Effective strategies for addressing the problem of negative externalities include
A) taxing the profit of polluting companies at twice the rate of non-polluting
companies.
B) imposing taxes on the activity that generates the pollution.
C) stressing the use of renewable resources.
D) imposing recycling laws.
E) closing down a polluting industry.
A four-firm concentration ratio that exceeds 60 percent indicates
A) a perfectly competitive market.
B) a monopolistically competitive market.
C) a monopoly.
D) an oligopoly.
E) a competitive market.
The quantity of money that the banking system can create is limited by
A) bank managers’ decisions.
B) the monetary base, desired reserves, and desired currency holdings.
C) the number of consumers who apply for loans.
D) the credit ratings of the consumers who are applying for loans.
E) the quantity of bank notes released by the Bank of Canada.
Which one of the following is not a depository institution?
A) a trust and mortgage loan company
B) a foreign-owned chartered bank
C) a credit union
D) a caisse populaire
E) a car insurance company
The unemployment rate is defined as the number of
A) unemployed people divided by the number of employed people.
B) employed people divided by the number of people in the country.
C) unemployed people divided by the number of people in the country.
D) unemployed people divided by the sum of the people employed and the people
unemployed.
E) unemployed people divided by the number of people in the country who are
employed.
The income effect of a higher wage is defined as
A) the increased income workers must be paid to be willing to work more.
B) the increased prices of consumer goods that result from increased worker incomes.
C) the increased demand for leisure that results from increased worker incomes.
D) the increased workers’ purchasing power that results from increased worker
incomes.
E) the desire for workers to purchase more normal goods and fewer inferior goods as
income rises.
A subsidy
A) lowers the price received by farmers.
B) decreases the quantity supplied in the market.
C) raises the price received by farmers.
D) prevents the deadweight loss from underproduction.
E) decreases total revenue received by farmers.
All else constant, a decrease in the income tax rate will result in
A) a movement down along the aggregate expenditure curve.
B) an upward shift of the AE curve with no change in its slope.
C) a downward shift of the AE curve with no change in its slope.
D) a decrease in the consumption expenditure.
E) an AE curve with a steeper slope.
The marginal propensity to consume
A) is negative if dissaving is present.
B) is greater than 1 if dissaving is present.
C) is between 1/2 and 1.
D) is greater than 1 but less than 2.
E) is between zero and 1.
A perfect price-discriminating monopoly
A) has a demand curve that is also its marginal revenue curve.
B) maximizes total revenue.
C) is inefficient.
D) will produce the quantity at which the marginal cost curve intersects its demand
curve.
E) both A and D
Tonya, who is wealth, and Jerome, who is not, both buy orange juice and croissants for
lunch at the student cafeteria. Their budget lines are drawn with orange juice on the
vertical axis and croissants on the horizontal axis. Choose the correct statement.
A) Both of these budget lines have the same y-axis intercepts.
B) Both of these budget lines have the same x-axis intercepts.
C) Both of these budget lines have the same slopes.
D) Both of these budget lines have the same y-axis intercepts and x-axis intercepts.
E) These budget lines have different slopes, different x-axis intercepts, and different
y-axis intercepts.
Refer to Table 3.4.1. A surplus occurs if
A) the price is $2 a unit.
B) the price is $3 a unit.
C) the price is above $4 a unit.
D) the price is $1 a unit.
E) the price is $4 a unit.
Use the figure below to answer the following questions.
Table 3.5.2
Demand and Supply Schedules for Cups of Coffee each day at CoolU
Refer to Table 3.5.2. The equilibrium price is $________ and the equilibrium quantity
is ________ cups a day.
A) 1.30; 1200
B) 0.90; 1000
C) 1.10; 900
D) 1.10; 800
E) 1.00; 800
Use the figure below to answer the following question.
Figure 26.3.4
Refer to Figure 26.3.4. The changes represented
A) cannot occur because aggregate demand and short-run aggregate supply cannot
change at the same time.
B) lead to an inflationary gap.
C) lead to a recessionary gap.
D) cause a proportionate increase in long run aggregate supply.
E) increase real GDP.
Refer to Figure 7.3.1. The deadweight loss from the tariff is
A) $80 million.
B) $16 million.
C) zero.
D) $64 million.
E) $32 million.
Use the figure below to answer the following question.
Figure 1A.5.3
The equation of a line is y = 4 + 2x. Which one of the graphs in Figure 1A.5.3
represents this line?
A) (a)
B) (b)
C) (c)
D) (d)
E) none of the graphs
The Gini ratio in Brazil was over 0.6 in 1990 and fell to 0.5 in 2010. This change means
that between 1990 and 2010, income inequality ________ and the Lorenz curve moved
________ the 45-degree line.
A) decreased; closer to
B) decreased; further away from
C) increased; closer to
D) increased; further away from
E) increased; so that it was the same as
A country moves from a situation of no trade to a situation where it imports a good.
Which of the following does not occur in the market for this good in the importing
country?
A) Deadweight loss decreases.
B) Consumer surplus increases.
C) Producer surplus decreases.
D) Workers in the domestic industry lose.
E) Total surplus increases.
Suppose that buying and selling a certain good is made illegal. In the market for this
good, the demand curve shifts ________ and the supply curve shifts ________.
A) rightward; rightward
B) leftward; leftward
C) rightward; leftward
D) leftward; rightward
E) None of the above; neither the demand curve nor the supply curve shifts.
The diagram of the production possibilities frontier corresponding to the data in Table
2.1.1 would be
A) negatively sloped and linear.
B) negatively sloped and bowed inward.
C) negatively sloped and bowed outward.
D) positively sloped for X and negatively sloped for Y.
E) a horizontal line.
Refer to Table 18.2.1. If the firm can sell all the output it wants for the price of $10 a
unit, what is the profit-maximizing number of workers if the wage rate is $30?
A) 1
B) 5
C) 6
D) 8
E) 9
When the cost of producing a unit of a good falls as its output rate increases,
A) economies of scale exist.
B) economies of scope exist.
C) transactions costs are zero.
D) market coordination is unnecessary.
E) the firm is a partnership.
The major factor determining whether a firm or a market coordinates a particular set of
activities is
A) cost.
B) a sale.
C) depreciation.
D) the size of the market.
E) the number of workers.
If the Ricardo-Barro effect occurs, a government budget deficit raises the equilibrium
real interest rate by ________ and decreases the equilibrium quantity of investment by
________ if the Ricardo-Barro effect is absent.
A) more; more than
B) more; less than
C) less; more than
D) less; less than
E) the same amount; the same amount as
Use the figure below to answer the following question.
Figure 28.2.1
Refer to Figure 28.2.1. The figure illustrates an economy initially in equilibrium at the
intersection of the SAS0 curve and the AD0 curve. Which of the following shifts the
short-run aggregate supply curve from SAS0 to SAS1?
A) an increase in the price of oil
B) an increase in the price level
C) an increase in the marginal product of labour
D) an increase in the demand for money
E) a decrease in the money wage rate
Which of the following is a government outlay?
A) personal income taxes
B) investment income
C) debt interest
D) indirect taxes
E) corporate income taxes
Appreciation of a currency means
A) an increase in the amount of goods and services that currency can purchase within
its own country.
B) an increase in the precious metal content in coins.
C) a shortage of currency.
D) that currency can buy more foreign currency.
E) that currency can buy less foreign currency.
Refer to Figure 19.3.2. At an employment level of 20 hours per week, firms are willing
to pay
A) a wage rate of $7 an hour to low-skilled workers.
B) a maximum of $5 an hour to high-skilled workers.
C) up to $7 an hour for high-skilled workers.
D) the same for high-skilled workers as for low-skilled workers.
E) $3 an hour more for high-skilled workers.
Max has $35 a day to spend, and he can spend as much time as he likes on his leisure
pursuits. Windsurfing equipment rents for $10 an hour, and snorkeling equipment rents
for $5 an hour. If Max equalizes the marginal utility per hour from windsurfing and
from snorkeling, he
A) maximizes his total utility.
B) can increase his total utility by spending less time windsurfing and more time
snorkeling.
C) can increase his total utility only if the price of windsurfing equipment rentals
decreases.
D) can increase his total utility by spending more time windsurfing and less time
snorkeling.
E) maximizes his marginal utility per dollar.
Consider a market for an illegal good. If the government imposes the cost of breaking
the law on the buyer of the good, then price will be
A) higher and quantity lower compared to imposing the same cost on the seller.
B) higher and quantity higher compared to imposing the same cost on the seller.
C) lower and quantity lower compared to imposing the same cost on the seller.
D) lower and quantity the same compared to imposing the same cost on the seller.
E) higher and quantity the same compared to imposing the same cost on the seller.