Suppose the Nunavut government decides to repair Iqaluit roads. One way to generate
sufficient funds for this plan is to increase taxes on gasoline. The government will be
able to raise total revenue from gasoline sales only if the demand for gasoline is
A) perfectly elastic.
B) equal to the supply of gasoline.
C) unit elastic.
D) inelastic.
E) elastic.
Choose the incorrect statement.
A) A patent encourages invention.
B) A patent encourages innovation.
C) A patent has an economic cost.
D) A patent creates a negative externality.
E) A patent produces a monopoly.
Refer to Fact 18.2.3. As a result,
A) Wanda’s demand for labour curve shifts rightward and the firm hires more students.
B) the value of marginal product decreases, but Wanda’s still continues to hire the same
number of students.
C) Wanda’s demand for labour curve shifts leftward and the firm hires fewer students.
D) marginal product increases so Wanda’s hires more students.
E) Wanda’s demand for labour curve shifts leftward and the students’ supply of labour
curve shifts leftward, and the firm hires fewer students.
The price of oranges rises by 3 percent and quantity of oranges demanded decreases by
3 percent. We conclude that the demand for oranges is
A) inelastic.
B) elastic.
C) perfectly inelastic.
D) perfect elastic.
E) unit elastic.
Refer to Fact 9.3.3. When the price of a muffin and the price of a cup of coffee change,
A) there is a substitution effect but no income effect.
B) there is an income effect but no substitution effect.
C) there is neither an income effect nor a substitution effect.
D) there is both a substitution effect and an income effect.
E) Jim remains on the same indifference curve.
Which one of the following need not be satisfied to achieve allocative efficiency?
A) Marginal social cost equals marginal social benefit.
B) The sum of consumer surplus and producer surplus is maximized.
C) Price equals marginal social benefit.
D) Price equals marginal social cost.
E) Only high-quality goods are produced.
Refer to Table 31.1.2. The table shows a country’s demand and supply schedules.
Suppose the world price is $4 a unit. The country
A) imports 20 units.
B) exports 20 units.
C) imports 10 units.
D) exports 10 units.
E) imports 30 units.
Use the information below to answer the following questions.
Fact 11.3.1 A Pepsi, A Business Decision
PepsiCo has done a deal with 300 small Mexican farmers close to their two factories to
buy corn at a guaranteed price. PepsiCo saves transportation costs and the use of local
farms assures it access to the type of corn best suited to its products and processes.
“That gives us great leverage because corn prices don’t fluctuate so much, but
transportation costs do,” said Pedro Padierna, president of PepsiCo in Mexico.
Refer to Fact 11.3.1. Fluctuations in the price of corn and in transportation costs shift all
of the following except the
A) average variable cost, marginal cost, and average total cost curves.
B) average fixed cost and total fixed cost curves.
C) total cost curve.
D) total variable cost curve.
E) average fixed cost, marginal cost, and total fixed cost curves.
One reason for diseconomies of scale is that as output becomes larger and larger,
A) costs per unit decrease.
B) management systems become more efficient.
C) the number of workers increases.
D) management systems can become more complex and inefficient.
E) workers become more efficient.
Refer to Figure 11.4.1, which illustrates the total product curves for four different plant
sizes. One of the fundamental technological facts reflected in the shape of each of the
total product curves is the
A) price of the inputs.
B) price of the output.
C) law of diminishing marginal returns.
D) law of economies of scale.
E) fact that capital and labour cannot be substituted for each other.
Refer to Table 21.3.1. The reference base period is 2002. Which one of the following
statements is true?
A) From 2002 to 2014, the cost of the market basket rose by 58 percent.
B) It costs 158 times more in 2014 than it does in 2002 to buy the same market basket.
C) All prices have risen by the same amount.
D) The inflation rate in 2014 is greater than the inflation rate in 2002.
E) The inflation rate in 2002 is greater than the inflation rate in 2014.
When Al makes the statement, “The cost of living has increased 10 percent over the
past 10 years,” he is
A) making a positive statement.
B) making a negative statement.
C) making a normative statement.
D) testing an economic model.
E) identifying the standard of living-cost of living tradeoff.
Use the table below to answer the following questions.
Table 12.2.2
Refer to Table 12.2.2, which gives the total cost schedule for Chip’s Pizza Palace, a
perfectly competitive firm. If the price of a pizza is $7, what is Chip’s
profit-maximizing output per hour?
A) zero pizzas
B) 1 pizza
C) 2 pizzas
D) 3 pizzas
E) 4 pizzas
Suppose the tax rate on interest income is 50 percent, the real interest rate is 3 percent,
and the inflation rate is 4 percent. The real after-tax interest rate is
A) -0.5 percent.
B) 3.5 percent.
C) 3.0 percent.
D) 4.0 percent.
E) -3.5 percent.
All of the following except ________ are noncriminal offences under the Competition
Act.
A) refusal to deal
B) mergers
C) false advertising
D) abuse of a dominant market position
E) exclusive dealing
Use the information below to answer the following questions.
Fact 18.4.1
Water is a natural resource that is plentiful in Canada but not plentiful in Arizona and
southern California. Suppose Canadians start to export bulk water to Arizona and
southern California.
Refer to Fact 18.4.1. The price of bulk water in Arizona and southern California will
________. Water is a ________ natural resource.
A) fall; renewable
B) rise; nonrenewable
C) rise; renewable
D) fall; nonrenewable
E) not change; nonrenewable
Refer to Table 3.5.2. Professor Hyper publishes a new study, showing that coffee raises
the test performance of students. Students double their demand for coffee. This change
would be represented as a
A) leftward shift of the demand curve.
B) rightward shift of the demand curve.
C) leftward shift of the supply curve.
D) rightward shift of the supply curve.
E) movement up along the demand curve.
Refer to Figure 14.2.1. This firm in monopolistic competition will
A) make an economic profit in the short run.
B) make zero economic profit in the short run.
C) incur an economic loss.
D) make an economic profit in the long run.
E) incur an economic loss in the long run.
If the Bank of Canada buys government securities in the open market, the supply curve
of real money
A) shifts leftward and the overnight loans rate rises.
B) shifts leftward and the overnight loans rate falls.
C) shifts rightward and the overnight loans rate rises.
D) shifts rightward and the overnight loans rate remains constant because the demand
for money increases at the same time.
E) shifts rightward and the overnight loans rate falls
If a good is a public good,
A) anyone can be excluded from enjoying its benefits.
B) no one can be excluded from enjoying its benefits.
C) consumers must pay a high price to enjoy its benefits.
D) it is rival and excludable.
E) economies of scale exist over the entire range of output for which there is a demand.
If the price of a normal good rises, the income effect
A) will increase consumption of the good and the substitution effect will decrease
consumption.
B) will decrease consumption of the good and the substitution effect will increase
consumption.
C) and the substitution effect will both increase consumption of the good.
D) and the substitution effect will both decrease consumption of the good.
E) is always larger than the substitution effect.
Refer to Fact 25.4.1. What is the imports?
A) 13 billion turkeys
B) 7 billion turkeys
C) 11 billion turkeys
D) 9 billion turkeys
E) 12 billion turkeys
Use the figure below to answer the following questions.
Figure 28.2.6
Refer to Figure 28.2.6. Starting at point A, the initial effect of a demand-pull inflation is
a move to point ________. As a demand-pull inflation spiral proceeds, it follows the
path ________.
A) E; I
B) C; E, H, I
C) C; B, H, G, I
D) B; E, G, I
E) C; F, H, I
Which of the following quotations best illustrates a tradeoff?
A) “If the firm reorganized its production process, it could produce more widgets and
more gadgets.”
B) “The firm should sell more gadgets, even if it means less widget sales.”
C) “The more and more gadgets the firm produces, the bigger the fall in widget
production.”
D) “If the firm invests more in capital equipment, it can expand sales next year.”
E) “The firm has been able to lower costs due to its extensive experience in building
widgets.”
Good X is measured on the horizontal axis and good Y is measured on the vertical axis.
The marginal rate of substitution is
A) the relative price of good X in terms of good Y.
B) the relative price of good Y in terms of good X.
C) the rate at which a consumer will give up good Y to obtain an additional unit of good
X while remaining indifferent.
D) the rate at which a consumer will give up good X to obtain an additional unit of good
Y while remaining indifferent.
E) equal to the magnitude of the slope of the budget line.
In Figure 27.2.3, the marginal propensity to import is
A) 0.
B) 0.1.
C) 0.25.
D) 0.3.
E) 0.6.
If the nominal interest rate is 11%, the inflation rate is 4% and the tax rate is 25%, what
is the real after-tax interest rate?
A) -1.25 percent
B) 4.25 percent
C) 5.25 percent
D) 8 percent
E) 10 percent
Which one of the following statements about the implicit rental rate of capital is true?
A) It is the market value of capital.
B) It is the opportunity cost to a firm of using its own capital.
C) It includes normal profit.
D) It is the amount paid for the use of land or buildings.
E) It is the depreciated value of capital.
To attract a majority of voters, a political party will
A) aim its message at the most enthusiastic groups.
B) aim its message at a small but loyal following.
C) present a political package aimed at making the wealthier voters better off.
D) present a political package aimed at making a majority of voters better off.
E) respond strongest to the most vigorous lobbyists.
Tim is opening a new online store. He plans to hire two workers at $10 an hour. Tim is
also considering buying or leasing some new computers. The purchase price of a
computer is $900 and after three years it is worthless. The annual cost of leasing a
computer is $450. The price of capital equipment is ________. The rental rate of capital
is ________.
A) $900; $450
B) $450; $450
C) $900; $900
D) $450; $900
E) 100 percent; 50 percent
Given Fact 2.4.2, the opportunity cost of producing a unit of X is
A) 1 unit of Y for Agnes and 2 units of Y for Brenda.
B) 1 unit of Y for Agnes and 1/2 unit of Y for Brenda.
C) 1 hour for Agnes and 1/2 hour for Brenda.
D) 1 hour for Agnes and 2 hours for Brenda.
E) 1 hour for Agnes and 1/4 hour for Brenda.
In the equilibrium for a common resource with no government regulation,
A) marginal social benefit is greater than marginal social cost.
B) marginal social benefit equals marginal social cost.
C) marginal social benefit is less than marginal cost.
D) marginal social benefit is greater than marginal cost.
E) marginal social benefit equals marginal cost.
Which one of the following is a component of M2 but not of M1?
A) currency outside banks
B) personal chequable deposits
C) personal non-chequable deposits
D) currency in a bank vault
E) Canada Savings Bonds
The category of federal government revenues that fluctuates the most is
A) investment income.
B) transfer payments.
C) personal income taxes.
D) debt interest.
E) indirect taxes.