Economic efficiency and economic equity have what relationship?
A) Redistribution of income reduces economic equality while it increases economic
efficiency.
B) Income is equitably distributed in free market systems without intervention by
government.
C) There is a no tradeoff between the two.
D) There is a tradeoff between equality and efficiency.
E) More equality is generally more efficient.
Which of the following is always true regarding a profit-maximizing monopolistically
competitive firm in short-run equilibrium?
A) P = ATC
B) P = MR
C) MR = MC
D) MC = ATC
E) P = MC
Which of the following would be an example of a consumption expenditure?
A) more spending by the government on children’s programs
B) an increase in welfare payments to single mothers
C) the purchase of a new car by the IPSCO steel company
D) the purchase of a new car by the Singh household
E) spending on protection services for the prime minister
Refer to Figure 26.3.2. Consider statements (1) and (2) and select the correct answer.
(1) The actual unemployment rate exceeds the natural unemployment rate in the short
run.
(2) SAS automatically shifts rightward as the economy adjusts to long-run equilibrium.
A) (1) is true; (2) is false.
B) (2) is true; (1) is false.
C) (1) and (2) are false.
D) (1) and (2) are true.
E) (1) is false; (2) is true if the LAS curve shifts rightward at the same time.
The demand curve for labour will shift rightward as a result of
A) a decrease in the price of the firm’s output.
B) an increase in the wage rate.
C) a decrease in the price of a substitute factor of production.
D) an increase in the price of a substitute factor of production.
E) a decrease in the wage rate.
Governments provide public goods such as national defence because
A) governments are more efficient than private firms at producing public goods.
B) of the free-rider problem, which results in underproduction by private firms.
C) people do not value national defence very highly.
D) of the potential that private firms will make excess profit.
E) of external costs.
The determination of prices in individual markets is primarily a concern of
A) positive economics.
B) negative economics.
C) macroeconomics.
D) microeconomics.
E) descriptive economics.
If marginal product of a restaurant employee is 10 customers per hour, and the price of
a meal is $15, the restaurant employee’s value of marginal product is
A) $15.
B) $7.5.
C) $12.5.
D) $10.
E) $150.
A single-price monopolist
A) maximizes economic profit by producing the quantity at which marginal revenue
equals marginal cost.
B) maximizes economic profit by producing the quantity at which marginal revenue
equals average total cost.
C) can increase the price and the quantity sold simultaneously.
D) is not restricted by the law of demand.
E) can sell as much as it wants at a given price because it is the only seller.
The ________ cycle theory states that only unexpected fluctuations in aggregate
demand bring fluctuations in real GDP around potential GDP.
A) new Keynesian
B) new classical
C) Keynesian
D) monetarist
E) real business
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
net investment for the year is
A) 1 machine.
B) 2 machines.
C) 3 machines.
D) 6 machines.
E) 5 machines
Everything else remaining the same, as the economy enters an expansion,
A) tax revenues rise and transfer payments fall.
B) tax revenues and transfer payments fall.
C) tax revenues and transfer payments rise.
D) tax revenues fall and transfer payments remain constant.
E) transfer payments and interest on the debt rise.
Refer to Fact 12.2.1. The shutdown decision maximizes GM’s economic profit (or
minimizes its loss) when price is less than
A) average variable cost.
B) total variable cost.
C) average fixed cost.
D) total fixed cost.
E) average total cost.
Which of the following are reasons economists consider valid for trade protection?
I. Protection penalizes countries that have weak environmental standards.
II. Protection limits dumping of low-wage jobs into the domestic economy.
III. Protection prevents low-wage jobs in foreign countries from lowering wages in
Canada.
A) I and II
B) II and III
C) I, II, and III
D) I and III
E) None of the above
A correctly anticipated increase in the quantity of money
A) increases the price level with no change in real GDP.
B) does not change the price level or real GDP.
C) does not change the price level but increases real GDP.
D) increases the price level and increases real GDP.
E) does not change the price level but decreases real GDP.
Refer to Fact 25.4.1. What is the value of the capital account and financial balance for
Ecoland, given the value of net interest income plus net transfers is +3 billion turkeys?
A) +3 billion turkeys
B) +6 billion turkeys
C) -3 billion turkeys
D) -1 billion turkeys
E) zero
Some unemployment is unavoidable because
A) people are making transitions through the stages of life and businesses are making
transitions.
B) many part-time workers would like to have full-time work.
C) often people become discouraged searchers.
D) many people in the working-age population attend school and are unemployed.
E) there is always some cyclical unemployment.
A 3 cents per-unit tax on bread leads to no change in the quantity bought and sold. The
tax is paid
A) completely by the sellers.
B) completely by the buyers.
C) equally by the buyers and sellers.
D) mostly but not completely by the buyers.
E) completely by either the sellers or the buyers; we cannot tell without more
information.
Which one of the following is true at the best affordable choice of a consumer?
A) Marginal rate of substitution exceeds the slope of the budget line.
B) Marginal rate of substitution is less than the relative price of the good measured on
the x-axis.
C) All income is spent.
D) The consumption choice is outside the budget line.
E) Other consumption points along the consumer’s budget line lie on higher indifference
curves.
Since 1980, there has been a dramatic increase in the number of working mothers.
Based on this information alone, we can predict that the market for child care services
has experienced
A) an increase in demand.
B) a decrease in demand.
C) an increase in quantity demanded.
D) a decrease in quantity supplied.
E) an increase in supply.
Consider a country that has two industries. In the north, they grow wild rice, which
requires a lot of rainfall. In the south, they grow wheat, which requires just a moderate
amount of rainfall (too much rainfall is bad for wheat production). One year, there is a
record rainfall. This will result in
A) a parallel shift inward of the production possibilities frontier.
B) a parallel shift outward of the production possibilities frontier.
C) the production possibilities frontier rotating, with the wild rice intercept increasing,
and the wheat intercept decreasing.
D) the production possibilities frontier rotating, with the wild rice intercept decreasing,
and the wheat intercept increasing.
E) the production possibilities frontier becoming linear.
The purchasers in the goods markets are
A) households and government only.
B) households and firms only.
C) households and net exporters only.
D) households, firms, and government only.
E) households, firms, government, and those who import our goods.
Canada has a comparative advantage in producing airplanes if
A) it can produce them at a lower dollar cost than another country.
B) it can produce a larger quantity than another country.
C) it has a larger quantity of skilled workers than another country.
D) it can produce them at a higher opportunity cost than another country.
E) it can produce them at a lower opportunity cost than another country.
If a rise in the price of good A from $100 to $120 results in an increase in quantity
supplied from 10,000 to 12,000 units, then the elasticity of supply is
A) 0.625.
B) 0.8.
C) 1.25.
D) 0.2.
E) 1.0.
A shift of the supply curve for rutabagas occurs if there is
A) a change in preferences for rutabagas.
B) a change in the price of a related good that is a substitute for rutabagas.
C) a change in income.
D) a change in the price of rutabagas.
E) none of the above
If the wage rate increases, the substitution effect gives a household the incentive to
A) raise its reservation wage.
B) increase leisure and decrease work.
C) increase work and decrease leisure.
D) increase both work and leisure.
E) decrease both work and leisure.
If the unemployment rate rises and the inflation rate falls, while the natural
unemployment rate and the expected inflation rate remain constant, then we are
studying a movement along the
A) aggregate demand curve.
B) long-run aggregate supply curve.
C) Friedman curve.
D) short-run Phillips curve.
E) Phelps-Friedman curve.
Refer to Figure 26.3.2. In Mythlo there is a difference between the ________
equilibrium real GDP and potential GDP of ________ billion.
A) above full-employment; $50
B) above full-employment; $25
C) below full-employment; $50
D) below full-employment; $25
E) full employment; 0
Refer to the table below to answer the following questions.
Table 7.2.1
Table 7.2.1 shows a country’s demand and supply schedules. Based on Table 7.2.1, at
what world price would the country import?
A) at exactly $8 a unit
B) any price above $8 a unit
C) a price of $10 a unit
D) a price of $20 a unit
E) a price below $8 a unit
Flora’s Flowers bought a new van last year for $10,000. It can now sell the van for
$8,500. To buy this year’s model of the same van it would have to pay $11,000. What is
the one-year amount of economic depreciation?
A) $2,500
B) $1,500
C) $1,000
D) $10,000
E) $3,500
Refer to Figure 6.1.2. What would be the maximum black market price of the good if a
price ceiling is set at $10 a unit?
A) $10
B) $15
C) $20
D) 50 goods sold at $10 and 50 goods sold at $20
E) 50 goods sold at $10 and 50 goods sold at $15
If the price level doubles, all else constant, the quantity of
A) real money demanded will double.
B) nominal money demanded will double.
C) real money demanded will half.
D) nominal money demanded will half.
E) nominal money demanded will remain constant.
All of the following will raise the price level except
A) aggregate demand increases and short-run aggregate supply decreases.
B) aggregate demand increases.
C) short-run aggregate supply decreases.
D) an increase in the quantity of capital.
E) an increase in the quantity of money.
In Table 21.2.1, which person is structurally unemployed?
A) A
B) B
C) C
D) D
E) none of them
Of the following countries, which has the lowest level of real GDP per person?
A) China
B) Singapore
C) Hong Kong
D) Korea
E) Canada