Behavioural economics
A) studies the activity of the human brain when a person makes an economic decision.
B) studies psychology by using the economist’s toolbox.
C) studies the ways in which limits on the human brain’s ability to compute and
implement rational decisions influences economic behaviour.
D) was used extensively in the development of marginal utility theory.
E) all of the above
Cable television and air traffic control are similar to each other because both of them
are
A) excludable.
B) nonexcludable.
C) nonrival.
D) rival.
E) private services.
Compared to the situation before international trade, after Canada exports a good,
production in Canada ________ and consumption in Canada ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change
A textbook publisher is in monopolistic competition. If the firm spends nothing on
advertising, it can sell no books at $100 a book, but for each $10 cut in price, the
quantity of books it can sell increases by 20 books a day. The firm’s total fixed cost is
$2,400 a day. Its average variable cost and marginal cost is a constant $20 per book. If
the firm spends $1,200 a day on advertising, it can increase the quantity of books sold
at each price by 50 percent. If the publisher advertises, its profit maximizing level of
output is
A) 120 books per day.
B) 80 books per day.
C) 160 books per day.
D) 100 books per day.
E) 240 books per day.
Suppose that the natural unemployment rate is 4.5 percent and the actual unemployment
rate is 3.5 percent. Then cyclical unemployment is
A) 1 percent.
B) -1 percent.
C) 8 percent.
D) 0 percent.
E) 3.5 percent.
If good A is a substitute for good B, then the cross elasticity of demand is
A) 12.
B) infinity.
C) positive.
D) zero.
E) less than zero.
When a farmer decides to harvest tomatoes using machines instead of migrant workers,
the farmer is answering the ________ question.
A) “what”
B) “how”
C) “who”
D) “where”
E) “when”
A debtor nation is one that during its entire history has
A) lent more to the rest of the world than it has borrowed from it.
B) borrowed more from the rest of the world than it has lent to it.
C) invested more in the rest of the world than has been invested in it.
D) a public sector deficit that is larger than its net exports.
E) had a government debt.
There have been severe problems in the Atlantic fishing industry, with large falls in the
fish stocks. As a result,
A) the price of fish will fall.
B) the quantity of fish sold will increase as fishermen will catch more to make up for
the shortage.
C) the equilibrium price and the equilibrium quantity will fall or rise depending on how
large the fall in fish stocks.
D) both the equilibrium price and the equilibrium quantity will rise, as consumers will
desire even more fish, because they are scarce.
E) the fall in the fish stocks will lead to a shortage, a rise in the equilibrium price and a
decrease in the equilibrium quantity.
Guy has an income (Y) of $50 with which he can purchase DVDs (D) at $10 each and
haircuts (H) at $20 each. Which one of the following represents Guy’s budget line?
A) Y = 10QD – 20QH
B) 50 = QD + QH
C) Y = 50 + QD + QH
D) 20Y = QD + 10QH
E) 50 = 10QD + 20QH
The symmetry principle is based on
A) the idea that income should be redistributed from the rich to the poor.
B) the idea that people in similar situations should be treated similarly.
C) the fact that taxes create a deadweight loss.
D) the idea that markets operate fairly.
E) the idea that there is symmetry between buyers and sellers in a market.
Refer to Figure 23.2.5. In Figure 23.2.5, the initial supply of loanable funds curve is
SLF0 and the initial demand for loanable funds curve is DLF0. An increase in the
expected profit
A) shifts the supply of loanable funds curve rightward to curve SLF1 and does not shift
the demand for loanable funds curve.
B) shifts the supply of loanable funds curve rightward to curve SLF1, and shifts the
demand for loanable funds curve rightward to curve DLF1.
C) shifts the demand for loanable funds curve rightward to curve DLF1 and does not
shift the supply of loanable funds curve.
D) has no effect on either the demand for loanable funds curve or the supply of loanable
funds curve.
E) increases the inflation rate.
Given Figure 3.2.1, under what condition are consumers willing to buy more than 9,000
apples per week?
A) if the price is above $1
B) if the price is between $1 and $0.50
C) if the price is below $0.50
D) if the price is between $1 and $1.50
E) if the price is $0.75
When the efficient quantity is produced
A) total consumer surplus is zero.
B) total producer surplus is zero.
C) consumer surplus exceeds producer surplus by the greatest possible amount.
D) producer surplus exceeds consumer surplus by the greatest possible amount.
E) the sum of consumer surplus and producer surplus is maximized.
New Maple Sap Method
With the new way to tap maple trees, farmers could produce 10 times as much maple
syrup per acre.
The new method of tapping maple trees ________ the supply of maple syrup and
________ the quantity supplied of maple syrup.
A) increases; does not change
B) increases; increases
C) does not change; increases
D) does not change; does not change
E) does not change; decreases
A common resource is
A) rival and either excludable or nonexcludable.
B) excludable and either rival or nonrival.
C) rival and excludable.
D) rival and nonexcludable.
E) nonexcludable and either rival or nonrival.
Which curve or curves in Figure 1A.2.4 shows a negative relationship between
unemployment and inflation?
A) A
B) A and B
C) B, C, and D
D) A and D
E) B and C
The higher and more unpredictable the changes in a monetary unit, the
A) more likely it will be used as a store of value.
B) less likely it will be used as a store of value.
C) more confidence people will have in holding it for the future.
D) less likely contracts will be written to counterbalance the uncertainty of its value in
the future.
E) more likely it will be used as a standard of deferred payment.
Contests do a good job in resource allocation
A) under any circumstances.
B) when the efforts of the players are easy to monitor and reward directly.
C) when the efforts of the players are hard to monitor and reward directly.
D) when the first-come, first-served allocation method has failed.
E) only under a command system.
Rent seeking is one reason why countries choose to
A) export and import the same goods.
B) work for freer trade.
C) follow the theory of comparative advantage.
D) hire foreign labour.
E) restrict trade.
Refer to Table 26.3.3. With no interference from the central bank or the government, the
A) money wage rate will eventually rise.
B) money wage rate will eventually fall.
C) short-run aggregate supply curve will shift leftward.
D) long-run aggregate supply curve will shift leftward.
E) aggregate demand curve will shift rightward.
Use the table below to answer the following questions.
Table 21.3.1
Suppose a simple economy produces three goods only.
The price and output data for some selected years are shown below.
Refer to Table 21.3.1. The reference base period is 2002. The CPI in 2014 is
A) 1,340.
B) 158.
C) 100.
D) 96.
E) 63.
When the unemployment rate ________ the natural unemployment rate, real GDP
________ potential GDP.
A) equals; is less than
B) is greater than; is less than
C) is less than; is less than
D) equals; is greater than
E) is greater than; equals
Use the table below to answer the following questions.
Table 19.4.1
In Table 19.4.1, which tax plan is proportional?
A) Plan A
B) Plan B
C) Plan C
D) Plan D
E) impossible to calculate without additional information
Suppose that the following situation exists in the foreign exchange market: 1 Canadian
dollar buys 7.2 Chinese yuan and 1 Canadian dollar buys 5.77 South African rand. How
many yuan will one rand buy?
A) 0.80 yuan
B) 1.25 yuan
C) 7.20 yuan
D) 5.77 yuan
E) 1.43 yuan
Refer to Fact 13.1.1. The firm described in ________ can price discriminate if it can
________.
A) statements 2, 3, 6, and 7; eliminate the barriers to entry
B) statements 2, 3, 6, and 7; distinguish between different classes of consumers
C) statements 2 and 3; eliminate the current barriers to entry
D) statement 1; increase advertising
E) statement 1; decrease its costs
A firm can sell its output for $40 per unit. When it increases its labour force from 4
workers to 5 workers, its output increases from 15 to 17 units. The value of marginal
product of the 5th worker is
A) $80.
B) $40.
C) $600.
D) $680.
E) $136.
One reason that international trade is restricted is that
A) the individual gain to parties who benefit from the protection will be much larger
than the individual loss to parties who lose.
B) the government completely pays the losers from international trade for their losses.
C) protectionism benefits consumers.
D) the government cannot measure the cost of protectionism.
E) tariff revenue raises more income than income taxes in industrial countries.
Which of the following newspaper headlines concerns a macroeconomic issue?
A) Why are people buying more SUVs and fewer minivans?
B) How would a tax on e-commerce affect chapters.indigo.ca?
C) How would an unexpected freeze in Oxford, Nova Scotia change the price of
blueberries in the Maritimes?
D) Why is Japan’s economy stagnant?
E) Why do grain producers purchase less pesticides?
Setting a production quota does not always achieve the efficient use of a common
resource because
A) marginal cost differs for each producer and it is in everyone’s self-interest to cheat
and produce more than the assigned quota.
B) the marginal private benefit from a production quota is zero.
C) marginal cost differs for each producer and the marginal social benefit from a
production quota is zero.
D) a production quota does not totally eliminate the problem of free-ridership of a
common resource.
E) the Coase theorem is invalid in this market.
According to the marginal utility theory, consumers
A) maximize utility and minimize marginal utility.
B) maximize utility and equalize marginal utility per dollar across all goods.
C) save part of their income for future consumption.
D) maximize utility by spending the most on the least expensive good.
E) maximize utility by spending the least on the least expensive good.
Refer to Figure 19.3.1. At the equilibrium wage rates,
A) more high-skilled workers will be hired than low-skilled workers.
B) more low-skilled workers will be hired than high-skilled workers.
C) the horizontal distance between the two demand curves is the compensation for the
cost of acquiring human capital.
D) the horizontal distance between the two supply curves is the value of marginal
product of skill.
E) value of marginal product is maximized.
The low-income cutoff level is
A) a level of housing and food provided by the government.
B) a fixed real income used to determine whether or not a household may qualify for
welfare.
C) the income level below which a family normally spends 73.6 percent or more of its
income on food, shelter, and clothing.
D) the income level below which a family normally spends 63.6 percent or more of its
income on food, shelter, and clothing.
E) a level of income below which starvation occurs.
The current account records
A) net exports, net interest income and net transfers.
B) net value of Canadian investments and foreign investments.
C) current government expenditure.
D) current consumption expenditure.
E) current investment.