Refer to Figure 1A.1.5. Which graph or graphs indicates a positive relationship between
x and y?
A) (a)
B) (b)
C) (c)
D) (d)
E) (a) and (d)
Which one of the following statements is false?
A) If the indifference curve is steep, the marginal rate of substitution is high.
B) A low marginal rate of substitution implies a flat indifference curve.
C) A flat indifference curve implies a consumer must receive a large amount of good X
to compensate for a small decrease in good Y.
D) A high marginal rate of substitution implies a consumer must receive a large amount
of good X to compensate for a small decrease in good Y.
E) A high marginal rate of substitution implies a consumer must receive a small amount
of good X to compensate for a large decrease in good Y.
Which one of the following statements is true?
A) Firms are markets in and of themselves.
B) Firms do not organize factors of production to produce goods and services.
C) Firms are buyers of consumer goods and services.
D) Efficient firms can eliminate scarcity.
E) Firms are often more efficient than markets as coordinators of economic activity.
Choose the correct statement.
A) A marginal cost curve that is a horizontal line is derived from a PPF that has a
bowed-out shape.
B) A marginal cost curve that is upward sloping is derived from a PPF that has a
constant slope.
C) A marginal cost curve that is vertical is derived from a PPF that has a bowed-out
shape.
D) A marginal benefit curve that is downward sloping is derived from a PPF that has a
bowed-out shape.
E) A marginal cost curve that is a horizontal line is derived from a PPF that has a
constant slope.
A new car has a sticker price of $35,000. Fred decided that he would pay no more than
$32,000 for this car. He bought the car for $31,000. Fred obtained a consumer surplus
of
A) $35,000.
B) $32,000.
C) $4,000.
D) $3,000.
E) $1,000.
If the price elasticity of demand is zero, then demand is
A) elastic.
B) inelastic.
C) perfectly inelastic.
D) perfectly elastic.
E) unit elastic.
A firm will shut down temporarily when the price is so low that total revenue is
insufficient to cover the
A) total cost of production.
B) total variable cost of production.
C) total fixed cost of production.
D) marginal cost of production.
E) average variable cost of production.
Refer to Table 15.2.7. Disney and Fox must decide when to release their next films. The
revenues received by each studio depend in part on when the other studio releases its
film. Each studio can release its film at Thanksgiving or at Christmas. The revenues
received by each studio, in millions of dollars, are given in the payoff matrix above.
Which of the following statements correctly describes Disney’s strategy given what
Fox’s release choice may be?
A) If Fox chooses a Thanksgiving release, Disney should choose a Christmas release.
B) If Fox chooses a Christmas release, Disney should choose a Thanksgiving release.
C) Disney should release on Thanksgiving regardless of what Fox does.
D) Disney should release on Christmas regardless of what Fox does.
E) Both answers A and B are correct.
Table 7.2.1 shows a country’s demand and supply schedules. Based on Table 7.2.1,
suppose the world price is $4 a unit. The country
A) imports 20 units.
B) exports 20 units.
C) imports 10 units.
D) exports 10 units.
E) imports 30 units.
In the long run, a monopolistically competitive firm produces the output at which price
equals
A) marginal cost.
B) marginal revenue.
C) average variable cost.
D) average total cost.
E) average fixed cost.
In which one of the following situations will a perfectly competitive firm incur an
economic loss?
A) MR > AVC
B) MR > ATC
C) ATC < MC
D) ATC > MR
E) MC > AVC
Which one, if any, of the following events shift the short-run aggregate supply curve but
not the long-run aggregate supply curve?
A) a change in factor prices
B) a change in the quantity of capital
C) an advance in technology
D) an increase in the full-employment quantity of labour
E) none of the above
Economists usually agree with which of the following arguments that favour
protectionism?
A) the competition with cheap foreign labour defence
B) the job protection defence
C) the dumping defence
D) the infant-industry defence
E) none of the above. Economists generally agree that arguments in favor of protection
are flawed.
Ceteris paribus, an increase in population results in a
A) higher level of labour employed and higher potential GDP per hour of labour.
B) lower level of labour employed and higher potential GDP per hour of labour.
C) higher level of labour employed and lower potential GDP per hour of labour.
D) lower level of labour employed and lower potential GDP per hour of labour.
E) constant level of labour employed and constant potential GDP per hour of labour.
Use the information below to answer the following questions.
Fact 14.1.1
For automobiles the HHI is 2,350, for sporting goods it is 161, for batteries it is 2,883,
and for jewellery it is 81.
Refer to Fact 14.1.1. The market for automobiles is ________ and the market for
sporting goods is ________.
A) monopolistic competition; an oligopoly
B) an oligopoly; perfectly competitive
C) an oligopoly; monopolistic competition
D) an oligopoly; an oligopoly
E) Perfectly competitive; perfectly competitive
If enforcement is aimed at buyers of an illegal good, the
A) price and quantity bought decrease.
B) price and quantity bought increase.
C) price rises and quantity bought decreases.
D) price falls and quantity bought increases.
E) price change is uncertain and quantity bought decreases.
During the past year, Teddy had a part-time job at which he is willing to work 30 hours
each week. During Teddy’s annual review, his boss grants him an 8 percent increase in
his wage. As a result of the wage increase, Teddy is now willing to work 25 hours each
week. Teddy’s opportunity cost of ________ has risen and for Teddy the substitution
effect of the wage hike is ________ the income effect.
A) leisure; less than
B) leisure; more than
C) labour; less than
D) labour; more than
E) leisure; equal to
Use the table below to answer the following questions.
Table 27.1.1
The following table shows the relationship between consumption
expenditure (C) and disposable income (YD) for a hypothetical economy.
Refer to Table 27.1.1. If YD is $400, then saving is
A) -$50.
B) $50.
C) zero.
D) $100.
E) -$125.
In Table 3.4.1, the equilibrium quantity is
A) 200 units.
B) 320 units.
C) 420 units.
D) 500 units.
E) none of the above; there is no equilibrium.
Refer to Table 20.4.1. Calculating chained-dollar real GDP, real GDP in 2014 increased
by
A) 56 percent.
B) 55.25 percent.
C) 54.5 percent.
D) 30 percent.
E) 75 percent.
If the people who take early retirement are not counted in the working-age population,
then
A) the unemployment rate would be lower.
B) the labour force participation rate would be less.
C) the unemployment rate would be higher.
D) the labour force participation rate would be higher.
E) the number of discouraged searchers would decrease.
In Figure 27.2.3, equilibrium expenditure is
A) $10 billion.
B) $100 billion.
C) $150 billion.
D) $347 billion.
E) $375 billion.
The real estate industry is monopolistically competitive, so in this industry
A) the market demand curve is a horizontal line.
B) the market demand curve is upward sloping.
C) there are few realtors in the market.
D) excess capacity exists.
E) excess capacity does not exist.
Refer to Figure 6.1.1. Suppose the demand for rental housing is shown by demand
curve D1, and there is a rent ceiling of $150 per room. What is the highest rent that
would be charged in a black market?
A) $150 a month
B) $175 a month
C) $200 a month
D) $100 a month
E) cannot be determined from the graph, but we know it is greater than $200
A Big Mac is
A) excludable and rival.
B) nonexcludable and nonrival.
C) nonexcludable and rival.
D) excludable and nonrival.
E) a private good in North America but a natural monopoly good in other countries.
Of the following sequences of price levels, which correctly represents a 5 percent
inflation rate?
A) 100, 100, 100, 100
B) 100, 105, 105, 105
C) 100, 105, 110, 115
D) 100, 105, 110.25, 115.76
E) 95, 100, 105, 110
Average variable cost is at a minimum at the same output at which
A) average product is at a maximum.
B) average product is at a minimum.
C) marginal product is at a maximum.
D) marginal product is at a minimum.
E) marginal cost is at a minimum.
If a turnip is an inferior good, then
A) a small decrease in income decreases the quantity of turnips demanded at the current
price by a large amount.
B) a large decrease in income decreases the quantity of turnips demanded at the current
price by a small amount.
C) an increase in income increases the quantity demanded at the current price.
D) an increase in income decreases the quantity demanded at the current price.
E) turnips taste awful.
Money’s function as a store of value can best be described as
A) an agreed measure for stating the prices of goods and services.
B) a guarantee of a double coincidence of wants.
C) an efficient means of writing contracts over a long time period.
D) something that can be held and exchanged later for goods and services.
E) a generally acceptable exchange system.
Choose the correct statement.
A) When marginal product of labour is greater than average product of labour and
marginal product is either increasing or decreasing average product of labour is
increasing.
B) When total product is increasing average product of labour and marginal product of
labour are both increasing.
C) When marginal product of labour is greater than or equal to average product of
labour, average product of labour is increasing.
D) When marginal product of labour is increasing, average product of labour is greater
than marginal product of labour.
E) When total product is increasing, average product of labour is decreasing and
marginal product of labour is increasing.
At the beginning of the year, Tom’s Tubes had capital of 5 tube-inflating machines.
During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom’s
capital at the end of year was
A) 1 machine.
B) 2 machines.
C) 3 machines.
D) 6 machines.
E) 8 machines.