The time spent looking for someone with whom to do business is called
A) elasticity of time.
B) market time.
C) search activity.
D) opportunity time.
E) development time.
When rent is not permitted to allocate scarce housing, what other mechanisms are
available?
A) a lottery
B) first-come, first-served
C) discrimination
D) both A and B are correct
E) A, B and C are correct
In a perfectly competitive market, the market price is $8. An individual firm is
producing the output at which MC = $8. AVC at that output is $10. What should the
firm do to maximize its economic profit in the short run?
A) shut down
B) expand output
C) contract output but continue to produce
D) leave output unchanged
E) raise the price
David has an income of $60 to buy movie tickets and bus tickets. The price of a movie
ticket is $12 and the price of a bus ticket is $4. What is David’s real income?
A) $30
B) 5 movie tickets or 15 bus tickets
C) 15 movie tickets or 5 bus tickets
D) $38
E) $32
Use the information below to answer the following questions.
Fact 13.5.1
Cascade Springs Inc. is a natural monopoly that bottles water from a spring high in the
Rocky Mountains. The total fixed cost it incurs is $80,000, and its marginal cost is 10
cents a bottle. The demand curve for Cascade Springs bottled water is shown in the
following figure:
Figure 13.5.1
Refer to Figure 13.5.1. Suppose the industry is unregulated. In this case, output is
A) 400,000 bottles per year.
B) 450,000 bottles per year.
C) 600,000 bottles per year.
D) 700,000 bottles per year.
E) 800,000 bottles per year.
An exclusive right granted to a firm to supply a good or service is
A) a licence.
B) a patent.
C) a public franchise.
D) the essential characteristic of natural monopoly.
E) an economy of scale.
International trade benefits the
A) exporting country but not the importing country.
B) importing country but not the exporting country.
C) government of the importing country.
D) government of the exporting country.
E) exporting country and the importing country.
Refer to Table 3.5.3. Suppose that the price of a designer sport t-shirt is $6. The market
has ________ leading to ________.
A) an equilibrium; no change in the price
B) a shortage; a fall in the price
C) a shortage; a rise in the price
D) a surplus; a fall in the price
E) a surplus; a rise in the price
If additional units of any good could be produced at a constant opportunity cost, the
production possibilities frontier would be
A) bowed inward.
B) bowed outward.
C) positively sloped.
D) horizontal.
E) linear and negatively sloped.
Policies that result in a redistribution of income toward the poor include all of the
following except
A) public provision of elementary education.
B) public provision of high school education.
C) public provision of health-care services.
D) public excise taxes.
E) public provision of subsidized university education.
In an unregulated housing market with no rent ceiling,
A) scarce housing resources are allocated inefficiently.
B) scarce housing resources are allocated efficiently.
C) tenants pay a lower rent compared to what they pay in a market with an effective
rent ceiling.
D) landlords receive less compared to what they receive in a market with an effective
rent ceiling.
E) consumer surplus equals producer surplus.
Use the table below to answer the following questions.
Table 18.2.3
Emperor Spring Rolls produces spring rolls. The market for spring rolls is perfectly
competitive, and the price of a spring roll is $3.50. The labour market is competitive,
and the wage rate is $28 a day. Table 18.2.3 shows the workers’ total product schedule.
To maximize its profit, Emperor hires ________ workers a day.
A) 2
B) 3
C) 4
D) 5
E) 6
Between 1926 and 2014, the average growth rate of real GDP per person in Canada was
________ percent a year. During this period, ________ grew at a faster rate than the
population.
A) 2.0; GDP;
B) 2.0; real GDP
C) 1.0; inflation
D) 3.0; real GDP
E) 3.0; GDP
A government budget surplus occurs, which ________ loanable funds. The real interest
rate ________, household saving ________, and investment ________.
A) increases the demand for; rises; increases; decreases
B) increases the supply of; falls; increases; decreases
C) increases the supply of; falls; decreases; increases
D) decreases the demand for; falls; decreases; increases
E) decreases the supply of; decreases; decreases; increases
A contestable market is similar to a perfectly competitive market in that there
A) are barriers to entry.
B) are no barriers to entry.
C) can be only one firm in the market.
D) will be no entry if the existing firm makes an economic profit.
E) is a perfectly elastic demand.
Which one of the following would result in the dollar depreciating against the Japanese
yen?
A) a fall in the Canadian interest rate differential
B) a rise in the Canadian interest rate
C) a fall in the Japanese interest rate
D) an increase in the expected future Canadian exchange rate
E) an increase in the Canadian interest rate differential
Suppose the interest rate in Canada rises and the interest rate in Japan remains the same.
Interest rate parity implies that given equal risk,
A) the inflation rate is higher in Japan.
B) Japanese financial investments are less profitable.
C) the yen is expected to depreciate against the dollar.
D) the yen is expected to appreciate against the dollar.
E) Canadian financial investments are less profitable.
All of the following statements regarding rational ignorance are true except
A) it results when the cost of information exceeds the expected benefit of acquiring the
information.
B) it allows special interest groups to exert political influence.
C) combined with special interest groups, it yields inefficiency in the provision of
public goods.
D) it leads to an efficient outcome.
E) it results in voters having little knowledge about issues that have little effect on their
economic welfare.
When the Bank of Canada fights inflation by implementing open market operations, the
supply of loanable funds curve shifts ________ and the aggregate demand curve shifts
________.
A) leftward; leftward
B) leftward; rightward
C) rightward; leftward
D) rightward; rightward
E) leftward; leftward, and potential GDP decreases
Use the figure below to answer the following questions.
Figure 6.3.1
Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.
The tax on each frisbee is
A) $0.40.
B) $0.60.
C) $1.00.
D) $5.60.
E) $6.60.
When the Bank of Canada fights recession by lowering the overnight loans rate, the
supply of reserves curve shifts ________ and the supply of money curve shifts
________.
A) leftward; leftward
B) leftward; rightward
C) rightward; leftward
D) rightward; rightward
E) rightward; rightward, and the demand for loanable funds increases
Suppose the price of a burger is $4.50 Canadian in Toronto, and the exchange rate is
103 U.S. cents per Canadian dollar. Then
A) the price of a burger is $4.50 U.S. in New York if purchasing power parity holds.
B) the price of a burger is $4.64 U.S. in New York if interest rate parity holds.
C) the price of a burger is $4.64 U.S. in New York if purchasing power parity holds.
D) the Canadian dollar is expected to appreciate according to purchasing power parity.
E) the Canadian dollar is expected to depreciate according to purchasing power parity.
The price of good A rises, and the demand curve for good B shifts leftward. We can
conclude that
A) A and B are substitutes.
B) A and B are complements.
C) A and B are complements in production.
D) B is an inferior good.
E) B is a normal good.
Suppose that a severe shock that decreases the demand for loanable funds hits Canada.
Which of the following can we expect to occur according to real business cycle theory?
A) The real interest rate will fall.
B) People will work fewer hours.
C) The real wage rate will fall.
D) The demand for loanable funds will decrease.
E) All of the above are true.
For a monopoly able to practice perfect price discrimination, the market
A) supply curve is horizontal.
B) supply curve is the same as the marginal revenue curve.
C) demand curve is the same as the marginal cost curve.
D) demand curve is the same as the marginal revenue curve.
E) demand curve is horizontal.
Michael lost his job as a night security guard because he kept falling asleep at the job.
Now he is looking for a new job. Michael is
A) frictionally unemployed.
B) structurally unemployed.
C) not unemployed.
D) cyclically unemployed.
E) not in the labour force.
R4 is
A) long-term unemployment.
B) the official unemployment rate.
C) comparable to the official U.S. rate.
D) short-term unemployment.
E) the unemployment rate that adds discouraged searchers to the official rate.
Refer to Figure 14.2.2. This firm
A) is incurring an economic loss.
B) is in long-run equilibrium.
C) is making an economic profit.
D) must raise its price to maximize economic profit.
E) will make more economic profit in the long run.
Which one of the following quotations could be attributed to a supporter of the classical
growth theory?
A) “Growth will last as long as technology keeps advancing.”
B) “Prosperity will last as long as technology keeps advancing.”
C) “Growth will last only until the increase in population brings productivity down to
the subsistence level.”
D) “Prosperity will last as long as there is knowledge accumulation.”
E) “Growth will last as long as knowledge accumulation continues.”
Currently the government of Ricardia has outlays equal to $100 billion, and a tax
scheme that is related positively to real GDP by the following equation: Taxes = $25
billion + 0.1(real GDP). What are autonomous taxes in Ricardia?
A) It depends on the level of real GDP.
B) 0.1
C) $2.5 billion
D) $250 billion
E) $25 billion
A price cap is a price ________. A price cap might be a more effective way of
regulating monopoly than rate of return regulation because under rate of return
regulation, ________.
A) ceiling; a firm incurs an economic loss
B) floor; price is set equal to marginal cost
C) ceiling; the firm’s managers have an incentive to inflate costs
D) floor; the firm’s managers have an incentive to purchase more than the efficient
quantity of capital
E) floor; the firm’s managers have an incentive to inflate costs
Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.
Government revenue from the tax is
A) $4,000.
B) $5,000.
C) $22,400.
D) $26,400.
E) $30,000.
When perfect price discrimination occurs, which one of the following statements is
false?
A) Buyers cannot resell the product.
B) The firm can distinguish between buyers.
C) The firm sets prices.
D) The firm captures consumer surplus.
E) The outcome is less efficient than with single-price monopoly.
The long-run average cost curve is the relationship between the lowest attainable
average total cost and output, when plant size is ________ and labour is ________. The
long-run average cost curve is made up of the segments of individual average ________
cost curves with the lowest average ________ cost for a given output.
A) varied; varied; variable; variable
B) varied; varied; total; total
C) varied; held constant; variable; variable
D) held constant; varied; total; total
E) held constant; varied; variable; variable