Fact 20.1.2. Item 3 is ________ and item 4 is ________.
A) an intermediate good; a final good that is government expenditure
B) a final good that is investment; a final good that is investment
C) a final good that is investment; a final good that is government expenditure
D) an intermediate good; a final good that is investment
E) a final good that is investment; an intermediate good
China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both
cases, China pegs its currency to the
A) U.S. dollar.
B) Japanese yen.
C) euro.
D) Mexican peso.
E) Russian ruble.
We observe a decrease in the price level and an increase in real GDP. Which of the
following is a possible explanation?
A) a decrease in the quantity of money
B) a decrease in expected future income
C) an increase in factor prices
D) an increase in the quantity of capital
E) an increase in expected future profits
The key difference between the neoclassical growth theory and the new growth theory
is that
A) capital is not subject to diminishing returns under new growth theory.
B) capital is subject to diminishing returns under new growth theory.
C) increases in population drive workers’ incomes back down to the subsistence level in
neoclassical growth theory.
D) the pace of technological advances are caused by chance in new growth theory.
E) labour productivity grows indefinitely in neoclassical growth theory.
Suppose that the following situation exists in the foreign exchange market: 1 Canadian
dollar buys $1.05 U.S, and 1 Canadian dollar buys 8.6 Chinese yuan. How many yuan
will $1 U.S. buy?
A) 8.6 yuan
B) 1.0 yuan
C) 8.2 yuan
D) 0.12 yuan
E) 0.14 yuan
When the price elasticity of demand is ________, demand for the good is inelastic.
A) equal to infinity
B) greater than 1
C) equal to 1
D) between 1 and zero
E) equal to zero
Net domestic income at market prices equals
A) consumption expenditure plus government expenditure plus net exports plus
investment.
B) consumption expenditure plus government expenditure plus exports plus personal
taxes.
C) indirect business taxes plus personal income plus net exports.
D) all incomes plus indirect taxes minus subsidies.
E) all incomes minus depreciation.
The main components of government revenues are
A) transfer payments, investment income, and indirect taxes.
B) personal income taxes, corporate income taxes, indirect taxes, and investment
income.
C) debt interest, expenditures on goods and services, and income taxes.
D) corporate income taxes, indirect taxes, and transfer payments.
E) debt interest, corporate income taxes, and income taxes.
In a monopoly, the four-firm concentration ratio is
A) 75 percent.
B) 100 percent.
C) almost zero.
D) 25 percent.
E) 50 percent.
Use the figure below to answer the following questions.
Figure 12.1.1
Refer to Figure 12.1.1. The firm competes in a perfectly competitive market. Curve A
represents the firm’s
A) total fixed cost curve.
B) average fixed cost curve.
C) average variable cost curve.
D) total revenue curve.
E) marginal revenue curve.