When price rises, the substitution effect
A) always increases consumption.
B) increases consumption for normal goods only.
C) decreases consumption for normal goods only.
D) decreases consumption for inferior goods only.
E) does none of the above.
Autoworkers agree to a cut in the nominal wage rate. This event ________ short-run
aggregate supply and ________ long-run aggregate supply.
A) does not change; does not change
B) decreases; does not change;
C) increases; does not change;
D) increases; increases
E) decreases; does not change
Table 13.4.1 shows the demand schedule faced by a perfect price-discriminating
monopoly. If 3 units are sold, total revenue is
A) $15.00.
B) $16.00.
C) $18.00.
D) $19.50.
E) $5.00.
Refer to the figure below to answer the following question.
Figure 23.2.1
Refer to Figure 23.2.1. In Figure 23.2.1, the economy is at point A on the initial demand
for loanable funds curve DLF0. What happens if the real interest rate rises?
A) There is a movement to a point such as B on the demand for loanable funds curve
DLF0.
B) The demand for loanable funds curve shifts rightward to curve DLF2.
C) The demand for loanable funds curve shifts leftward to curve DLF1.
D) Either A or B can occur.
E) Either A or C can occur.
If a country’s currency appreciates and its official holdings of foreign currency increase.
The central bank is ________ foreign currency to limit the appreciation, and the official
settlements account balance is ________.
A) buying; negative
B) selling negative
C) buying; positive
D) selling; positive
E) buying; zero
The Canadian price level rises. What is the effect on the quantity of real GDP demanded
or aggregate demand in Canada?
A) The quantity of Canadian real GDP demanded increases.
B) The quantity of Canadian real GDP demanded decreases.
C) Canadian aggregate demand increases.
D) Canadian aggregate demand decreases.
E) There is no change to either the quantity of real GDP demanded or to aggregate
demand.
Suppose a gift shop in Corner Brook, Newfoundland, hires workers to personalize
ornaments for Christmas. The store sells the personalized ornaments for $6 each. The
value of marginal product of this store’s fourth worker is $60. The marginal product of
the fourth worker is
A) 6 ornaments.
B) 10 ornaments.
C) 60 ornaments.
D) 360 ornaments.
E) 90 ornaments.
A supply curve is
A) the same as a production possibilities frontier.
B) a marginal social benefit curve.
C) a marginal benefit curve.
D) a marginal cost curve.
E) a downward-sloping curve.
In which market would you find mortgage-backed securities?
A) stock market
B) bond market
C) housing market
D) capital market
E) loan market
Refer to Figure 20.3.2. In the figure, a trough is at point ________ and a peak is at point
________.
A) A; B
B) B; C
C) B; A
D) D; C
E) C; D
Which of the following decreases the supply of popcorn?
A) a decrease in the price of popcorn
B) an increase in the price of popcorn
C) a technological advance in the production of popcorn
D) a decrease in the demand for popcorn
E) a decrease in the number of popcorn producers
Refer to Table 8.1.1. The value of C is
A) 0.
B) 13.
C) 17.
D) 50.
E) 3.
Which of the following is a positive statement?
A) Low rents restrict the supply of housing.
B) Low rents are better for a city than high rents.
C) Housing costs too much.
D) Owners of apartment buildings ought to be free to charge whatever rent they want.
E) Government should control the rents that apartment owners charge.
If price elasticity of demand is zero, then as the price falls,
A) total revenue does not change.
B) quantity demanded does not change.
C) quantity demanded falls to zero.
D) total revenue increases.
E) quantity demanded increases.
Suppose that the world price of eggs is $1 a dozen, Canada does not trade
internationally, and the equilibrium price of eggs in Canada is $3 a dozen. Then Canada
begins to trade internationally.
The price of eggs in Canada ________. Canadian consumers buy ________ eggs.
A) rises; more
B) rises; less
C) falls; more
D) falls; less
E) rises; the same quantity of
The key difference between new classical cycle theory and new Keynesian cycle theory
is that the new classical cycle theory believes that ________ while the new Keynesian
cycle theory believes that ________.
A) expected changes in aggregate demand change real GDP; expected changes in
aggregate demand do not change real GDP
B) only unexpected changes in aggregate demand change real GDP; only expected
changes in aggregate demand change real GDP
C) only unexpected changes in aggregate demand change real GDP; both expected and
unexpected changes in aggregate demand change real GDP
D) the short-run aggregate supply curve is horizontal; the short-run aggregate supply
curve is vertical.
E) expected and unexpected changes in aggregate demand change real GDP; only
changes in labour productivity change aggregate demand
Marginal cost
A) is constantly increasing, but as output increases it increases by smaller and smaller
amounts.
B) decreases at low outputs until it reaches its minimum value, then remains constant.
C) decreases at low outputs and increases at high outputs.
D) increases at low outputs until it reaches its maximum value, then remains constant.
E) is constantly decreasing, but as output increases it decreases by smaller and smaller
amounts.
Consider a country that sells some of its goods as exports. Who does NOT benefit?
A) domestic consumers
B) domestic producers
C) workers in the industry
D) foreign consumers
E) Everyone benefits.
Refer to Fact 14.3.2. Having a brand name helps Tommy Hilfiger increase its economic
profit because
A) the goal of a brand name is to encourage people to buy just one good. After the
initial purchases, Tommy Hilfiger can decrease quality and produce goods at a lower
average total cost, which increases economic profit.
B) in every type of market, consumers are most comfortable when buying from a firm
with a well-known brand name. And the greater the number of consumers, the greater is
the economic profit.
C) a brand name provides an incentive to achieve high and consistent quality, and
consumers will purchase goods from Tommy Hilfiger rather than from an unknown
producer because they know what to expect from Tommy Hilfiger.
D) having a brand name usually leads to a monopoly.
E) none of the above
Refer to Table 3.5.2. If the price is set at $1.30 per cup, there is ________ leading to a
price ________.
A) a shortage; rise
B) a shortage; fall
C) a surplus; rise
D) a surplus; fall
E) an equilibrium; rise
Refer to Figure 27.5.2. The equation of the saving function that corresponds to the
consumption function in this figure is
A) S = 200 + 0.8YD.
B) S = -200 + 0.8YD.
C) S = 200 + 0.75YD.
D) S = -200 + 0.75YD.
E) S = -200 + 0.25YD.
Use the table below to answer the following questions.
Table 6.4.1
Refer to Table 6.4.1. The table shows the demand and supply schedules for rice. The
market for rice is in equilibrium. With a subsidy of $0.30 a box, the price of a box of
rice is ________, the marginal cost of producing rice is ________ a box, and the
quantity of rice produced is ________ boxes.
A) $1.40; $1.40; 2,500
B) $1.20; $1.50; 2,500
C) $1.20; $1.50; 3,000
D) $1.50; $1.20; 3,000
E) $1.50; $1.20; 2,500
Marginal cost
A) is always less than price.
B) can be negative.
C) is the minimum price a producer must receive to induce him to offer one more unit
of a good or service for sale.
D) is greater than price.
E) decreases as more of a good or service is produced.
Which one of the following would result in a movement from point A to point B in
Figure 3.2.1?
A) a fall in the price of apples
B) a rise in the price of oranges
C) an increase in population size
D) public concern about chemicals sprayed on apples
E) a rise in the price of bananas
In Figure 7.2.1, international trade ________ consumer surplus in Canada by ________.
A) increases; $320 million
B) decreases; $192 million
C) increases; $192 million
D) decreases; $320 million
E) increases; $576 million
For a firm in monopolistic competition, the marginal cost curve intersects the average
total cost curve
A) at the minimum average total cost.
B) to the left of the minimum average total cost.
C) to the right of the minimum average total cost.
D) at no point.
E) at the same quantity at which the marginal cost curve intersects the marginal revenue
curve.
Use the figure below to answer the following question.
Figure 11.4.3
Refer to Figure 11.4.3 which shows a firm’s long-run average total cost curve. An
increase in production from Q1 to Q2 sweaters per day produces
A) the minimum efficient scale.
B) economies of scale.
C) diseconomies of scale.
D) constant total costs.
E) constant returns to scale.
Private provision of public goods
A) fails because the private firm will always go broke.
B) succeeds because public provision is often more costly.
C) succeeds if consumers expect to obtain a benefit from the consumption of the public
good.
D) fails because of the free-rider problem.
E) fails because private firms generally charge higher prices than public firms, and
therefore lose customers.
A change in the exchange rate, other things remaining the same, brings a
A) change in the quantity of Canadian dollars demanded and a movement along the
demand curve.
B) change in the quantity of Canadian dollars demanded with no movement along the
demand curve.
C) shift of the demand curve for Canadian dollars with a movement along the demand
curve.
D) change in the quantity of Canadian dollars demanded and a shift of the demand
curve.
E) shift of the demand curve for Canadian dollars with no movement along the demand
curve.
Refer to Figure 19.1.1. The middle 20 percent of households receive what share of total
income?
A) 20 percent
B) 25 percent
C) 35 percent
D) 15 percent
E) 60 percent
Your city council is contemplating upgrading its traffic control system and the council
believes that the bigger the computer it installs, the better job it can do. Elected officials
want to install the scale of the system that will win the most votes. The city bureaucrats
want to maximize the budget. Suppose that you are an economist and your job is to
calculate the scale of the system that uses resources efficiently. Public choice theory
predicts that the quantity chosen will result in ________. As an informed voter, you can
attempt to influence the choice of the correct system by encouraging other voters to
________.
A) overprovision that maximizes the budget of the bureaucrats; vote only for officials
that will provide the smaller efficient quantity
B) overprovision that maximizes the budget of the bureaucrats; increase their income
elasticity of demand for the new traffic control system
C) the efficient quantity; decrease their income elasticity of demand for the new traffic
control system
D) the efficient quantity; increase their income elasticity of demand for the new traffic
control system
E) overprovision that minimizes the income elasticity of demand of bureaucrats;
decrease their elasticity of demand for the new traffic control system