Larry consumes only beer (B) and chips (C). If beer is measured on the vertical axis, the
relative price of chips in terms of beer is all of the following except
A) PC/PB.
B) the magnitude of the slope of the budget line.
C) equal to the opportunity cost of 1 bag of chips.
D) the real income in terms of beer.
E) the inverse of the relative price of beer in terms of chips.
Refer to Table 16.2.2. The efficient output of fertilizer is
A) 1 tonne.
B) 2 tonnes.
C) 3 tonnes.
D) 4 tonnes.
E) 5 tonnes.
Which one of the following is considered to be money?
A) a cheque
B) a debit card
C) a credit card
D) currency
E) a Van Gogh painting
The Canadian currency drain ratio for M1 is approximately ________ percent in 2014.
A) 15
B) 24
C) 11
D) 34
E) 75
The MC curve shifts upward if
A) factor prices rise.
B) a new technology is introduced.
C) more workers are hired.
D) all of the above
E) none of the above
If the Bank of Canada aims to lower the overnight rate, it will
A) lower the bank rate and settlement balances rate, as well as buy government
securities.
B) lower the bank rate and increase the settlement balances rate, as well as buy
government securities.
C) lower the bank rate and settlement balances rate, as well as sell government
securities.
D) raise the bank rate and settlement balances rate, as well as buy government
securities.
E) raise the bank rate and settlement balances rate, as well as sell government
securities.
Use the figure below to answer the following questions.
Figure 20.3.1
Refer to Figure 20.3.1. In the figure, the distance between points S and T represents
A) an expansion.
B) a trough.
C) a peak.
D) a recession.
E) a business cycle.
In a contestable market with one firm, the existing firm
A) sets its price lower than the monopoly price.
B) sets its price equal to the monopoly price.
C) sets its price above the monopoly price.
D) has no competition.
E) sets its price so that other firms will enter the market.
An example of an activity that creates a negative consumption externality is
A) logging, which pollutes rivers.
B) locating beehives next to an orange orchard.
C) smoking, which harms the health of a bystander.
D) a flu vaccination.
E) a sales tax.
Refer to Table 2.4.1. For Romulus, the opportunity cost of producing an additional unit
of Y is
A) 2/3 units of X.
B) 1/2 unit of X.
C) 2 units of X.
D) 3 units of X.
E) 3/2 units of Y.
If the marginal private cost of producing one kilowatt of power in British Columbia
equals five cents and the marginal social cost of each kilowatt equals nine cents, then
the marginal external cost equals ________ per kilowatt.
A) five cents
B) nine cents
C) four cents
D) fourteen cents
E) forty-five cents
Two variables are negatively related if
A) increases in one are associated with decreases in the other.
B) increases in one are associated with increases in the other.
C) both variables are less than zero.
D) any change in one causes an increase in the other.
E) any change in one causes a decrease in the other.
The use of fiscal policy is limited because
A) of recognition lag.
B) of law-making lag.
C) of impact lag.
D) all of the above
E) none of the above
Rational ignorance
A) results when the cost of acquiring information exceeds the benefit of acquiring the
information.
B) allows special interest groups to exert political influence.
C) combined with special-interest groups can yield inefficient provision of public
goods.
D) results in all of the above.
E) results in none of the above.
Use the figure below to answer the following question.
Figure 13.4.3
Refer to Figure 13.4.3. The outcome is efficient if
A) the monopoly is able to perfectly price discriminate.
B) the price consumers pay is equal to average total cost.
C) the price consumers pay exceeds minimum average variable cost.
D) the quantity produced is 80 units.
E) the quantity produced is 20 units.
A country moves from a situation of no trade to a situation where it exports a good.
Which of the following does not occur in the market for this good in the exporting
country?
A) Deadweight loss increases.
B) Consumer surplus decreases.
C) Producer surplus increases.
D) Workers in the domestic industry gain.
E) Total surplus increases.
Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a
complement of oatmeal. Which of the following increases the demand for oatmeal?
A) an increase in the price of raisins
B) a decrease in income
C) a decrease in population
D) an increase in the price of cold cereal
E) an increase in the supply of oatmeal
Refer to Figure 26.3.1. As Econoworld automatically adjusts to long-run equilibrium,
the
A) SAS curve shifts rightward.
B) AD curve shifts rightward.
C) SAS curve shifts leftward.
D) AD curve shifts leftward.
E) LAS curve shifts leftward.
What is the slope across the arc between B and C in Figure 1A.3.3?
A) 1/2.
B) 2/3
C) 1
D) 2
E) 3
An import quota is a
A) tariff imposed on goods that are dumped in the country.
B) law that prevents ecologically damaging goods from being imported into a country.
C) market-imposed balancing factor that keeps prices of imports and exports in
equilibrium.
D) government-imposed restriction on the quantity of a specific good that can be
imported.
E) tax in an international market.
Refer to Table 26.3.1. Consider the economy represented in the table. There is
A) an inflationary gap equal to $100 billion.
B) an inflationary gap equal to $50 billion.
C) a recessionary gap equal to $50 billion.
D) a recessionary gap equal to $100 billion.
E) neither an inflationary nor a recessionary gap because the economy is at full
employment.
Refer to Table 16.2.2. The Pigovian tax that achieves the efficient quantity of output is
A) $0.
B) $10 a tonne.
C) $20 a tonne.
D) $30 a tonne.
E) $40 a tonne.
If the economy’s capital increases over time,
A) net investment is positive.
B) depreciation is less than zero.
C) depreciation exceeds gross investment.
D) gross investment equals depreciation.
E) gross investment is zero.
Refer to Table 27.3.1. The equilibrium level of real GDP is
A) $525 billion.
B) $550 billion.
C) $450 billion.
D) $500 billion.
E) $600 billion.
When a market price allocates a scarce resource,
A) everyone in the economy can use the resource.
B) only those who show interest can use the resource.
C) willingness-to-pay is not an issue.
D) ability to pay for the resource is less important than willingness-to-pay.
E) only those who are willing and able to pay get the resource.
Suppose that investment increases by $10 billion. If the multiplier is 2, the AD curve
A) shifts rightward by the horizontal distance $20 billion.
B) shifts rightward by a horizontal distance greater than $20 billion.
C) shifts rightward by a horizontal distance less than $20 billion.
D) is not affected.
E) shifts upward by a vertical distance equal to $20 billion.
Refer to Figure 27.1.1. When disposable income is $200 billion,
A) saving is equal to line segment AD.
B) households are consuming less than $200 billion.
C) businesses are spending more than households because the consumption function
lies above the 45 line.
D) households are dissaving an amount equal to line segment AB.
E) households are saving an amount equal to line segment AB.
Choose the statement that is incorrect.
A) The world’s largest net borrower is the United States.
B) Canada is a net borrower.
C) China is a net lender.
D) Saudi Arabia is a net lender.
E) Japan is a net borrower.
In the labour market, an increase in labour productivity ________ the real wage rate
and ________ the level of employment.
A) raises; increases
B) raises; decreases
C) lowers; increases
D) lowers; decreases
E) raises; does not change
If the price of a good rises, then in the new consumer equilibrium all of the following
are true except
A) the marginal utility from consuming the good will be higher than before the price
rise.
B) the quantity of the good consumed decreases.
C) the quantity of substitutes consumed increases.
D) the marginal utility from substitutes will be lower than before the price rise.
E) the marginal utility from the good equals its new higher price.
Prime Pharmaceuticals has developed a new asthma medicine, for which it has a patent.
An inhaler can be produced at a constant marginal cost of $2 per inhaler. The demand
curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are
shown in Figure 13.4.6. The patent gives Prime Pharmaceuticals a monopoly for its new
inhaler. If Prime Pharmaceuticals can perfectly price discriminate, then consumer
surplus is
A) zero.
B) $24 million.
C) $64 million.
D) $44 million.
E) $32 million.
A tax on labour income
A) decreases the demand for labour but does not change the real wage rate.
B) increases the demand for labour and raises the real wage rate.
C) increases the supply of labour and lowers the real wage rate.
D) decreases the supply of labour and has no influence on the real wage rate.
E) has no effect on the demand for labour.
Demand is perfectly inelastic when
A) a good has perfect substitutes.
B) an increase in supply does not change total revenue.
C) a decrease in supply decreases total revenue.
D) the price elasticity of demand is negative.
E) an increase in supply does not change the equilibrium quantity.
Suppose the multiplier is 2.5 and investment increases by $20 billion. Starting at
potential GDP, in the long run, equilibrium real GDP
A) increases by $50 billion.
B) increases by more than $50 billion.
C) decreases by less than $50 billion.
D) does not change.
E) increases by less than $50 billion.
Use the table below to answer the following questions.
Table 6.3.1
Refer to Table 6.3.1. Suppose a sales tax of $2 a unit is imposed on the good described
in the table. The new price paid by consumers is $ ________ and ________ units are
sold.
A) $6; 400
B) $7; 700
C) $7; 500
D) $6.50; 500
E) $6.50; 700