Use the information below to answer the following question.
Fact 10.2.2 A Medical Sensation
Hospitals are buying da Vinci surgical robots. Surgeons, sitting comfortably at a da
Vinci console, can use various robotic attachments to perform even the most complex
procedures.
Refer to Fact 10.2.2. Assume that performing a surgery with a surgical robot requires
fewer surgeons and nurses. Using the surgical robot ________ technologically efficient.
We would need additional information about ________ to determine if switching to
surgical robots is economically efficient for a hospital.
A) is not; the cost of surgery with a surgical robot and the cost of surgery without a
surgical robot
B) is not; the success rate of operations with surgical robots compared to the success
rate of operations using other methods
C) is; the success rate of operations with surgical robots compared to the success rate of
operations using other methods
D) is; the cost of surgery with a surgical robot and the cost of surgery without a surgical
robot
E) is not; clinical trials
New Keynesian economists believe that ________ is influenced by ________.
A) yesterday’s money wage rate; today’s rational expectations of the money wage
B) today’s money wage rate; yesterday’s rational expectations of the price level
C) yesterday’s rational expectations of the price level; today’s money wage rate
D) today’s money wage rate; today’s rational expectations of the price level
E) today’s money wage rate; animal spirits
The marginal cost curve slopes downward at low outputs because of ________. The
marginal cost curve eventually slopes upward because of ________.
A) greater specialization and division of labour; the law of diminishing returns
B) the law of diminishing returns; increasing average fixed cost
C) falling average fixed cost; the law of diminishing returns
D) the law of diminishing returns; greater specialization and division of labour
E) greater specialization and division of labour; rising average fixed cost
If the demand for a good is perfectly inelastic, then a tax on the good will be paid
A) completely by the buyers.
B) completely by the sellers.
C) equally by the buyers and sellers.
D) mostly but not completely by the buyers.
E) mostly but not completely by the sellers.
Consider the effect of a minimum wage imposed in an unregulated labour market.
Which of the following statements is correct?
i. A minimum wage set above the equilibrium wage increases the quantity of labour
supplied.
ii. A minimum wage set above the equilibrium wage increases the supply of labour.
iii. A minimum wage set above the equilibrium wage decreases the demand for labour.
A) i only
B) ii only
C) iii only
D) ii and iii only
E) i, ii, and iii
If the quantity of carrots demanded increases by a large percentage when income
increases by a small amount, we know that the demand for carrots is
A) price elastic.
B) price inelastic.
C) income inferior.
D) income inelastic.
E) income elastic.
Consumption expenditure includes only
A) expenditure by Canadian households on goods and services produced in Canada.
B) expenditure by Canadian households and firms on goods and services produced in
Canada.
C) expenditure by Canadian households, firms, and governments on goods and services
produced in Canada.
D) expenditure by Canadian households on goods and services produced in Canada and
in the rest of the world.
E) expenditure by Canadian households and foreigners on goods and services produced
in Canada.
When the Bank of Canada makes an open market sale, its assets ________ and its
liabilities ________.
A) decrease; decrease
B) decrease; increase
C) increase; increase
D) increase; decrease
E) decrease; do not change
CoolU has solved its smoking problem by allocating each student 5 smoking permits a
day, and allowing trading. This is an example of
A) cap-and-trade.
B) emission charges.
C) the Coase theorem.
D) a pollution tax.
E) a voucher.
In Figure 7.2.1, international trade ________ producer surplus in Canada by ________.
A) increases; $320 million
B) decreases; $192 million
C) increases; $192 million
D) decreases; $320 million
E) decreases; $256 million
Use the information below to answer the following questions.
Fact 5.3.1
Only 1 percent of the world supply of water is fit for human consumption. Some places
have more water than they can use; some could use much more than they have. The 1
percent available would be sufficient if only it were in the right place.
Refer to Fact 5.3.1. The major problem in achieving an efficient use of the world’s
water is
A) the lack of rain in some areas of the world.
B) water is vital for life.
C) to get it from the places where it is most abundant to the places in which it has the
most valuable uses.
D) markets in water are controlled by governments or private producers.
E) the price of water is too low.
Use the figure below to answer the following questions.
Figure 14.2.6
Refer to Figure 14.2.6, which shows the demand curve, marginal revenue curve and
cost curves faced by Gap. Gap maximizes its profit if it sells ________ jackets per day.
A) 200
B) 240
C) 275
D) 140
E) 280
According to the fair rules view of fairness, a fair outcome in the housing market
A) is one that does not block voluntary exchanges of housing.
B) cannot be created in housing industry.
C) is one that allocates scarce housing resources to those who are willing and able to
pay.
D) is one that allocates scarce housing resources by lottery.
E) is one that allocates scarce housing resources to the poorest.
In the classical growth theory, economic growth eventually stops due to
A) diminishing returns.
B) knowledge capital being easily replicated.
C) the real rate of interest falling back down to its target rate.
D) real GDP per person becoming too high.
E) high population growth resulting from the increase in real GDP per person.
Use the information below to answer the following questions.
Fact 10.1.1 The Colvin Interview: Chrysler
The key driver of profitability will be that the focus of the company isn’t on
profitability. Our focus is on the customer. If we can find a way to give customers what
they want better than anybody else, then what can stop us?
Refer to Fact 10.1.1. In spite of what Chrysler’s vice chairman and co-president claims,
Chrysler’s focus actually is on profitability because
A) all car firms are greedy.
B) without profitability the UAW will be unable to negotiate high enough wage rates
for its members.
C) without a focus on profitability, Chrysler will either be eliminated from the market
or taken over by another firm.
D) without a focus on profitability, Chrysler will face an unreasonably high implicit
rental rate.
E) without profitability, Chrysler will not have enough money for research and
development.
Suppose in current dollar terms, GDP increased by approximately 7 percent between
one period and the next, but real GDP fell by 2 percent. Which one of the following
explanations is most likely?
A) Prices fell by 9 percent.
B) Prices fell by 2 percent.
C) Output rose by 2 percent.
D) Prices increased by 7 percent.
E) Prices increased by 9 percent.
Suppose there is an increase in the cost of resources used in the production of good A.
Then
A) if the price of A rises, we know the demand for A is elastic.
B) if the total revenue from sales of A rises, we know the demand for A is elastic.
C) if the total revenue from sales of A falls, we know the demand for A is elastic.
D) total revenue will increase because the price of A must rise.
E) total revenue must fall because the quantity bought and sold of A must fall.
Which of the following is true regarding marginal benefit?
I. The marginal benefit curve shows the benefit firms receive by producing another unit
of a good.
II. Marginal benefit increases as more and more of a good is consumed.
III. Marginal benefit is the maximum amount a person is willing to pay to obtain one
more unit of a good.
A) I only
B) I and II
C) I and III
D) III only
E) I, II, and III
Refer to Figure 26.3.2. When the economy of Mythlo is in short-run macroeconomic
equilibrium, the price level is
A) 65.
B) 95.
C) 70.
D) 75.
E) 80.
Suppose interest rates are 3 percent in Japan and 6 percent in Canada. The current value
of the exchange rate is 110 Japanese yen per dollar, and it is generally expected that in
one year the exchange rate will be 106.7 yen per dollar. However, new information is
released that changes everyone’s expectations, and they think the exchange rate in one
year will still be 110 yen per dollar. As a result of this change,
A) the demand for Canadian dollars increases.
B) the supply of Canadian dollars decreases.
C) people will borrow in Canada and lend in Japan.
D) the demand for Canadian dollars decreases.
E) A and B.
In a recent study, the University of Underfunded argued that it created four times as
many jobs as people that it hired directly. This argument illustrates the idea
A) of the marginal propensity to consume.
B) of the multiplier.
C) of government spending.
D) of the tax multiplier.
E) that universities are wasting taxpayers’ dollars.
The quantity theory of money begins with the equation of exchange, MV = PY, and
then adds the assumptions that
A) velocity varies inversely with the interest rate, and the price level is independent of
the quantity of money.
B) velocity and the price level are independent of the quantity of money.
C) potential GDP and the quantity of money are independent of the price level.
D) potential GDP and the price level are independent of the quantity of money.
E) velocity and potential GDP are independent of the quantity of money.
In Figure 7.2.1, with international trade, Canada ________ million shirts per year.
A) imports 32
B) imports 48
C) exports 16
D) exports 32
E) imports 16
When a city street is not congested, it is
A) a common resource
B) rival and excludable.
C) rival and nonexcludable.
D) a private good.
E) a public good.
The idea that the platforms of the political parties will tend to become similar over time
is
A) not a reflection of reality.
B) true in theory but not true in actuality.
C) called the principle of minimum differentiation.
D) called the principle of minimal political confrontation.
E) the result of intense lobbying pressure.
At the best affordable point, what is the relationship between the indifference curve and
the budget line?
A) The budget line and the indifference curve are identical.
B) The slope of the indifference curve exceeds the slope of the budget line.
C) The slope of the budget line exceeds the slope of the indifference curve.
D) The slope of the indifference curve equals the slope of the budget line.
E) The slope of the indifference curve is one-half the slope of the budget line.
What will be the value in one year of $25 invested today at an annual interest rate of 5
percent?
A) $25
B) $26.25
C) $27.50
D) $30
E) $23.81
Suppose the cost of breaking the law is imposed on the sellers of an illegal good. This
action will have its biggest impact on quantity if the demand for the good is
A) inelastic or the supply is inelastic.
B) elastic or the supply is elastic.
C) elastic or the supply is inelastic.
D) inelastic or the supply is elastic.
E) perfectly inelastic.
Ron starts out in consumer equilibrium, consuming two goods, X and Y. The price of X
rises. Immediately after the rise in price
A) MUX/PX> MUY/PY, and then Ron increases his consumption of X.
B) MUX/PX> MUY/PY, and then Ron decreases his consumption of X.
C) MUX/PX< MUY/PY, and then Ron increases his consumption of X.
D) MUX/PX< MUY/PY, and then Ron decreases his consumption of X.
E) MUX/PX> MUY/PY, and then Ron increases his consumption of X and Y.
Most governments subsidize basic education because
A) there are external costs associated with well-educated citizens.
B) the marginal social benefit from education is greater than the marginal private
benefit.
C) of the existence of private schools.
D) the marginal social cost of education is greater than the marginal private cost.
E) otherwise too many students will receive educations.