Use the figure below to answer the following questions.
Figure 19.3.5
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. The equilibrium
wage rate for low-skilled workers is
A) $3 an hour.
B) $7 an hour.
C) $6 an hour.
D) $5 an hour.
E) $4 an hour.
Refer to Figure 3.2.2. Which one of the following represents a decrease in quantity
demanded?
A) a shift from D1 to D2
B) a shift from D2 to D1
C) a movement from A to B
D) a movement from B to A
E) none of the above
The redistribution of income creates the big tradeoff between
A) receiving workers’ compensation and not receiving workers’ compensation.
B) equity and efficiency.
C) qualifying to receive employment insurance and not qualifying to receive
employment insurance.
D) earning an income and losing welfare benefits.
E) being rich and being poor.
The amount of real money people want to hold will increase if either the amount they
are spending increases or the
A) price level increases.
B) price level decreases.
C) interest rate increases.
D) interest rate decreases.
E) price of bond falls.
If the supply of a good is perfectly inelastic, then a tax on the good will be paid
A) completely by the buyers.
B) completely by the sellers.
C) equally by the buyers and sellers.
D) mostly but not completely by the buyers.
E) mostly but not completely by the sellers.
Sam buys gasoline and coffee each week. To draw his budget line for gasoline and
coffee, Sam needs to know
A) if his income is expected to rise in the future.
B) if the price of gasoline is expected to rise in the future.
C) if the price of coffee is expected to fall in the future.
D) the goods that he considers to be substitutes for gasoline and for coffee.
E) how much income he has to spend and the prices of one litre of gasoline and one cup
of coffee.
When a shortage occurs, there is a tendency for the
A) price to fall.
B) price to remain unchanged.
C) price to rise.
D) quantity demanded to increase.
E) quantity supplied to decrease.
“Intertemporal substitution” in real business cycle theory refers to the change in the
________ as a result of the change in the real interest rate.
A) personal tax rate
B) demand for loanable funds
C) supply of labour
D) consumer demand for goods
E) demand for labour
A regressive income tax
A) taxes income at an average rate that decreases with income.
B) taxes lower income people a smaller percentage than higher income people.
C) receives more from rich people, but taxes them at the same rate as poor people.
D) taxes everyone at the same rate.
E) taxes income at a marginal rate that increases with rises in income.
To increase sales from 7 units to 8 units, a single-price monopolist must drop the price
from $7 per unit to $6 per unit. What is marginal revenue in this range?
A) $48
B) $6
C) $1
D) -$1
E) $7
Using the Rule of 70, if the country of Flowerdom’s current growth rate of real GDP per
person is 10 percent a year, how long will it take the country’s real GDP per person to
double?
A) 0.7 years
B) 1 year
C) 10 years
D) 49 years
E) 7 years
Refer to Figure 27.3.1. The slope of the AE curve is
A) 0.75.
B) 0.25.
C) 0.50.
D) 0.67.
E) 1.33.
Which one of the following is likely to be the outcome of a rent ceiling imposed below
the equilibrium rent?
A) a black market for rent-controlled housing
B) long waiting lists of potential suppliers for rent-controlled housing
C) a surplus of housing
D) no search activity
E) Both A and B are correct.
Refer to Figure 29.3.1, which shows the outlays and revenues for the government of
Pianoland. An automatic increase in tax revenues would be shown as a
A) movement from left to right along the revenues curve.
B) movement from left to right along the outlays curve.
C) shift upwards in the revenues curve.
D) shift upwards in the the outlays curve.
E) both A and C
Goods that can be produced using rare productive resources have a ________ elasticity
of supply. The greater the amount of time available after a price change, the ________
is the elasticity of supply.
A) low; smaller
B) high; greater
C) high; smaller
D) low; greater
E) high; more inelastic
When a firm decides to produce more hybrid cars and fewer gas guzzlers, it is
answering the ________ question.
A) “how”
B) “what”
C) “who”
D) “where”
E) “when”
A monetary policy aimed at increasing domestic expenditure will
A) increase interest rates and decrease the exchange rate.
B) have no impact on interest rates, but increase the exchange rate.
C) have no impact on interest rates nor on the exchange rate.
D) decrease interest rates and increase the exchange rate.
E) decrease interest rates and the exchange rate.
Suppose the price of a football is $20.00 and the price of a basketball is $10.00. The
________ of a football is ________.
A) relative price; 2 basketballs per football
B) relative price; 1/2 basketball per football
C) opportunity cost; $15.00
D) opportunity cost; $10.00
E) relative price; $10
A zero percent unemployment rate
A) is one of the economic goals of the Canadian government.
B) would alleviate scarcity.
C) is not consistent with the notion of full employment.
D) was last achieved during World War II when everyone was willing to work at the
going wage rate to end the war.
E) is the only efficient unemployment rate.
Monopolistic competition might be efficient if
A) firms invested in technology that decreased the marginal cost of production.
B) more firms entered the industry.
C) firms left the industry.
D) the loss that arises because the quantity produced is less than the efficient quantity is
offset by the gain that arises from having a greater degree of product variety.
E) firms made more use of brand names.
During a period of severe inflation, which function of money is most seriously affected?
A) store of value
B) unit of account
C) medium of exchange
D) means of payment
E) barter
Refer to Figure 24.5.2. Which one of the following best describes the response to a
decrease in real GDP?
A) A movement from A to C
B) A movement from A to B
C) A movement from A to E
D) A movement from B to C
E) A movement from E to A
The gains from free trade are enjoyed by a ________ number of people and the costs of
free trade are imposed on a ________ number of people.
A) small; large
B) large; small
C) small; small
D) large; large
E) We can’t determine the relative number of people who benefit and lose from free
trade.
Fred’s income increases from $840 per week to $1,160 per week. As a result, he decides
to purchase 24 percent more bubble gum each week. The income elasticity of Fred’s
demand for bubble gum is
A) 0.32.
B) 1.33.
C) 24.
D) 0.24.
E) 0.75.
The correct ranking of the four basic market structures from low HHI
(Herfindahl-Hirschman Index) to high HHI is
A) monopolistic competition, perfect competition, oligopoly, monopoly.
B) perfect competition, oligopoly, monopolistic competition, monopoly.
C) monopoly, oligopoly, monopolistic competition, perfect competition.
D) perfect competition, monopolistic competition, oligopoly, monopoly.
E) monopoly, monopolistic competition, oligopoly, perfect competition.
Which one of the following statements is correct?
A) When marginal product is increasing, average product is decreasing.
B) When average product is less than zero, marginal product is positive.
C) When marginal product is increasing and greater than average product, average
product is increasing.
D) When marginal product is zero, total product is at its minimum.
E) When average product exceeds marginal product, marginal product is increasing.
Networks increase the price they charge cable television firms for programming. As a
result, the price of cable television rises. Choose the correct statement.
A) A movement occurs up along the demand curve for cable television and the quantity
demanded increases.
B) The demand curve for cable television shifts rightward.
C) The demand curve for cable television shifts leftward.
D) A movement occurs up along the demand curve for cable television and the quantity
demanded decreases.
E) The price of cable television does not change because subscribers are already paying
a high enough price.
Which one of the following characteristics applies to oligopolistic markets?
A) There is free entry of rival firms.
B) Firms are so large relative to the market that they do not have to consider the
behaviour of rival firms.
C) Firms are mutually independent because there are many firms in the industry.
D) Firms have to consider the behaviour of their rivals since their rivals are also large
relative to the size of the market as a whole.
E) Economic profit of each firm equals zero.
In consumer equilibrium,
A) total utility is maximized given the consumer’s income and the prices of goods.
B) marginal utility is maximized given the consumer’s income and the prices of goods.
C) marginal utility per dollar is maximized given the consumer’s income and the prices
of goods.
D) the marginal utility from each good is equal.
E) marginal utility per dollar is zero.
Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.
Suppose the Genoa City Council sets a minimum wage of $6 per hour. Teenage
unemployment is ________ hours a week.
A) 800
B) 600
C) 400
D) 200
E) zero
The steeper the slope of the total product curve,
A) the smaller the average product.
B) the smaller the marginal product.
C) the greater the total cost.
D) the more efficient the technology employed.
E) the greater the marginal product.
Which of the following describes comparative advantage?
A) Firm A can produce a good at a cost of $3 a unit, and Firm B can produce the same
good at a cost of $4 a unit.
B) Jane can type 50 words per minute, and Joe can type 60 words per minute.
C) Firm A can produce 4 boxes of cereal in a day, and Firm B can produce 5 boxes of
cereal in a day.
D) To produce a basket of wheat, Farmer John must give up growing 2 baskets of corn,
whereas Farmer Ben must give up 3 baskets of corn to produce a basket of wheat.
E) Bill can read one book in a week, but it takes Jeannie 10 days to read the same book.