According to a behavioural economist, a person who is unwilling to sell the last
kilogram of rice he purchased for the same price that he paid for it is displaying
A) the endowment effect.
B) bounded rationality.
C) bounded self-interest.
D) bounded willpower.
E) rational behaviour.
Use the figure below to answer the following question.
Figure 11.3.1
Refer to Figure 11.3.1. Which one of the following statements is false?
A) The total fixed cost curve A.
B) Total variable cost and total cost both increase with output.
C) The vertical gap between curves B and C is equal to total variable cost.
D) Marginal cost is equal to the slope of curve C.
E) Total fixed cost is constant.
Choose the statement that is incorrect.
A) In a deflation, the inflation rate is positive but decreasing in consequent years.
B) In a deflation, the price level persistently falls.
C) A one-time fall in the price level occurs when there is an increase in capital that
increases potential GDP.
D) A one-time fall in the price level occurs either because aggregate demand decreases
or because short-run aggregate supply increases.
E) A one-time fall in the price level is not a deflation.
Canada’s government debt
A) is smaller than the value of the public capital stock so Canada’s debt has not
financed public consumption expenditure.
B) is larger than the value of the public capital stock so some of Canada’s debt has
financed public consumption expenditure.
C) equals the value of the public capital stock.
D) has risen every year since 1975.
E) is smaller than the value of the public capital stock so some of Canada’s debt has
financed public consumption expenditure.
Use the table below to answer the following questions.
Windsurfing equipment rents for $10 per hour and snorkeling equipment rents for $5
per hour.
Table 8.2.1
Consider Devon’s utility from snorkeling and windsurfing in Table 8.2.1. Devon has
$55 to spend. What are Devon’s choices for time spent on the two activities?
A) 1 hour of windsurfing and 9 hours of snorkeling
B) 2 hours of windsurfing and 7 hours of snorkeling
C) 3 hours of windsurfing and 5 hours of snorkeling
D) 4 hours of windsurfing and 3 hours of snorkeling
E) 5 hours of windsurfing and 1 hour of snorkeling
If the price of the good measured on the horizontal axis falls, the substitution effect is
indicated by movement to a
A) higher indifference curve.
B) lower indifference curve.
C) steeper part of the same indifference curve.
D) flatter part of the same indifference curve.
E) flatter part of a higher indifference curve.
Use the table below to answer the following question.
Table 8.2.4
Refer to Table 8.2.4. Suppose the price of X is $1 and the price of Y is $1. How much of
each should you purchase to maximize utility from a total expenditure of $11?
A) 3 units of X and 8 units of Y
B) 4 units of X and 7 units of Y
C) 5 units of X and 6 units of Y
D) 6 units of X and 5 units of Y
E) 7 units of X and 4 units of Y
Which one of the following is an example of capital?
A) money
B) a carpenter
C) pasture
D) a bread-slicing machine
E) a university professor
Table 7.1.1 shows Glazeland’s doughnut market before international trade. Glazeland
opens up to international trade. If the world price is $0.40 a doughnut then Glazeland
will produce ________ doughnuts and will ________ doughnuts.
A) 3 million; import 3 million
B) 3 million; export 3 million
C) 4 million; import 1 million
D) 4 million; export 1 million
E) 6 million; export 3 million
The greater a household’s ________ the less is its saving.
A) return from saving
B) wealth
C) disposable income
D) expected future profit
E) all of the above
The Bank of Canada
A) has no influence on the exchange rate.
B) sells Canadian dollars to the United States in an attempt to depreciate the Canadian
dollar and increase Canadian exports to the United States.
C) alternates between a flexible, fixed, and crawling peg exchange rate policy
depending on economic conditions.
D) follows a flexible exchange rate policy, although the Bank’s actions can impact the
exchange rate.
E) buys Canadian dollars from the United States in an attempt to depreciate the
Canadian dollar and increase Canadian exports to the United States.
The supply curve of dollars shifts rightward if
A) the Canadian exchange rate rises.
B) the price of Canadian goods and services decreases.
C) Canadian interest rates rise.
D) foreign interest rates rise.
E) none of the above
Refer to Table 3.5.3. In a television interview, Joe Cool shows off his designer sport
t-shirt, setting off a new craze that doubles business at the sportswear establishments.
This would be represented as a
A) movement up along the demand curve.
B) rightward shift of the demand curve.
C) leftward shift of the demand curve.
D) rightward shift of the supply curve.
E) leftward shift of the supply curve.
When a firm decides to produce computers using robots instead of people, it is
answering the ________ question.
A) “what”
B) “where”
C) “how”
D) “who”
E) “when”
Liquidity is
A) the property of being easily convertible into a means of payment without loss in
value.
B) the degree of certainty of the price of an asset.
C) a high-risk asset.
D) the net flow of gold into the Bank of Canada.
E) the same as currency.
Business people speak about cross elasticity of demand without using the actual term.
Which one of the following statements reflects cross elasticity of demand?
A) “A price cut won’t help me. It won’t increase sales, and I’ll just get less money for
each unit.”
B) “I don’t think a price cut will make any difference to my bottom line. What I may
gain from selling more I would lose on the lower price.”
C) “My customers are real bargain hunters. Since I set my prices just a few cents below
my competitors, customers have flocked to the store and sales are booming.”
D) “With the recent economic recovery, people have more income to spend and sales
are booming, even at the previous prices.”
E) “Since the price of gasoline fell at the neighbouring station, my milk sales have been
booming.”
A shift in the aggregate expenditure curve as a result of a rise in the price level,
A) shifts the aggregate demand curve leftward.
B) has no effect on the aggregate demand curve.
C) shifts the aggregate demand curve rightward.
D) creates a movement down along the aggregate demand curve.
E) creates a movement up along the aggregate demand curve.
After constructing a new factory, the cost of building the factor is a
A) past cost.
B) variable cost.
C) significant cost.
D) taxable cost.
E) sunk cost.
Initially, the demand curve for good A is D2 in Figure 3.5.1. Suppose good B is a
substitute for good A. If the price of B falls
A) the price of A will rise.
B) there will be a surplus of good A at P2.
C) the demand curve for good A will shift from D2 to D3.
D) the equilibrium quantity of good A will increase.
E) all of the above are true except B.
Sam’s demand curve for pizza
A) lies below his marginal benefit curve from pizza.
B) lies above his marginal benefit curve from pizza.
C) is the same as his marginal benefit curve from pizza.
D) is the same as his marginal cost curve of pizza.
E) lies below his marginal cost curve of pizza.
Refer to Fact 27.5.1. If autonomous consumption increases by 10, what is the new
equilibrium real GDP for this economy?
A) 153.33
B) 120
C) 86.67
D) 460
E) 230
In 2014, Country A has net taxes of $30 million and government expenditures of $35
million. Private saving in Country A is $5 million and consumption expenditure is $80
million. The government of Country A is running a budget ________ and national
saving is ________.
A) surplus; $5 million
B) deficit; -$5 million
C) deficit; $5 million
D) surplus; $25 million
E) deficit; zero
The expansion of international trade, borrowing and lending, and investment is
A) the big tradeoff.
B) industrial revolution.
C) corporate revolution.
D) globalization.
E) antiglobalization.
Refer to Table 10.2.2. If the price of labour is $20 per unit and the price of capital is $10
per unit, which method is economically efficient?
A) 1 only
B) 2 only
C) 3 only
D) 2 and 3 only
E) 1 and 3 only
The official settlements account measures the
A) value of Canadian merchandise purchased by foreigners.
B) net value of foreign goods officially purchased by Canada.
C) net value of Canadian official exports of services.
D) change in the government’s holdings of foreign currency.
E) change in Canada’s net exports.
An increase in income
A) increases the demand for turnips if a turnip is an inferior good.
B) increases the demand for turnips if a turnip is a normal good.
C) increases the supply of turnips.
D) decreases the demand for turnips if turnips have a very low price.
E) decreases the supply of turnips.
If a perfectly competitive firm is producing in the short run at an output where price is
less than average total cost, the firm
A) will shut down.
B) is breaking even.
C) is still making a positive economic profit.
D) is incurring an economic loss but will continue to operate as long as price is above
minimum average fixed cost.
E) is incurring an economic loss but will continue to operate as long as price is above
minimum average variable cost.
According to the Ricardo-Barro effect, government deficits
A) lead to a rise in the equilibrium real interest rate, crowding out investment.
B) lead to simultaneous increases in private saving and have no effect on the
equilibrium real interest rate and investment.
C) lead to simultaneous decreases in private saving and decreases in the equilibrium
real interest rate and investment.
D) lead to a fall in the equilibrium real interest rate and an increase in investment.
E) raise the real interest rate but have no effect on the nominal interest rate.
Canada Post has a monopoly on residential mail delivery. Pfizer Inc. makes LIPITOR, a
prescription drug that lowers cholesterol. Rogers Communications is the sole provider
of cable television service in some parts of Ontario. The monopolies which profit from
price discrimination are
A) Canada Post and Rogers Communications.
B) only Pfizer.
C) only Canada Post.
D) Canada Post, Pfizer, and Rogers Communications.
E) only Rogers Communications.
Use the figure below to answer the following question.
Figure 4.3.1
The two supply curves in Figure 4.3.1 are parallel. Between $7 to $8,
A) S1 is more elastic than S2.
B) S1 is more inelastic than S2.
C) S1 and S2 have the same elasticity.
D) S1 is steeper than S2.
E) S1 is flatter than S2.
Consider a downward-sloping demand curve. Consumer surplus is
A) the difference between the market price of the good and the cost of the good.
B) greater on the last unit sold than on the first unit sold.
C) greater on the first unit sold than on the last unit sold.
D) equal to price multiplied by quantity sold.
E) equal to the area below the demand curve.
When a sales tax is imposed on sellers, the supply curve shifts so that the vertical
distance between the original supply curve and supply plus tax curve equals the
A) sales tax multiplied by the price elasticity of demand.
B) sales tax multiplied by the price elasticity of supply.
C) sales tax divided by the price elasticity of demand.
D) amount of the sales tax per unit.
E) sales tax divided by the price elasticity of supply.