Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and
Y.
Refer to Table 2.1.1. What does point C mean?
A) If 8 units of X are produced, then at least 28 units of Y can be produced.
B) If 8 units of X are produced, then at most 28 units of Y can be produced.
C) If 28 units of Y are produced, then more than 8 units of X can be produced.
D) If 8 units of X are produced, then only 36 units of Y can be produced.
E) There is unemployment at this point.
Which of the following is a normative statement?
A) Next year’s inflation rate will be under 4 percent.
B) Consumers will buy more gasoline over the December holiday period than they
bought during the summer holiday period even if the price of gas is 10 cents a litre
higher than it was during the summer.
C) Government cuts in welfare spending impose an unfair hardship on the poor.
D) A wheat shortage or surplus is always the result of federal government policies.
E) Hurricane Irene caused more damage in the United States than Hurricane Katrina.
Suppose that you took out a $1,000 loan in January and were required to pay $75 in
annual interest. During the year, inflation was 6 percent. Which of the following
statements is correct?
A) The nominal interest rate is 7.5 percent and the real interest rate is 1.5 percent.
B) The nominal interest rate is 7.5 percent and the real interest rate is 13.5 percent.
C) The real interest rate is 7.5 percent and the nominal interest rate is 1.5 percent.
D) The real interest rate is 6 percent and the nominal interest rate is 7.5 percent.
E) The real interest rate is 6 percent and the nominal interest rate is -1.5 percent.
A firm with one or more owners of limited liability is
A) a sole proprietorship.
B) a partnership.
C) a conglomerate.
D) a corporation.
E) a public company.
Use the figure below to answer the following question.
Figure 2.1.4
Refer to the production possibilities frontier in Figure 2.1.4. Which point is
unattainable?
A) A
B) B
C) C
D) D
E) E
Why might only a few firms dominate an oligopolistic industry?
A) A natural or legal barrier to entry exists.
B) Perfectly elastic demand makes small-scale operation economically inefficient.
C) Decreasing returns to scale may make small-scale firms more advantageous.
D) Inelastic market demand leads to the domination of the industry by a few firms.
E) It is due to the outcome of the prisoners’ dilemma.
Use the table below to answer the following questions.
Table 16.3.1
Refer to Table 16.3.1. The table shows marginal private benefit and the marginal social
benefit from the consumption of chemical fertilizer and the marginal social cost of the
production of fertilizer. Choose the correct statement.
A) The marginal external benefit is $20 per unit.
B) The marginal external cost is $10 per unit.
C) There are no externalities associated with this market.
D) The marginal external benefit is $10 per unit.
E) There is not enough information provided to determine whether or not there are
externalities.
The employment-to-population ratio is
A) the percentage of the working-age population who are employed.
B) the percentage of the labour force who are unemployed or employed.
C) the percentage of the working-age population who are unemployed or employed.
D) the percentage of the labour force who are employed.
E) none of the above
The Canadian exchange rate depreciates if
A) prices increase in the United States and other countries but remain constant in
Canada.
B) the Canadian interest rate differential rises.
C) the Canadian interest rate differential falls.
D) the demand for Canada’s exports increases.
E) Canada’s demand for imports decreases.
In an economy in 2011, 3 million people had full-time managerial and professional jobs
that paid an average of $800 a week. At the same time, 1 million people had full-time
sales positions that paid an average of $530 a week. Managers and professionals are
paid more than salespeople because
A) the supply curve of managers and professionals lies above that of salespeople.
B) the demand curve for managers and professionals lies above that of salespeople.
C) managers and professionals have a a higher value of marginal product.
D) the typical manager or professional has incurred a higher cost of education.
E) all of the above
Consider a perfectly competitive market. In the short run, if demand increases due to a
technological advance, the equilibrium price
A) remains constant and the equilibrium quantity increases.
B) remains constant and the equilibrium quantity decreases.
C) rises and the equilibrium quantity increases.
D) falls and the equilibrium quantity decreases.
E) rises and the equilibrium quantity remains the same.
A tariff ________ a deadweight loss and an import quota ________ a deadweight loss.
A) creates; creates
B) does not create; creates
C) creates; does not create
D) does not create; does not create
E) sometimes creates; always creates
If the price is above the equilibrium price, then
A) none of the good will be sold.
B) the price must rise further to reach the new market equilibrium.
C) a surplus exists.
D) a shortage exists.
E) price will not change; producers will cut back production until the market is in
equilibrium.
Information technologies are ________ for low-skilled labour and ________ for
high-skilled labour.
A) substitutes; complements
B) substitutes; substitutes
C) complements; complements
D) complements; substitutes
E) normal goods; inferior goods
Refer to Fact 31.3.2. Canadian gains from trade will ________ and Australian gains
from trade will ________.
A) increase; decrease
B) decrease; decrease
C) decrease; increase
D) increase; increase
E) not change; not change
Suppose the Bank of Canada uses the Taylor rule to set the overnight loans rate. If the
inflation rate is 3 percent, and the output gap is 0 percent, then the Taylor rule sets the
overnight rate equal to
A) 5 percent.
B) 5.5 percent.
C) 0 percent.
D) 2.5 percent.
E) 6 percent.
Use the figure below to answer the following question.
Figure 1A.3.6
What is the slope of the line in Figure A1.3.6?
A) 2
B) 1/2.
C) 3
D) 1/3
E) -3
In which of the following cases can the tragedy of the commons occur?
I. Cattle grazing on private ranches.
II. Catching lobsters off the coast of Florida.
III. Raising salmon on salmon farms.
IV. Using legal services provided by the courts.
A) I only
B) II only
C) II and III only
D) I and IV only
E) I and II only
Refer to Figure 19.3.5. This figure shows the labour supply curves and the value of
marginal product curves for high-skilled and low-skilled workers. If the labour markets
are competitive, then for a 40-hour work week, high-skilled workers must be paid
A) an extra $3 to compensate for the cost of acquiring their human capital and for their
increased productivity.
B) an extra $20 to compensate for the cost of acquiring their human capital and for their
increased productivity.
C) an extra $120 to compensate for the cost of acquiring their human capital and for
their increased productivity.
D) an extra $300 to compensate for the cost of acquiring their human capital and for
their enhanced productivity.
E) an extra $180 to compensate for the cost of acquiring their human capital and for
their increased productivity.
Use the figure below to answer the following questions.
Figure 14.2.5
Refer to Figure 14.2.5 The figure shows the situation facing Smart Digit, Inc., a firm in
monopolistic competition that produces calculators. What is the firm’s economic profit
per day?
A) zero
B) between $1 and $700
C) between $701 and $900
D) more than $901
E) less than zero
Measured wealth distributions that do not consider the distribution of human capital
A) overstate the equality of the income distribution.
B) understate the inequality of the income distribution.
C) are correct since human capital is difficult to accurately measure.
D) overstate the inequality of the wealth distribution.
E) are correct because the distribution of human capital is about the same as the
distribution of non-human wealth.
To describe preferences, economists use the concept of
A) opportunity cost.
B) scarcity.
C) marginal benefit.
D) marginal cost.
E) price.
The government department charged with monitoring and protecting the environment is
A) Protection Canada.
B) Revenue Canada.
C) Environment Canada.
D) Industry Canada.
E) the EPA.
Betty and Anna work at the same office in Calgary. They both must attend a meeting in
Edmonton, and they have decided to drive to the meeting together. Betty is a cigarette
smoker and her marginal benefit from smoking one package of cigarettes a day is $40.
Cigarettes are $6 a pack. Anna dislikes cigarette smoke and her marginal benefit from a
smoke-free environment is $50 a day. If Betty drives her car with Anna as a passenger,
________. If Anna drives her car with Betty as a passenger, ________.
A) Anna will offer Betty an amount between $34 and $50 and Betty will not smoke;
Betty does not smoke because Betty will not offer Anna a high enough price to be
allowed to smoke.
B) Betty will smoke because she owns the property rights in the car; Betty does not
smoke because Betty will not offer Anna a high enough price to be allowed to smoke.
C) Betty will smoke because she owns the property rights in the car; Betty will offer
Anna $51 and Betty will smoke.
D) Anna will offer Betty an amount between $34 and $50 and Betty will not smoke;
Betty will offer Anna $51 and Betty will smoke.
E) Betty will smoke because she is the car owner; Betty will offer Anna an amount
between $34 and $50 and Betty will smoke.
If enforcement of the law is aimed at buyers of an illegal good, the result will be
A) an increase in the supply of the good.
B) a decrease in the supply of the good.
C) a decrease in the demand for the good.
D) a rise in the price of the good.
E) no change in the equilibrium quantity.
Refer to Figure 18.3.3. Suppose the government passes a minimum wage law that
prohibits anyone from hiring labour at less than $8 per hour. The monopsonist will hire
A) 250 hours of labour.
B) 300 hours of labour.
C) 350 hours of labour.
D) 400 hours of labour.
E) 450 hours of labour.
Suppose the interest rate in Canada falls and the interest rate in Japan remains the same.
Interest rate parity implies that given equal risk,
A) the inflation rate is higher in Japan.
B) Japanese financial investments are more profitable.
C) the yen is expected to depreciate against the dollar.
D) the yen is expected to appreciate against the dollar.
E) Canadian financial investments are less profitable.
The branch of economics that studies the performance of the national economy and the
global economy is
A) macroeconomics.
B) microeconomics.
C) Keynesian economics.
D) positive economics.
E) normative economics.
In the short run, the market supply of land is
A) relatively elastic.
B) relatively inelastic.
C) perfectly elastic.
D) perfectly inelastic.
E) either elastic or inelastic depending on the productivity of the land.
Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand
curve and S is the domestic supply curve. The world price is $20 per shirt.
Figure 31.1.1
In Figure 31.1.1, with international trade Canadians buy ________ million shirts per
year.
A) 48
B) 32
C) 16
D) 24
E) 56
Refer to Table 20.2.1. From the data in the table, what is total income in Eastland?
A) $1,120
B) $1,180
C) $1,360
D) $1,420
E) $1,280