Refer to Figure 27.2.1. When real GDP is equal to Yb, then
A) actual expenditure is less than planned expenditure.
B) actual expenditure is greater than planned expenditure.
C) planned expenditure is equal to actual expenditure.
D) real GDP increases.
E) real GDP decreases.
When Good A is produced, pollution is also produced. When the marginal social cost of
production of Good A equals marginal social benefit from Good A, then
I. there is no pollution.
II. resources are used efficiently.
A) I only
B) II only
C) neither I nor II
D) both I and II
E) sometimes I and sometimes II, but never both simultaneously
Refer to Fact 25.4.1. What is the amount of net taxes?
A) 10 billion turkeys
B) 12 billion turkeys
C) 2 billion turkeys
D) 8 billion turkeys
E) 14 billion turkeys
A change in consumption, in response to a change in income, is
A) unplanned consumption.
B) autonomous consumption.
C) induced consumption.
D) equilibrium consumption.
E) planned consumption.
When a price ceiling is set below the equilibrium price,
A) the demand curve shifts leftward.
B) the quantity supplied exceeds the quantity demanded.
C) the quantity supplied equals the quantity demanded.
D) the supply curve shifts rightward.
E) the quantity demanded exceeds the quantity supplied.
Refer to Table 18.3.1. Table 18.3.1 gives information about the labour market in Lantis,
a community in which the labour market is perfectly competitive. If the price of the
good that Lantis produces increases and the value of marginal product of labour
changes by $10 an hour, the equilibrium wage rate ________ an hour and the quantity
of labour employed ________.
A) rises to $17.50; increases to 450 hours
B) rises to $10; increases to 600
C) rises to $20; increases to 500 hours
D) remains at $15; decreases to 300 hours
E) rises to $20; decreases to 300 hours
Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.
Between 4,000 and 5,000 frisbees, supply is
A) inelastic.
B) unit elastic.
C) elastic.
D) perfectly elastic.
E) perfectly inelastic.
A marginal benefit curve measures
A) comparative advantage.
B) willingness to pay.
C) absolute advantage.
D) opportunity cost.
E) expenditure.
A proportional income tax
A) taxes lower income people a larger percentage than higher income people.
B) taxes lower income people a smaller percentage than higher income people.
C) receives less tax from higher income people, but taxes them at the same rate as lower
income people.
D) taxes everyone at the same rate.
E) taxes everyone the same amount.
A price-taking firm faces a
A) perfectly inelastic demand.
B) downward-sloping marginal revenue curve.
C) downward-sloping supply curve.
D) perfectly elastic demand.
E) downward-sloping demand curve.
Which one of the following industries is the best example of an oligopoly?
A) the battery industry
B) the sporting goods industry
C) the footwear industry
D) the cosmetics industry
E) the power industry
Total revenue from the sale of a good will decrease if
A) income increases and the good is a normal good.
B) its price rises and demand is elastic.
C) its price rises and demand is inelastic.
D) income falls and the good is an inferior good.
E) its price falls and demand is elastic.
A perfectly competitive firm is maximizing profit if
A) marginal cost equals price and price is not below minimum average variable cost.
B) marginal cost equals price and price is not below minimum average fixed cost.
C) total revenue is at a maximum.
D) average variable cost is at a minimum.
E) average total cost is at a minimum.
Calvin is a custom picture framer. His total fixed cost is $110 a day, and his average
variable cost is $1 a frame. He is maximizing his profit by selling 22 picture frames a
day for $6 a frame. Few people know about Calvin’s Framery. Calvin thinks that if he
spends $10 a day on advertising, he can increase his market and sell 44 picture frames a
day for $6 a frame. If Calvin’s belief about the effect of advertising is correct, he
A) cannot increase his economic profit by advertising because advertising increases his
average total cost.
B) cannot increase his economic profit by advertising because advertising increases his
total cost.
C) can increase his economic profit by advertising.
D) can increase his economic profit by advertising only if he raises the price of a
picture frame.
E) can increase his economic profit by advertising only if he can lower his total variable
cost.
Use the figure below to answer the following question.
Figure 1A.3.8
The slope of the line in Figure 1A.3.8 is
A) 3/2.
B) 2/3.
C) -3/2.
D) -2/3.
E) none of the above.
Use the figure below to answer the following questions.
Figure 11.4.1
Refer to Figure 11.4.1 which shows the total product curves for four different plant
sizes as Tania varies the quantity of capital and workers. The curve that represents the
plant using the largest amount of capital is
A) plant A.
B) plant B.
C) plant C.
D) plant D.
E) all curves because each plant uses the same number of machines, just different
amounts of labour.
Which one of the following is included in the implicit rental rate of capital?
A) economic depreciation
B) the cost of electricity
C) the cost of raw materials
D) the cost of low-skilled labour
E) the cost of heating
A subsidy
A) raises marginal social benefit above marginal social cost.
B) makes marginal social cost equal marginal social benefit.
C) results in efficient production.
D) raises marginal social cost above marginal social benefit.
E) makes world prices higher than domestic prices.
Suppose a bond promises to pay its holder $100 a year forever. The interest rate on the
bond rises from 4 percent to 5 percent. The price of the bond
A) falls from $2,500 to $2,000.
B) falls from $25,000 to $20,000.
C) rises from $2,000 to $2,500.
D) rises from $20,000 to $25,000.
E) does not change. Bond prices are constant.
Refer to Figure 13.3.3. What is the redistribution of surplus from consumers to the
producer with a single-price monopoly, as compared to a perfectly competitive market?
A) EADH
B) EABH
C) ABD
D) ACD
E) EABH – BCD
If the marginal product of the fifth worker is 34, then the total product of five workers
A) is 35.
B) is 24.
C) is 170.
D) is 6.8.
E) cannot be calculated with the information given.
The average product of labour equals
A) the slope of the total product curve.
B) the slope of the marginal product curve.
C) the increase in total product divided by the increase in labour employed.
D) total product divided by the quantity of labour employed.
E) the difference between the total product and the marginal product of labour.
In a perfectly competitive market, the Herfindahl-Hirschman Index (HHI)
A) is small.
B) is usually greater than 5,000.
C) is greater than 1,000 but less than 2,000.
D) lies between 1,200 and 1,500.
E) is greater than 10,000.
Use the table below to answer the following questions.
Table 12.2.5
Refer to Table 12.2.5. Archibald’s Tattoos is a perfectly competitive firm. The firm’s
total costs are shown in the table. The price at Archibald’s shut-down point is
A) $10.00.
B) $15.00.
C) $12.50.
D) $13.33.
E) $17.00.
Between 1970 and 2005, the world Gini ratio ________ indicating ________ in the
world distribution of income.
A) fell; greater equality
B) fell; greater inequality
C) did not change; no change
D) rose; greater equality
E) rose; greater inequality
Economic growth results when there are increases in
A) aggregate demand.
B) the real wage rate.
C) long-run aggregate supply.
D) the inflationary gap.
E) short-run aggregate supply resulting from falling money wage rates and falling
factor prices.
Refer to Table 4.2.2. All of the following statements regarding Jolt are true except
A) it has an elastic demand.
B) it is an inferior good.
C) it is a substitute for Coke.
D) it has a negative cross elasticity of demand with respect to Coke.
E) it has a negative income elasticity of demand.
When Canada exports a good, the amount of the ________ in Canada’s consumer
surplus is ________ the amount of the increase in Canada’s producer surplus.
A) increase; smaller than
B) increase; larger than
C) decrease; smaller than
D) decrease; equal to
E) decrease; larger than
Suppose the market for diamonds is a monopoly. We can expect
A) underproduction of diamonds.
B) overproduction of diamonds.
C) marginal social benefit to equal marginal social cost in the diamond market.
D) an efficient quantity of diamonds.
E) the allocation of diamonds to be first-come, first-served.
Choose the correct sentence.
A) Inherited wealth does not change income inequality because debts can’t be forced
onto the next generation.
B) Inherited wealth can increase income inequality because debts can’t be forced onto
the next generation, but it can also decrease income inequality.
C) Inherited wealth decreases income inequality because debts are forced onto the next
generation.
D) Inherited wealth decreases income inequality because on average most people
inherit the same amount of money.
E) Inherited wealth always increases income inequality because of assortative mating.
If a market is shared equally by 100 firms, the Herfindahl-Hirschman Index is
A) 1/100.
B) 1/50.
C) 1.
D) 50.
E) 100.
If the interest rate is 10 percent per year, the present value of $100 in two years is
A) $80.00.
B) $82.64.
C) $90.91.
D) $120.00.
E) $121.00.
A situation in which resources are either unused or misallocated or both is represented
in a production possibilities frontier diagram by
A) any point on either the horizontal or the vertical axis.
B) a point above or to the right of the production possibilities frontier.
C) a point outside the production possibilities frontier.
D) a point inside the production possibilities frontier.
E) a point on or inside the production possibilities frontier.
A decrease in the overnight loans rate
A) increases other short-term interest rates, decreases investment, and decreases
aggregate demand.
B) lowers the exchange rate, increases the supply of loanable funds, and increases
aggregate demand.
C) lowers other short-term interest rates, raises the real interest rate, and increases
aggregate demand.
D) decreases the demand for loanable funds, lowers the real interest rate, and decreases
aggregate demand.
E) lowers the exchange rate, increases the demand for loanable funds, and increases
aggregate demand.