When a good is rival and excludable, it is a
A) natural monopoly good.
B) public good.
C) regulated good.
D) private good.
E) common resource.
One difference between oligopoly and monopolistic competition is
A) there is a smaller number of firms in a monopolistically competitive market than in
an oligopoly.
B) in oligopolies firms make slightly different products whereas in monopolistic
competition the products are identical.
C) monopolistic competition has barriers to entry, whereas oligopoly has none.
D) fewer firms compete in an oligopoly than in a monopolistically competitive market.
E) in oligopolies, firms are typically smaller in size.
The money creation process begins when
A) desired reserves increase because of an increase in deposits.
B) the quantity of money increases.
C) banks have excess reserves.
D) bank deposits increase.
E) banks lend reserves.
Two firms, Alpha and Beta, produce identical computer hard drives. They have
identical costs, and the hard drives they produce are identical. The industry is a natural
duopoly. Alpha and Beta enter into a collusive agreement, according to which they split
the market equally. If both firms comply with the agreement,
A) together they will produce the monopoly quantity and make the monopoly economic
profit.
B) the price of a hard drive will equal marginal cost.
C) each firm will make zero economic profit.
D) the oligopoly will produce more hard drives than a profit-maximizing monopoly
would produce.
E) the oligopoly will produce fewer hard drives than a profit-maximizing monopoly
would produce.
Two firms, Alpha and Beta, produce identical computer hard drives. They have
identical costs, and the hard drives they produce are identical. The industry is a natural
duopoly. Alpha and Beta enter into a collusive agreement, according to which they split
the market equally. If both firms cheat on the agreement so the market is the same as a
competitive market,
A) each firm makes zero economic profit in the long run.
B) each firm makes the monopoly profit.
C) the oligopoly will produce fewer hard drives than a profit-maximizing monopoly
would produce.
D) the oligopoly will produce the same number of hard drives as a profit-maximizing
monopoly would produce.
E) each firm incurs an economic loss and exits the market in the long run.
If Canada imposes a tariff of $1 per imported shirt, the tariff
A) raises the price of a shirt to Canadian consumers.
B) benefits Canadian shirt producers.
C) decreases imports of shirts into Canada.
D) creates a social loss.
E) all of the above
Which market is an example of a market for services?
A) orange market
B) tennis lessons market
C) manufactured input market
D) energy market
E) labour market
The technique used to calculate the CPI implicitly assumes that consumers buy
A) relatively more of goods with relative prices that are increasing.
B) relatively less of goods with relative prices that are decreasing.
C) the same relative quantities of goods as in a base year.
D) goods and services whose quality improves at the rate of growth of real GDP.
E) more computers and CD players and fewer black-and-white TVs.
The fact that resources are not equally productive in all activities
A) implies that a production possibilities frontier will be bowed outward.
B) implies that gains from specialization and trade are unlikely.
C) follows from the law of demand.
D) implies a linear production possibilities frontier.
E) implies that an economy should not produce certain goods.
In a duopoly game, we observe the following payouts. If the two firms collude they
each make an economic profit of $50,000. If one firm cheats, then that firm makes an
economic profit of $60,000 and the other incurs an economics loss of $10,000. If both
firms cheat, then they both make zero economic profit. What is the Nash equilibrium?
A) Both firms cheat.
B) Neither firm cheats.
C) One firm cheats but we don’t know which one.
D) Only the larger firm cheats.
E) Only the smaller firm cheats.
Suppose the demand for gasoline is inelastic, but not perfectly inelastic, and the supply
is elastic, but not perfectly elastic. A tax on gasoline is paid
A) mostly by buyers.
B) mostly by sellers.
C) equally by buyers and sellers.
D) totally by buyers.
E) totally by sellers.
A bank can create money by
A) selling some of its securities.
B) increasing its reserves.
C) lending its excess reserves.
D) printing more cheques.
E) converting reserves into securities.
Which of the following news quotes best describes a Keynesian view of a recession?
A) “Rapid computerization is creating obsolete workers and higher unemployment.”
B) “The unexpectedly tight fiscal policy is raising spending and lowering
unemployment.”
C) “The anti-inflationary policy of the Bank of Canada is increasing spending.”
D) “The cuts in government spending have helped lower consumer spending and
created unemployment.”
E) “Businesses are very worried about future sales and have lowered their purchases of
capital equipment.”
The demand curve slopes downward to the right because
A) an increase in income leads to increased consumption.
B) of the law of supply.
C) of the law of demand.
D) of comparative advantage.
E) as income rises, the quantity demanded increases.
Refer to Figure 26.2.1. Which graph illustrates what happens when the quantity of
money decreases?
A) (a) only
B) (b) only
C) (c) only
D) (d) only
E) Both (b) and (d)
In a country with a working-age population of 30 million, 18 million are employed, 2
million are unemployed, and 2 million of the employed are working part-time, half of
whom wish to work full-time. The involuntary part-time rate is
A) 10 percent.
B) 5 percent.
C) 4.8 percent.
D) 4.5 percent.
E) 0.5 percent.
Which of the following is not a mainstream theory of the business cycle?
A) Keynesian cycle theory
B) monetarist cycle theory
C) new Keynesian cycle theory
D) real business cycle theory
E) new classical cycle theory
This year Pizza Hut spent $1.3 billion on new capital in its stores. Depreciation during
the year was $300 million. Pizza Hut’s gross investment was ________ and its net
investment was ________.
A) $1.3 billion; $1.6 billion
B) $1.0 billion; $1.3 billion
C) $1.3 billion; $1.0 billion
D) $1.0 billion; $0.7 billion
E) $1.3 billion; $0.3 billion
Use the figure below to answer the following questions.
Figure 12.4.1
Refer to Figure 12.4.1, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive market. In the long run, market
A) demand will increase.
B) demand will decrease.
C) supply will increase.
D) supply will decrease.
E) supply and market demand will decrease.
From the data in Table 2.1.1, the production of 10 units of X and 28 units of Y is
A) unattainable.
B) attainable but leaves some resources misallocated.
C) on the production possibilities frontier between points C and D.
D) inside the PPF.
E) possible if we reduce the amount of capital goods.
Refer to Fact 9.3.1. When the price of a bag of chips falls, Marc
A) will consume more beer, more chips, and be better off.
B) will consume less beer, more chips, and be better off.
C) will consume less beer, more chips, and be worse off.
D) will consume less beer, less chips, and be worse off.
E) will consume more beer, less chips, and be better off.
Refer to Table 6.5.1. If a $2-per-unit cost of breaking the law is imposed on buyers, the
new price is ________ and the new equilibrium quantity is ________ units.
A) $8; 400
B) $8; 300
C) $7; 300
D) $9; 300
E) $8; 200
Refer to Figure 26.3.1. Econoworld is at its short-run macroeconomic equilibrium.
There is a difference between ________ real GDP and potential GDP of $________
billion.
A) above full-employment equilibrium; 40
B) above full-employment equilibrium; 20
C) below full-employment equilibrium; 40
D) below full-employment equilibrium; 20
E) full-employment equilibrium; 0
Refer to Table 28.4.1. The table gives points on the short-run Phillips curve for the
country of Ruritania. If the expected inflation rate is 10 percent, and the inflation rate
unexpectedly rises to 12 percent, what is the unemployment rate?
A) 4 percent
B) 5 percent
C) 6 percent
D) 7 percent
E) 9 percent
To gain from comparative advantage, countries must not only trade, they must also
A) save.
B) invest.
C) engage in research and development.
D) engage in capital accumulation.
E) specialize.
A vertical long-run aggregate supply curve indicates that
A) an increase in the price level will not expand an economy’s output in the long run.
B) output rates greater than the long-run output rate are unattainable.
C) an increase in the price level will permit the economy to achieve a higher level of
output.
D) an increase in the price level will increase technological change and economic
growth.
E) the long-run aggregate supply curve never shifts.
An effective rent ceiling
A) increases consumer surplus.
B) increases producer surplus.
C) creates a deadweight loss.
D) decreases the supply of housing.
E) increases the supply of housing.
In 2012, Northland had real GDP of $4.21 billion and a population of 2.98 million. In
2013, real GDP was $4.59 billion and population was 2.97 million. Between 2012 and
2013, Northland’s standard of living
A) increased.
B) decreased.
C) did not change.
D) might have increased, decreased, or remained unchanged.
E) doubled.
Refer to Figure 7.3.1. The tariff ________ the domestic production of shirts in Canada
by ________ per year.
A) increases; 8 million
B) decreases; 16 million
C) increases; 4 million
D) decreases; 8 million
E) increases; 24 million
Choose the statement that is incorrect.
A) Between 2008 and 2012, carbon emissions in British Columbia remained constant.
B) As of 2012, British Columbia applies a carbon tax of $30 per tonne of carbon
emitted.
C) British Columbia’s carbon tax is revenue-neutral.
D) Australia has a carbon tax.
E) A high gas tax in the United Kingdom cuts carbon emissions by inducing people to
drive smaller cars and to drive less.
If the number of discouraged searchers decreases because many of them start to look
for work, everything else remaining the same, then the
A) unemployment rate will increase.
B) employment-to-population ratio will decrease.
C) labour force participation rate will increase.
D) labour force participation rate will decrease.
E) both A and C
Refer to Table 3.5.3. In a television interview, Joe Cool shows off his designer sport
t-shirt, setting off a new craze that doubles business at the sportswear establishments.
The quantity of t-shirts demanded doubles at each price. The new equilibrium price is
$________ and the new equilibrium quantity is ________ t-shirts per month.
A) 12; 240
B) 8; 400
C) 16; 400
D) 12; 120
E) 16; 200
If the real wage rate is $10.00 an hour and the price level is 60, the money wage rate is
A) $16.75 an hour.
B) $18.50 an hour.
C) $10.00 an hour.
D) $6.00 an hour.
E) $16.67 an hour.
Use the figure below to answer the following questions.
Figure 26.3.2
Refer to Figure 26.3.2. Short-run macroeconomic equilibrium real GDP in Mythlo is
________ billion.
A) $500
B) $650
C) $550
D) $600
E) $475