If a firm spends $600 on advertising, its
A) ATC and MC curves shift upward.
B) MC curve shifts upward and its ATC curve does not shift.
C) ATC curve shifts upward and its MC curve does not shift.
D) ATC curve shifts upward and its MC curve shifts downward.
E) AFC and AVC curves shift upward.
Use the figure below to answer the following questions.
Figure 3.5.1
If the demand curve is in Figure 3.5.1,
A) the equilibrium price is and the equilibrium quantity is .
B) the equilibrium price is and the equilibrium quantity is .
C) there is a shortage in the amount of – .
D) a rise in price will shift the demand curve to .
E) the price will rise.
Which one of the following newspaper quotations describes a shift of only the SAS
curve?
A) “The decrease in consumer spending may lead to a recession.”
B) “The increase in consumer spending is expected to lead to inflation, without any
increase in real GDP.”
C) “Recent higher wage settlements are expected to cause higher inflation this year.”
D) “Growth has been unusually high the last few years due to more women entering the
work force.”
E) “The recent tornadoes destroyed many factories in Calgary and Edmonton.”
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
Other things remaining the same, the Canadian interest rate differential increases for
sure if the Canadian interest rate
A) rises and the U.S. interest rate falls.
B) rises and the U.S. interest rate rises.
C) falls and the U.S. interest rate falls.
D) falls and the U.S. interest rate rises.
E) doesn’t change and the U.S. interest rate rises.
Refer to Table 16.2.1. Given in the table are the marginal private cost and the marginal
social cost of the production of chemical fertilizer and the marginal social benefit from
the consumption of fertilizer. If the government decides to correct the externality
problem, it could
A) subsidize production by $20 per unit.
B) subsidize production by $10 per unit.
C) provide the good itself.
D) tax production by $10 per unit.
E) tax production by $20 per unit.
Any two individuals will gain from exchange
A) unless one has an absolute advantage in producing all goods.
B) if each specializes in the production of the good for which he has the higher
opportunity cost.
C) unless they have the same opportunity costs for producing all goods.
D) unless they have different opportunity costs for producing all goods.
E) unless they have the same absolute advantage in producing all goods.
Lucy buys only magazines and CDs. Both are normal goods. Lucy’s income decreases,
but the prices of magazines and CDs do not change. Marginal utility theory predicts that
A) Lucy buys more magazines and more CDs.
B) Lucy buys fewer magazines and fewer CDs.
C) Lucy’s demand curve for magazines shifts leftward.
D) Lucy’s demand curve for CDs shifts leftward.
E) B, C, and D are correct.
Refer to Fact 14.3.3. In the long run, Roots’ economic profit is
A) positive.
B) negative.
C) zero.
D) greater than the economic profit of its competitors.
E) less than the economic profit of its competitors.
Use the table below to answer the following questions.
Windsurfing equipment rents for $10 per hour and snorkeling equipment rents for $5
per hour.
Table 8.2.1
Devon enjoys windsurfing and snorkeling. His total utility from each activity is
summarized in Table 8.2.1. Devon has $35 to spend. How long will Devon choose to
windsurf and to snorkel?
A) 1 hour windsurfing and 5 hours snorkeling
B) 2 hours windsurfing and 3 hours snorkeling
C) 3 hours windsurfing and 1 hour snorkeling
D) 4 hours windsurfing and no hours snorkeling
E) 2 hour windsurfing and 4 hours snorkeling
An inflationary gap is the amount by which
A) potential GDP exceeds real GDP.
B) demand must increase to achieve full employment at a given price level.
C) supply must increase to achieve full employment at a given price level.
D) the price level must adjust to achieve full employment.
E) real GDP exceeds potential GDP.
Pooling risk
A) refers to a default contract made by a bank to other banks.
B) refers to spreading the risk of loan default among all the depositors within the
depository institution.
C) is now illegal under the Nuisance Act of 2014.
D) occurs when one person lends to an entire group or pool of borrowers.
E) refers to the lower cost of obtaining funds from a depository institution.
Refer to Table 20.4.1. Chained-dollar real GDP in 2014 is
A) $1665.
B) $1950.5.
C) $1707.75.
D) $1250.
E) $1100.
A Canadian tariff imposed on items that can be produced more cheaply abroad
A) benefits Canadians by making these goods cheaper.
B) makes the goods more expensive in foreign markets.
C) creates a social loss.
D) equalizes the cost of production between Canada and foreign producers.
E) all of the above
Refer to the figure below to answer the following questions.
Figure 7.3.1
The figure shows the market for shirts in Canada, where D is the domestic demand
curve and S is the domestic supply curve. The world price is $20 per shirt. Canada
imposes a tariff on imported shirts of $4 per shirt.
Refer to Figure 7.3.1. With the tariff, Canadians buy ________ million shirts per year.
A) 48
B) 32
C) 16
D) 24
E) 40
The creation of a successful movie can influence the main questions that economics
seeks to answer. Choose the statement that is false.
A) The movie influences the how question because the movie can create new
production techniques, which can be used in subsequent films.
B) The movie influences the for whom question because the people who earn higher
incomes through the movie production buy more goods and services.
C) The movie influences the when question because movie crews work on many
different films and must be available for the entire production.
D) The movie influences the what question because it can lead to spinoff goods or a
new movie genre, which can result in the production of similar films.
E) The movie influences the how question because it can use unknown actors or
Academy Award winners.
Refer to Table 22.3.1. The tables show the labour market and the production function
schedule for the country of Pickett. An increase in population changes the quantity of
labour supplied by 20 billion hours at each real wage rate. Potential GDP
A) does not change.
B) decreases to $3 trillion.
C) increases to $50 trillion.
D) increases to $18 trillion.
E) increases to $20 trillion.
An oil painting has a marginal cost of $1,000. The painting was bought for $1,500.
How much producer surplus did the painter obtain?
A) $1,500
B) $1,000
C) $500
D) zero
E) cannot be determined from the information given
In Figure 19.1.3, the second poorest 20 percent of all families receive what share of
income?
A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent
E) 50 percent
Use the information below to answer the following question.
Fact 21.2.2
CNN reported that for the first six months of 2008, the U.S. economy lost 438,000 jobs.
The job losses in June were concentrated in manufacturing and construction, two
sectors that have been badly battered in the recession.
Consider Fact 21.2.2. According to the news clip, the main source of increased
unemployment might be ________, and the main type of increased unemployment is
________.
A) losses in manufacturing and construction jobs; cyclical
B) people entering the labour force to look for work; structural
C) people entering the labour force to look for work; frictional
D) losses in manufacturing and construction jobs; structural
E) losses in manufacturing and construction jobs; frictional
In monopolistic competition
A) firms practice product differentiation.
B) the goods produced by each firm are identical.
C) firms do not have any control over the price of their products.
D) there are barriers to entry.
E) a small number of firms compete.
An increase in the price level due to an increase in the price of oil
A) creates stagflation in the short-run and will trigger a cost-push inflation.
B) creates stagflation in the short-run and may trigger off a cost-push inflation.
C) increases output above potential GDP.
D) leads to an increase in the money wage rate.
E) leads to a decrease in the money wage rate.
Limit pricing refers to
A) the highest price a monopolist can set.
B) the highest price that just inflicts a loss on a potential entrant.
C) a strategy used by entering firms in contestable markets.
D) the lowest price a duopoly can set.
E) the price set in a perfectly competitive market.
Which of the following quotes best illustrates the idea of total product?
A) “If I have 10 workers on my assembly line, I can produce 13 tables a day.”
B) “If I add an 11th worker, I can produce 1 extra table a day.”
C) “Each worker produces 2 tables a day.”
D) “I find if I add an extra shift at night, table production only rises by 80 percent
because I need more maintenance time on the assembly line.”
E) “If I double workers and double the assembly line, I can make 120 percent more
tables.”
If the price of a good falls, then in the new consumer equilibrium
A) the marginal utility from consuming the good will be higher than before.
B) the quantity of the good consumed decreases.
C) the quantity of substitutes consumed increases.
D) the marginal utility from substitutes will be lower than before the fall in price.
E) none of the above
An efficient allocation is achieved when
A) consumers are selecting points on their demand curves.
B) producers are selecting points on their supply curves.
C) the sum of consumer surplus and producer surplus is maximized.
D) all of the above
E) none of the above
A technological advance shifts
A) both SAS and AD rightward.
B) both SAS and LAS leftward.
C) SAS rightward but leaves LAS unchanged.
D) LAS rightward but leaves SAS unchanged.
E) both SAS and LAS rightward.
Complete the following sentence. Microeconomics is
A) not concerned with factors of production.
B) concerned with normative issues only.
C) concerned with the size of the total amount of income earned by all households in an
economy.
D) the branch of economics that studies the choices of individuals and businesses.
E) concerned exclusively with the role of the government in the economy.
John and Sally have identical preferences except Sally’s utility units are exactly 10
times that of John’s. Both have the same income and face the same prices. Choose the
best response.
A) John consumes 10 times the amount that Sally consumes.
B) John receives 1/10 the satisfaction that Sally receives.
C) Both will consume the same amount of all goods.
D) John and Sally will have equal total utility.
E) John and Sally will have equal marginal utility.
Refer to Figure 27.2.1. Equilibrium real GDP
A) is decreasing.
B) is equal to Ya.
C) is equal to Yb.
D) is equal to Yc.
E) can be any of Ya, Yb, or Yc depending on what is happening to inventories.
Use the table below to answer the following questions.
Table 28.4.1
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, what is the natural
unemployment rate?
A) 4 percent
B) 5 percent
C) 6 percent
D) 7 percent
E) 9 percent
Figure 2.1.6 shows the production possibilities frontier for a firm that produces pet
food. This PPF ________ illustrate scarcity because ________.
A) does; the firm cannot produce points outside the frontier, and as the firm moves
along the PPF, it cannot produce more dog biscuits without producing less cat food
B) does not; the firm can produce any quantity it wants if it is willing to pay a high
enough price
C) does not; the PPF is downward sloping
D) does; as more is produced, consumer must pay a higher price
E) does not; scarcity does not occur in the market for pet food
Refer to Table 11.2.2 which gives Tania’s total product schedule. The average product
when the firm hires three workers is
A) 1 teapot per worker.
B) 2 teapots per worker.
C) 3 teapots per worker.
D) 4 teapots per worker.
E) 12 teapots per worker.