If the price of a burger is $2.90 Canadian in Toronto and $3 U.S. in New York, and if
purchasing power parity holds, then the exchange rate is
A) $1 U.S. per Canadian dollar.
B) $3 U.S. per Canadian dollar.
C) 97 cents U.S. per Canadian dollar.
D) 103 cents U.S. per Canadian dollar.
E) none of the above.
Trade is organized using the social institutions of all of the following except
A) firms.
B) property rights.
C) money.
D) markets.
E) labour unions
A horizontal supply curve
A) is impossible except in the long run.
B) implies an elasticity of supply equal to zero.
C) implies an elasticity of supply equal to infinity.
D) indicates that suppliers are unwilling to produce the good.
E) indicates there is a fixed quantity of the good that can be supplied.
Use the information below to answer the following questions.
Fact 9.3.3
Jim has made his best affordable choice of muffins and coffee. He spends all of his
income on 10 muffins at $1 each and 20 cups of coffee at $2 each. Muffins and coffee
are ordinary goods. Now the price of a muffin rises to $1.50 and the price of coffee falls
to $1.75 a cup.
Refer to Fact 9.3.3. When the price of a muffin rises to $1.50 and the price of coffee
falls to $1.75 a cup, Jim
A) continues to buy this combination because the marginal rate of substitution has not
changed.
B) can no longer afford to buy 10 muffins and 20 cups of coffee.
C) continues to buy this combination because it remains his best affordable choice.
D) does not continue to buy this combination because the marginal rate of substitution
has changed.
E) ignores the substitution effect and the income effect because muffins and coffee are
normal goods.
Refer to Table 6.5.1. If a $2-per-unit cost of breaking the law is imposed on sellers, the
price received by sellers (net of the cost of breaking the law) would be
A) $8.
B) $7.
C) $9.
D) $10.
E) $6.
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. Canadian farmers produce ________ eggs. Canada
________ eggs.
A) more; imports
B) more; exports
C) less; exports
D) less; imports
E) the same quantity of; imports
Refer to Table 11.4.1, which represents Swanky’s production possibilities as the firm
varies the quantities of knitting machines and workers per day. If Swanky increases the
number of knitting machines from 1 to 2 and increases the number of workers
employed from 1 to 2, the factory experiences
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) constant marginal product.
E) minimum efficient scale.
Use the figure below to answer the following questions.
Figure 1A.3.5
Refer to Figure 1A.3.5. Which one of the following statements is true?
A) The slope is less between points A and B than between points B and C.
B) The slope is greater between points B and C than between points A and B.
C) The slope at C is 0.
D) The slope at C is 1.
E) The slope at C is negative.
From the data in Table 2.1.1 we can infer that
A) the economy illustrated has a comparative advantage in the production of Y.
B) the economy illustrated has a comparative advantage in the production of X.
C) the opportunity cost of producing an additional unit of Y increases as the production
of Y increases.
D) the opportunity cost of producing an additional unit of Y decreases as the production
of Y increases.
E) none of the above.
A firm will want to increase its scale of plant if
A) it is persistently producing on the upward-sloping part of its short-run average total
cost curve.
B) it is persistently producing on the downward-sloping part of its short-run average
total cost curve.
C) it is producing below minimum efficient scale.
D) marginal cost is below average total cost.
E) marginal cost is below average variable cost.
The difference in the market value of a new van owned by a firm and the market value
of the same van one year later is
A) economic depreciation.
B) physical depreciation.
C) economic deterioration.
D) physical deterioration.
E) conventional depreciation.
The effects of offshore outsourcing from opening up call centres in India are similar to
the effects from
A) free trade.
B) tariffs.
C) import quota.
D) voluntary export restraints.
E) export subsidies.
Which one of the following is true for perfect competition, monopolistic competition,
and single-price monopoly?
A) Each firm produces an identical good.
B) Each firm makes zero long-run economic profit.
C) The profit maximizing quantity occurs at the quantity at which MC = MR.
D) There is easy entry and exit.
E) Demand is perfectly elastic.
If real GDP is $3 billion and aggregate planned expenditure is $3.5 billion, then
inventories
A) increase and productions increases.
B) increase and production decreases.
C) decrease and production increases.
D) decrease and production decreases.
E) remain the same and production decreases.
Consider the market demand curve in Figure 13.3.3. If the market is perfectly
competitive, which area indicates producer surplus?
A) AEK
B) DHK
C) DIK
D) DIH
E) ACD
Consider Figure 5.2.1. When the price is $4, what is the consumer surplus from the
second unit of the good?
A) $7
B) $3
C) $4
D) $1
E) $10
Suppose that the market in which bakeries compete is a perfectly competitive market.
Which one of the following reasons does not explain why it is difficult for a bakery to
make an economic profit in the long run?
A) All bakeries are price takers.
B) All bakeries are able to set the market price.
C) The threat of entry by potential bakeries.
D) The demand facing each bakery is perfectly elastic.
E) All bakeries produce identical goods.
Firms that can price discriminate between customers do so to
A) increase consumer surplus.
B) increase employment.
C) increase economic profit.
D) decrease the quantity they produce.
E) increase producer surplus and deadweight loss.
A good has a price elasticity of demand equal to 2. If new imports lower its price from
$1.20 to $0.80, the percentage change in quantity demanded will be
A) an increase of 80 percent.
B) a decrease of 80 percent.
C) a decrease of 40 percent.
D) an increase of 2 percent.
E) an increase of 40 percent.
________ is the accumulated skill and knowledge of human beings.
A) Labour productivity
B) Human capital
C) Capital
D) Technology
E) Human investment
Which one of the following is an example of capital as a factor of production?
A) money held by Tim Hortons
B) a Bell Canada bond
C) an automobile factory owned by Ford
D) a high school teacher
E) natural gas
Canadian businesses expect future profits to rise. Starting from a position of long-run
equilibrium, what effect does this event have on Canada’s economy in the short run?
A) Real GDP increases and the price level rises.
B) Real GDP decreases and the price level falls.
C) Real GDP increases and the price level falls.
D) Real GDP decreases and the price level rises.
E) There is no change in either real GDP or the price level.
The two big economic questions
A) summarize the scope of economics.
B) are “what goods and services are produced?” and “how are goods and services
produced?”
C) have nothing to do with goods and services.
D) do not consider for whom goods and services are produced.
E) have nothing to do with the way goods and services are produced.
Post-secondary education in Canada is subsidized. This fact suggests that
i. less than the efficient amount of education would be provided by an unregulated
market.
ii. the marginal private benefit from education equals the marginal social benefit from
education.
iii. post-secondary education has no externalities.
Which statements are correct?
A) i only
B) ii only
C) iii only
D) i and ii only
E) i, ii, and iii
The construction of the economy’s marginal social benefit curve for a public good
reflects the fact that
A) all the individuals can consume the same unit of the good.
B) the government can supply a public good at a lower cost than can a private supplier.
C) more than one supplier can provide the good.
D) the same unit of the good cannot be simultaneously shared by more than one person
at a time.
E) demand for a public good is perfectly elastic.
Refer to Figure 31.3.1. The Canadian government’s revenue from the tariff is
A) $64 million.
B) $32 million.
C) $128 million.
D) $48 million.
E) $480 million.
If disposable income increases, people ________ saving and the real interest rate will
________.
A) increase; rise
B) decrease; rise
C) increase; fall
D) decrease; fall
E) increase; rise or fall depending on the shift of the demand curve for loanable funds
Choose the correct statements.
1. Opportunity cost of a good is the increase in the quantity produced of one good
divided by the decrease in the quantity produced of another good as we move along the
PPF.
2. The opportunity cost of an action is the highest-valued alternative forgone.
3. Opportunity cost is a ratio.
4. There is no relationship between the opportunity cost of producing an additional
good measured on the x-axis and the opportunity cost of producing an additional good
measured on the y-axis.
A) Statements 1 and 3 are correct.
B) Statements 1 and 2 are correct.
C) Statements 2 and 3 are correct.
D) Statements 2 and 4 are correct.
E) Statements 3 and 4 are correct.
In a country with a working-age population of 22 million, 16 million are employed, 2
million are unemployed, and 1 million of the employed are working part-time, half of
whom wish to work full-time. The involuntary part-time rate is
A) 6.3 percent.
B) 12.5 percent.
C) 2.8 percent.
D) 5 percent.
E) 0.5 percent.
Refer to Fact 2.4.1. The opportunity cost of producing 1 kilogram of butter is
A) 20 minutes (1/3 hour) for Andy and 1 hour for Rolfe.
B) 1 hour for Andy and 1 hour for Rolfe.
C) 3 loaves of bread for Andy and 1/3 loaf of bread for Rolfe.
D) 3 loaves of bread for Andy and 1 loaf of bread for Rolfe.
E) 8 loaves of bread for Rolfe and 24 loaves of bread for Andy.