Refer to Figure 16.3.1. The figure shows the marginal private benefit curve, the
marginal social benefit curve, and the market supply curve. If a voucher is given to
consumers that generates an efficient outcome, then consumers pay
A) zero.
B) P1 per unit.
C) P2 per unit.
D) P3 per unit.
E) P4 per unit.
If capital per worker increases, labour productivity
A) decreases for a given level of technology.
B) increases because the level of technology increases.
C) increases for a given level of technology.
D) decreases because the level of technology decreases.
E) does not change unless technology advances at the same time.
Refer to Figure 28.4.1. The figure illustrates an economy’s Phillips curves. If the current
inflation rate is 3 percent, what is the current unemployment rate?
A) 9 percent
B) 6 percent
C) 4 percent
D) 3 percent
E) cannot be determined without more information
A market is open to international trade. At the world price, the quantity demanded is
150 units and the quantity supplied is 200 units. This country will
A) import 50 units.
B) export 200 units.
C) import 150 units.
D) import 200 units.
E) export 50 units.
Restaurants don’t use market price to allocate their tables because
A) they would have to watch the price of a table at other restaurants to keep
competitive.
B) restaurants would have to advertise the price.
C) the price of a table would fluctuate hourly, customer uncertainty would deter
patrons, and lower demand would bring lower profit.
D) they would have to continually change the supply of tables to keep the price
constant.
E) the price of a table would eventually fall to zero and restaurants would incur a loss.
Consider Fact 27.1.1. When disposable income increases from $400 billion to $500
billion, saving
A) increases by $40 billion.
B) increases by an unknown amount.
C) decreases by an unknown amount.
D) increases by $60 billion.
E) decreases by $60 billion.
An effective minimum wage ________ the firms’ surplus and ________ the workers’
surplus.
A) decreases; increases
B) increases; increases
C) decreases; decreases
D) increases; decreases
E) has no effect on; has no effect on
Choose the correct statement.
A) Exports include goods and services.
B) Imports include goods but not services.
C) Imports include services but not goods.
D) Exports include goods but not services.
E) Exports include services but not goods.
Use the table below to answer the following question.
Table 2.2.1
Refer to Table 2.2.1. Marginal benefit from food crops
A) equals the marginal cost of food crops.
B) remains constant as the quantity of food crops increases from 1 tonne a day to 2
tonnes a day.
C) cannot be calculated from the table.
D) increases as the quantity of food crops increases from 1 tonne a day to 2 tonnes a
day.
E) equals 70 barrels of ethanol.
Figure 17.3.1 shows the marginal private cost curve, marginal social cost curve, and
marginal social benefit curve for cod, a common resource. A quota that results in the
common resource being used efficiently is set at
A) 0 kilograms a week.
B) 4,000 kilograms a week.
C) 3,000 kilograms a week.
D) 5,000 kilograms a week.
E) 1,000 kilograms a week.
Between 2009 and 2011, the Canadian dollar
A) depreciated against the U.S. dollar.
B) appreciated against the U.S. dollar.
C) remained constant against the U.S. dollar.
D) was not able to vary against the U.S. dollar, because the exchange rate was fixed
against the Japanese yen.
E) bought the same number of U.S. dollars as the euro.
A contest allocates resources to
A) a winner or a group of winners.
B) an athlete.
C) a gambler.
D) the government.
E) private firms.
Use the figure below to answer the following questions.
Figure 22.3.2
Refer to Figure 22.3.2. The equilibrium real wage rate is
A) $10 an hour.
B) $15 an hour.
C) $20 an hour.
D) any wage rate above $15 an hour.
E) any wage rate below $15 an hour.
When the price of a good changes, the change in consumption that leaves the consumer
indifferent between the two choices is called the
A) normal effect.
B) substitution effect.
C) income effect.
D) price effect.
E) inferior effect.
To prevent monopoly from arising, there must be
A) a single supplier of a good in the market.
B) no close substitutes for the good.
C) barriers preventing entry of other firms.
D) freedom of entry into the market.
E) economies of scale.
Refer to Table 2.4.1. For Romulus, the opportunity cost of producing an additional unit
of X is
A) 4 units of Y.
B) 2 units of Y.
C) 2/3 units of Y.
D) 1 unit of Y.
E) 3/2 units of Y.
Refer to Figure 19.3.1. At any given employment level, the vertical distance between
the demand curves of the high-skilled and low-skilled workers
A) is equal to the difference in the value of marginal product of the workers.
B) is equal to the difference in the work ethic of the workers.
C) is caused by discrimination against minorities.
D) is caused by discrimination against women.
E) equals the cost of acquiring the skills.
Which one of the following statements is true?
A) Since consumers of a good consume this good until the price equals the value of the
last unit, they clearly get no benefit from consuming this good.
B) Consumers choosing between goods X and Y will set MUX = MUY.
C) The value of a good to a consumer is measured by the price.
D) Consumer surplus on a unit of a good will never be zero.
E) If the marginal utility per dollar of good X is less than the marginal utility per dollar
of good Y, then the consumer should shift some spending from X to Y.
A monopolistically competitive firm is able to influence the price of what it sells
because of
A) barriers to entry.
B) economies of scale.
C) product differentiation.
D) the fact there are many buyers.
E) inelastic demand.
In the long-run, a firm in monopolistic competition produces at an output level where
A) P > ATC and MR = MC.
B) P > ATC and MR > MC.
C) P = ATC and MR = MC.
D) P = ATC and MR > MC.
E) P > ATC and MC > ATC.
If the demand for salmon in Cape Breton, Nova Scotia, is unit elastic, the price
elasticity of demand for salmon equals
A) 1.0.
B) 100.0.
C) 0.10.
D) zero.
E) 10.0.
The kitchen manager at an Italian restaurant is deciding what assignments he should
give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta
per hour and David can make 20 pizzas or 30 servings of pasta per hour. Which is the
manager’s best choice?
A) Fire David because he is not as productive as John. John will produce both pasta and
pizza.
B) David will make pizza because he has a comparative advantage in making pizza.
C) John and David will each spend half their time making pizza and half their time
making pasta.
D) John will make pizza because he has a comparative advantage in making pizza.
E) Increase David’s salary because with encouragement, he can increase his output.
In one year, Brazil exported more than 1.8 billion kilograms of coffee to the rest of the
world. We can conclude that
A) Brazil has comparative advantage in coffee production.
B) Brazil has an absolute advantage in coffee production.
C) the rest of the world has a comparative advantage in coffee production.
D) the rest of the world has an absolute advantage in coffee production.
E) Brazil’s government has placed a tariff on coffee.
Use the table below to answer the following question.
Table 8.1.2
Table 8.1.2 gives total utilities for Jim and Sally. Which one of the following statements
is true?
A) Jim has increasing marginal utility.
B) For Sally, the marginal utility of the third unit consumed is 6.
C) If Jim consumes 2 units, his total utility is 34 units.
D) Jim and Sally receive the same marginal utility from the third unit consumed.
E) If Sally consumes 2 units, her total utility is 10 units.
The marginal propensity to save is calculated as
A) saving divided by disposable income.
B) saving divided by the change in disposable income.
C) the change in saving divided by the change in consumption expenditure.
D) the change in saving divided by the change in disposable income.
E) the change in saving divided by disposable income.
Ben spends $50 a year on 2 bunches of flowers and $50 a year on 10,000 litres of tap
water. Ben is maximizing utility and his marginal utility from water is 0.5 units per litre.
Ben’s expenditure on flowers and water illustrates the paradox of value because Ben’s
marginal utility from flowers is ________ his marginal utility from water, and his total
utility from flowers is ________ than his total utility from water.
A) greater than; greater
B) less than; less
C) greater than; less
D) less than; greater
E) the same as; less
For perfect competition to arise, it is necessary that market demand be
A) inelastic.
B) elastic.
C) perfectly elastic.
D) large relative to the minimum efficient scale of a single firm.
E) small relative to the minimum efficient scale of a single firm.
Choose the incorrect statement.
A) The outlet substitution bias injects an upward bias into the CPI.
B) When the quality of a good improves over time and as a result the price rises, the
CPI counts the entire price rise as inflation and so overstates inflation.
C) When relative prices change and people substitute to the lower priced good, the CPI
ignores the substitution and the CPI overstates inflation.
D) The CPI basket is constantly updated to allow for the introduction of new goods.
E) All of the above statements are incorrect.
Complete the following sentence. Marginal cost
A) is the opportunity cost of producing one more unit of a good or service.
B) is unrelated to the production possibilities frontier.
C) always equals marginal benefit.
D) remains constant.
E) is always greater then marginal benefit.
Use the table below to answer the following questions.
Table 28.4.2
The economy’s natural unemployment rate is 4 percent. Table 28.4.2 gives some points
on the economy’s short-run Phillips curve. When the unemployment rate is 4 percent,
A) actual inflation is greater than expected inflation.
B) actual inflation is less than expected inflation.
C) and the inflation rate is 6 percent a year, the short-run and long-run Phillips curves
intersect.
D) and the expected inflation rate is 8 percent a year, the short-run Phillips curve shifts
downward.
E) aggregate demand increases.
How is consultation between the Bank of Canada and the Government of Canada on
monetary policy arranged?
A) Consultations are arranged at the discretion of the Minister of Finance.
B) No consultation is required or needed.
C) The Bank of Canada Act requires regular consultations between the Governor and
the Minister of Finance.
D) Consultations are arranged at the discretion of the Governor of the Bank of Canada.
E) Consultations are arranged through the Parliamentary Committee on Finance.
Which approach to measuring GDP is being used when Statistics Canada sums wages,
salaries and supplementary labour income, and other factor incomes?
A) opportunity cost approach
B) expenditure approach
C) value-added approach
D) factor cost approach
E) income approach
Refer to the table below to answer the following questions.
Table 11.2.1
Refer to Table 11.2.1 which gives Tania’s total product schedule. The marginal product
when the firm increases the number of workers from 3 to 4 per day is
A) 6 teapots.
B) 2 teapots.
C) 9 teapots.
D) 7 teapots.
E) 4 teapots.
Which one of the following is a means of coping with a negative externality?
A) emission subsidies
B) patents
C) vouchers
D) Pigovian taxes
E) copyrights