Consider a graph that shows the total cost curve and the total variable cost curve. As
output increases, the vertical distance between these two curves
A) increases.
B) decreases.
C) becomes smaller and then larger.
D) becomes larger and then smaller.
E) is constant.
Between 1926 and 2014 real GDP per person in Canada grew at an average rate of
A) 2.8 percent a year.
B) 1.7 percent a year.
C) 2.0 percent a year.
D) 3.6 percent a year.
E) 4.3 percent a year.
A decrease in the overnight loans rate leads to all of the following except
A) an increase in the quantity of money.
B) a fall in the exchange rate.
C) an increase in exports.
D) an increase in consumption expenditure.
E) an increase in imports.
In the foreign exchange market, a change in which of the following will result in a
movement along the demand curve for Canadian dollars?
A) the U.S. interest rate
B) the Canadian interest rate
C) the exchange rate
D) the expected future exchange rate
E) an increase in Canadian exports
Use the table below to answer the following question.
Table 4.2.1
Consider the information in Table 4.2.1. Select the best statement.
A) The income elasticity of demand is -2.5.
B) The income elasticity of demand is 2.5.
C) The income elasticity of demand is -3.33.
D) The income elasticity of demand is 3.33.
E) We cannot calculate the income elasticity of demand because both income and price
are changing at the same time.
Taking competitive rent seeking activity into account, the social cost of monopoly is
equal to the
A) deadweight loss from monopoly.
B) monopoly’s producer surplus.
C) deadweight loss plus the monopoly’s producer surplus.
D) deadweight loss minus the monopoly’s producer surplus.
E) consumer surplus lost plus producer surplus lost.
Charlene is willing to pay $5.00 for a sandwich. If the price of a sandwich is ________,
Charlene ________.
A) $4.00; does not receive any consumer surplus
B) $4.00; receives a consumer surplus
C) $6.00; receives a consumer surplus
D) $6.00; receives a marginal cost
E) $4.00; receives a producer surplus
If a 10 percent increase in income results in a 10 percent decrease in the consumption
of widgets, then
A) the price elasticity of demand for widgets equals 1.
B) the income elasticity of demand for widgets is negative.
C) the income elasticity of demand for widgets equals 1.
D) widgets are a normal good.
E) the price elasticity demand for widgets is negative.
A consumer always has a cup of coffee with a tablespoon of sugar. What would the
consumer’s indifference curves for these two goods look like?
A) upward sloping
B) horizontal along the entire length
C) downward sloping with a constant slope
D) vertical along the entire length
E) L-shaped
The marginal propensity to save
A) equals 1 – MPC.
B) is between zero and 1/2.
C) is greater than 1.
D) is greater than 1 but less than 2.
E) is negative.
A production quota
A) is a lower limit to the quantity of a good that can be produced in a specified period.
B) is an upper limit to the quantity of a good that can be produced in a specified period.
C) is a payment made by a consumer to a producer.
D) is a payment made by a producer to a consumer.
E) is a payment made by the government to a producer.
A monopoly is a market with a single firm that
A) produces a good or service for which no close substitute exists and which is
protected by a barrier that prevents other firms from selling that good or service.
B) purchases its factors of production from only one supplier because of a barrier
preventing it from buying from other suppliers.
C) produces a good or service for which no close substitute exists and that sells all its
output to one buyer because there is barrier preventing other buyers from purchasing
the good or service.
D) cannot control the price it sets for its good or service because there is barrier that
prevents the firm from changing the price.
E) produces its good or service using labour from a single source, which is usually a
union.
Use the table below to answer the following questions.
Table 12.1.1
Refer to Table 12.1.1 which gives the demand schedule for a perfectly competitive firm.
If the firm sells 5 units of output, total revenue is
A) $15.
B) $30.
C) $75.
D) $90.
E) $105.
The existence of which one of the following is a reason for the fact that GDP gives an
underestimated value of total output in the economy?
A) pollution
B) market activities
C) underground economy
D) depreciation
E) environmental problems
Suppose OPEC unexpectedly collapses, which leads to a fall in the price of oil. As a
result, the price level
A) rises, and real GDP increases.
B) rises, and real GDP decreases.
C) falls, and real GDP increases.
D) falls, and real GDP decreases.
E) rises, and real GDP remains the same.
If the working-age population increases, then
A) the size of the labour force will increase.
B) the number of people employed will increase.
C) the unemployment rate will increase.
D) the labour force participation rate will increase.
E) the total number of people aged 15 years and above will increase.
Refer to Figure 16.3.3. The figure shows the marginal private benefit and marginal
social cost of a university education. Society’s external benefit from university
graduates is $10,000 each. With no subsidy,
A) no students go to university.
B) less than 10 million students go to university.
C) 10 million students go to university.
D) more than 10 million students go to university.
E) the market is efficient.
When the quantity of coal is measured in kilograms instead of pounds, the demand for
coal becomes
A) more elastic.
B) less elastic.
C) neither more nor less elastic.
D) perfectly elastic.
E) perfectly inelastic.
Some producers are chatting over a beer. Which one of the following quotations refers
to a rightward shift of the supply curve?
A) “Wage increases have forced us to raise our prices.”
B) “Our new, sophisticated equipment will enable us to undercut our competitors.”
C) “Raw material prices have sky-rocketed; we will have to pass the cost on to our
customers.”
D) “We anticipate a big increase in demand. Our product price should rise, so we are
planning for an increase in output.”
E) “Competitors are leaving the industry.”
Suppose that investment decreases by $15 billion. If the multiplier is 2, and the
short-run aggregate supply curve is positively sloped. In the short run, equilibrium real
GDP
A) decreases by $30 billion.
B) decreases by more than $30 billion.
C) decreases by less than $30 billion.
D) increases by less than $30 billion.
E) does not change.
Perfect competition occurs in a market where there are many firms, each selling
A) an identical product.
B) a similar product.
C) a unique product.
D) a capital-intensive product.
E) a competitive product.
Use the figure below to answer the following questions.
Figure 18.3.2
Refer to Figure 18.3.2. This figure illustrates a monopsonist in the labour market. The
profit-maximizing wage rate is ________ and the quantity of labour hired is ________.
A) $4 per hour; 800 hours
B) $4 per hour; 400 hours
C) $7 per hour; 600 hours
D) $9 per hour; 400 hours
E) $2 per hour; 150 hours.
If Mr. Brown’s income increases by 12 percent and as a result his quantity demanded of
music downloads increases by 4 percent, Mr. Brown’s income elasticity of demand for
music downloads is
A) 3.0.
B) 0.33.
C) -0.33.
D) -3.0.
E) 48.0.
Which one of the following is an example of a factor of production?
A) an insurance policy
B) a donut
C) the skills of a welder
D) an IBM stock certificate
E) a computer game
Choose the statement that is incorrect about trust and loan companies.
A) Trust and loan companies hold more than 70 percent of the total assets of the
Canadian financial services sector.
B) The largest trust and loan companies are owned by banks.
C) Trust and loan companies accept deposits and make personal loans and mortgage
loans.
D) Trust and loan companies administer estates.
E) Trust and loan companies administer trusts and pension plans.
Household characteristics that stand out when determining the incidence of poverty
include all of the following except
A) household type.
B) education.
C) age of householder.
D) ethnic background.
E) number of children.
If we observe an increase in the equilibrium quantity of good A, we know that
A) either the demand for A has increased or the supply of A has decreased or both.
B) either the demand for A has increased or the supply of A has increased or both.
C) either the demand for A has decreased or the supply of A has increased or both.
D) either the demand for A has decreased or the supply of A has decreased or both.
E) the price of A has risen.
A monopolist under marginal cost pricing has an incentive to
A) inflate costs.
B) produce more than the efficient quantity of output.
C) produce less than the efficient quantity of output.
D) maximize consumer surplus.
E) produce the efficient quantity of output.
Refer to Fact 3.5.1. A new study comes out, revealing that drinking Pepsi increases your
ability to study. The equilibrium quantity of coffee
A) increases.
B) decreases.
C) remains the same.
D) increases or decreases depending on the slope of the supply and demand curves.
E) increases or decreases depending on the relative shifts of the supply and demand
curves.
When disposable income increases,
A) the consumption function shifts upward.
B) the saving function shifts downward.
C) a movement occurs down along the consumption function.
D) a movement occurs up along the consumption function.
E) a movement occurs down along the saving function.
Marie-Louise has an income of $10 to buy peanuts and popcorn. The price of a bag of
peanuts is $1 and the price of a bag of popcorn is $2. What is Marie-Louise’s real
income in terms of popcorn?
A) 1/2 bag of popcorn
B) 1 bag of popcorn
C) 2 bags of popcorn
D) 5 bags of popcorn
E) 10 bags of popcorn
Refer to Figure 11.3.2, which illustrates the short-run average and marginal cost curves.
The average variable cost curve is curve
A) A.
B) B.
C) C.
D) D.
E) C minus curve B
An efficient use of resources occurs when
A) a deadweight loss arises.
B) total social benefit from a good equals its total social cost.
C) producer surplus is eliminated.
D) consumer surplus is maximized.
E) a monopoly practices perfect price discrimination.
In the short-run, the similarity between a monopolist and a monopolistically
competitive firm is that
A) they both make the same decisions about the level of output and output price.
B) they both face an upward-sloping supply curve for their products.
C) they both try to maximize their total revenues.
D) they both try to minimize their average fixed costs.
E) they set the price such that marginal revenue equals average total cost.