Refer to Figure 3.5.2, which represents the market for tacos. A new scientific study
reveals that tacos cause bad breath. Simultaneously, the cost of producing tacos
decreases. What is the new equilibrium, ceteris paribus?
A) 2
B) 3
C) 9
D) 4
E) 7
Refer to Figure 14.2.5. The figure shows the situation facing Smart Digit, Inc., a firm in
monopolistic competition that produces calculators. The firm’s markup is ________ per
calculator.
A) zero
B) $2
C) $4
D) $6
E) $10
The goods and services we sell to people in other countries are our
A) tariffs.
B) quotas.
C) exports.
D) imports.
E) investment goods and services.
Use the information below to answer the following questions.
Fact 8.4.1 Eating Away the Innings in Baseball’s Cheap Seats
Baseball and gluttony, two of America’s favourite pastimes, are merging with Major
League Baseball stadiums offering all-you-can-eat seats. Some fans try to “set personal
records” during their first game, but by the third time in such seats they eat normally.
Refer to Fact 8.4.1. Setting personal records for eating can be reconciled with marginal
utility theory
A) only if there is a money price assigned to the record.
B) only if the price of ballpark food decreases for each subsequent purchase made by a
fan in the all-you-can-eat seats.
C) if we also assign utility values to gaining the record.
D) if we eliminate the principle of diminishing marginal utility.
E) by considering the paradox of value.
An indifference curve slopes downward because
A) it shows that people are only happy when they increase consumption of all goods.
B) it shows that when a person gives up some of good X they must increase their
consumption of good Y to remain indifferent.
C) it shows that when a person gives up some of good X they can afford to increase
their consumption of good Y.
D) it is a demand curve without prices.
E) the quantity demanded increases as the price falls.
Refer to the table below to answer the following questions.
Table 31.1.1
Glazeland’s Doughnut Market
Table 31.1.1 shows Glazeland’s doughnut market before international trade. Glazeland
opens up to international trade. If the world price is $0.60, then Glazeland will produce
________ doughnuts and will ________ doughnuts.
A) 2 million; import 3 million
B) 4 million; import 1 million
C) 4 million; export 1 million
D) 5 million; import 3 million
E) 5 million; export 3 million
Choose the statement that is incorrect.
A) Free trade destroys some jobs.
B) Imports create jobs for retailers that sell imported goods and for firms that service
those goods.
C) Imports create income in the rest of the world, some of which is spent on
Canadian-made goods and services.
D) Free trade brings about a global rationalization of labour.
E) Protection saves jobs at a low cost.
Which of the following achieves the efficient use of a common resource?
A) property rights, production quotas, and individual transferable quotas
B) property rights, individual transferable quotas, and subsidies
C) property rights, production quotas, and subsidies
D) individual transferable quotas and copyrights
E) production quotas, individual transferable quotas, and copyrights
The fraction of a change in disposable income spent on consumption is the
A) marginal propensity to consume.
B) marginal propensity to save.
C) marginal propensity to dispose.
D) marginal tax rate.
E) consumption function.
Refer to Fact 12.4.1. Suppose the price of fiddleheads is expected to stay at $10 per bag
for the foreseeable future, and Franklin’s production and cost figures are expected to
stay the same. His total fixed cost consists entirely of rent on land, and his five-year
lease on the land runs out at the end of the month. Should Franklin renew the lease?
A) Yes, because total revenue will still cover total fixed cost.
B) Yes, because total revenue will still cover total variable cost and a portion of total
fixed cost.
C) No, because total revenue must cover all costs for factors of production to remain in
fiddlehead farming in the long run.
D) No, because in the long run, zero economic profit is a signal to move factors of
production out of fiddlehead farming.
E) Insufficient information to answer.
When Jitters Coffee Company, Inc., can lower the cost of packaging a kilogram of
coffee by doubling the quantity packaged each day, it is achieving
A) economies of scope.
B) lower transactions costs
C) economies of scale.
D) efficient team production.
E) all of the above
If the government imposes a maximum rent for housing that is above the equilibrium
price, then you predict that
A) the law will have no effect in the market for housing.
B) the law will generate a shortage of housing.
C) the law will create a surplus of housing.
D) the demand curve for housing shifts rightward.
E) the supply curve of housing shifts leftward.
If MC is rising then ATC must be
A) rising.
B) falling.
C) above MC.
D) below MC.
E) none of the above
A decrease in quantity demanded is represented by a
A) rightward shift of the supply curve.
B) rightward shift of the demand curve.
C) leftward shift of the demand curve.
D) movement upward and to the left along the demand curve.
E) movement downward and to the right along the demand curve.
Refer to Table 3.4.1. The equilibrium quantity is 420 units if
A) the price is fixed at $3 a unit.
B) the price is fixed at $4 a unit.
C) the price is fixed at $5 a unit.
D) Both A and C are correct.
E) none of the above
Use the figure below to answer the following question.
Figure 19.3.3
Refer to Figure 19.3.3. At any given level of employment for high-skilled and
low-skilled workers, the vertical distance between the two supply curves
A) disappears if there is free entry into the skill market.
B) disappears if there is equal pay for work of equal value.
C) is created by discrimination against low-skilled workers.
D) is the compensation required for the cost of acquiring human capital.
E) equals the value of marginal product of skill.
Refer to Figure 5.3.2. If the level of output is 150 units, the producer surplus is area
A) BCF.
B) ACG.
C) DCE.
D) ACH.
E) HCG.
In the short run, lowering the overnight loans rate shifts the ________ curve ________
and ________ real GDP.
A) aggregate demand; leftward; decreases
B) aggregate demand; rightward; increases
C) short-run aggregate supply; rightward; increases
D) aggregate demand; leftward; increases
E) long-run aggregate supply; rightward; increases
The long run refers to a time period
A) of one year or less.
B) in which all factors of production are variable.
C) in which labour is variable, but plant is fixed.
D) when there is at least one variable factor of production.
E) of at least 5 years.
Refer to Figure 28.2.3. Assume that the figure illustrates an economy initially in
equilibrium at the intersection of the SAS0 curve and the AD0 curve. If the aggregate
demand curve is expected to shift to AD1 but remains at AD0, the new equilibrium real
GDP is ________ and the new equilibrium price level is ________.
A) $380 billion; 100
B) $500 billion; 150
C) $500 billion; 100
D) $620 billion; 125
E) $380 billion; 125
In the long run, a firm can vary
A) all of its factors of production.
B) labour but not capital.
C) capital but not labour.
D) labour and capital but not land.
E) labour, capital and entrepreneurship but not land.
Use the table below to answer the following questions.
Table 6.2.2
Refer to Table 6.2.2. What is the level of unemployment in millions of hours if the
minimum wage is set at $3 per hour?
A) 70
B) 40
C) 30
D) 20
E) zero
An import quota directly restricts ________ and are designed to protect domestic
________.
A) exports; consumers only
B) exports; producers only
C) imports; consumers only
D) imports; producers only
E) imports; producers and consumers
To graph a relationship among three variables we
A) hold two variables constant to graph the third variable.
B) hold one variable constant and graph the relationship between the other two
variables.
C) graph each of the three variables using a separate set of axes.
D) must be able to draw in three dimensions.
E) must be able to allow all three variables to vary simultaneously in one graph.
Which curve or curves in Figure 1A.2.4 shows no relationship between unemployment
and inflation?
A) A
B) A and B
C) B, C, and D
D) A and C
E) B and D
For the aggregate economy, income equals
A) expenditure, but these are not generally equal to GDP.
B) GDP, but expenditure is generally less than these.
C) expenditure equals GDP.
D) expenditure equals GDP only if there is no government or foreign sectors.
E) expenditure equals GDP only if there is no depreciation.
If the cross elasticity of demand between goods A and B is negative, then
A) the demands for A and B are both price elastic.
B) the demands for A and B are both price inelastic.
C) A and B are complements.
D) A and B are substitutes.
E) A and B are independent goods.
Choose the statement that is incorrect.
A) A large current account deficit emerged in Canada during the 1980s.
B) Canada’s current account moved into a surplus in the 2000s.
C) Canada’s current account moved into a deficit after 2008.
D) Canada’s capital and financial account balance is almost a mirror image of the
current account balance.
E) Canada’s official settlements balance is very large in comparison with the current
account and the capital and financial account.
Refer to Figure 26.2.1. Which graph illustrates what happens when the quantity of
money increases?
A) (a) only
B) (b) only
C) (c) only
D) (d) only
E) Both (b) and (c)
In Figure 2.2.1, the curve labelled A is the ________ curve and the curve labelled B is
the ________ curve.
A) marginal cost; marginal benefit
B) marginal cost; trade
C) marginal benefit; trade
D) production possibilities; trade
E) marginal benefit; marginal cost