Use the figure below to answer the following questions.
Figure 16.2.2
Refer to Figure 16.2.2. This figure shows the demand curve, the marginal private cost
curve and the marginal social cost curve of good A. Production of the 6th unit of output
generates a marginal external
A) cost of $1.50.
B) cost of $3.
C) cost of $6.
D) benefit of $3.
E) benefit of $6.
Given the information in Table 2.4.2, which one of the following is true?
A) Sheila has a comparative advantage in good X.
B) Bruce has a comparative advantage in good X.
C) The opportunity cost to Bruce of an additional unit of X is 0.4 units of Y.
D) A and B
E) B and C
If energy (E) is the only input used to produce output (Q), what is the formula for
average product of energy?
A) ΔQ/ΔE
B) Q/E
C) ΔE/ΔQ
D) E/Q
E) Q E ∗
To produce a unit of output, Alphaworks uses 10 hours of labour and 5 kilograms of
material. Betaworks uses 5 hours of labour and 10 kilograms of material, and
Gammaworks uses 10 hours of labour and 10 kilograms of material. If labour costs $10
per hour and material costs $5 per kilogram, which firm is economically efficient?
A) Alphaworks only
B) Betaworks only
C) Gammaworks only
D) Alphaworks and Betaworks
E) Alphaworks and Gammaworks
Jesse just graduated from university, and is looking for her first job. Jesse is
A) frictionally unemployed.
B) structurally unemployed.
C) not unemployed.
D) cyclically unemployed.
E) not in the labour force.
John likes to eat apples, oranges, and pears. If John increases his consumption of
oranges, ceteris paribus, marginal utility theory tell us that John’s marginal utility of
A) oranges decreases.
B) apples decreases.
C) pears decreases.
D) oranges remains constant.
E) oranges, apples, and pears all decrease.
According to real business cycle theory, a fall in the real interest rate ________ the
supply of labour and ________ employment.
A) decreases; decreases
B) increases; increases
C) decreases; increases
D) increases; decreases
E) does not change; does not change
Growthland’s real GDP per person was $112,000 in 2013 and $117,000 in 2014. What is
the growth rate of Growthland’s real GDP per person in 2014?
A) 4.3 percent
B) 4.5 percent
C) 5 percent
D) 12 percent
E) 17 percent
Refer to the figure below to answer the following question.
Figure 7.2.3
Refer to Figure 7.2.3. The graph shows the market for shoes in Canada. The world price
of a pair of shoes is $20. With free international trade, Canadian consumer surplus
________ and Canadian producer surplus ________.
A) increases by area A + B; decreases by area B
B) increases by area B; decreases by area B
C) increases by area A; decreases by area B
D) decreases by area A + B; increases by area B
E) decreases by area B; increases by area A
If real GDP per person is growing at 4 percent per year, it will double in
A) 17.5 years.
B) 25 years.
C) 4 years.
D) 8 years.
E) 56 years.
Labour productivity grows as
A) consumption expenditure increases.
B) depreciation increases.
C) physical capital grows.
D) human capital grows.
E) Both C and D are correct.
According to the “big tradeoff,”
A) income transfers reduce efficiency.
B) efficiency requires income transfers.
C) a more equally shared pie results in a larger pie.
D) property rights and voluntary exchange insure equality of opportunity.
E) income transfers should make the poorest person as well off as possible.
Use the table below to answer the following questions.
Table 6.1.1
Refer to Table 6.1.1, which gives the demand schedule and the supply schedule for the
apartment market in Anytown, Alberta. If a rent ceiling of $300 is imposed in the
apartment market, then
A) there is a shortage of 40 apartments.
B) there is a surplus of 40 apartments.
C) the supply of apartments will increase.
D) the supply of apartments will decrease.
E) the quantity of apartments supplied is 60 units.
For a given expected inflation rate, the higher the unemployment rate, the lower is the
actual inflation rate. This relationship is the ________ Phillips curve. When the
expected inflation rate changes, this is shown as a movement along the ________
Phillips curve.
A) short-run; short-run
B) long-run; long-run
C) long-run; natural
D) natural; short-run
E) short-run; long-run
In Figure 1A.3.4, the slope across arc BC is
A) -2/3.
B) -3/2.
C) -2.
D) -4/3.
E) -3/4.
What is a distinguishing characteristic of an inferior good?
A) a negative price effect
B) a positive income effect
C) a positive substitution effect
D) a negative income effect
E) an upward-sloping demand curve
Governments use subsidies
A) as a means of increasing government spending.
B) when they want to increase taxes.
C) to achieve an efficient outcome in a market with external costs.
D) to achieve an efficient outcome in a market with external benefits.
E) and pollution permits to achieve an efficient outcome in markets with external
benefits.
In Canada’s economy, investment is financed by
A) C + I + G + X – M.
B) C + S + T.
C) S + T + M.
D) S + (T – G) + (X – M).
E) S + (T – G) + (M – X).
Once a cartel determines the profit-maximizing price,
A) all members of the cartel have a strong incentive to abide by the agreed-upon price.
B) each member will face the temptation to cheat on the cartel price to increase its sales
and profit.
C) changes in the output of any member firms will have no impact on the market price.
D) entry into the industry of rival firms will have no impact on the profit of the cartel.
E) entry into the industry of rival firms will raise cartel profit as long as the new firms
join the cartel.
Refer to Fact 6.5.1. If a penalty is imposed on either the buyer or the seller, and the
penalty is the same, then the marginal benefit
A) is higher when the penalty is imposes on the seller.
B) cannot be measured regardless of who pays the penalty.
C) is the same regardless of who pays the penalty.
D) is higher when the penalty is imposed on the buyer.
E) is zero.
The shutdown point occurs at the point of minimum
A) marginal cost.
B) average variable cost.
C) average fixed cost.
D) total cost.
E) average total cost.
All of the following statements are true except
A) the market price of an ITQ equals the marginal social benefit minus the marginal
cost.
B) when an ITQ system is used in a fishing market, boat owners with a low marginal
cost are willing and able to pay more for a quota than are boat owners with a higher
marginal cost.
C) individual differences in marginal cost do not prevent an ITQ system from delivering
the efficient outcome.
D) an ITQ is a production limit that is assigned to an individual who is free to transfer
the quota to someone else.
E) Canada does not use ITQs.
Refer to Fact 2.4.1. ________ has a comparative advantage in producing caps. If Sue
and Tessa each specialize in producing the good in which they have a comparative
advantage and trade 1 jacket for 7 caps, ________.
A) Sue; Tessa gains but Sue loses
B) Tessa; Sue loses but Tessa gains
C) Sue; both Sue and Tessa gain
D) Tessa; both Sue and Tessa gain
E) Tessa; Tessa loses but Sue gains
Suppose that a country’s government expenditures are $400 billion, net taxes are $300
billion, saving is $300 billion, and investment is $250 billion. Net exports are a
A) surplus of $150 billion.
B) surplus of $50 billion.
C) deficit of $150 billion.
D) deficit of $50 billion.
E) deficit of $250 billion.
Refer to Figure 13.5.1. Suppose the government regulates the firm with average cost
pricing. What is the price?
A) $0 a bottle
B) $0.50 a bottle
C) $0.30 a bottle
D) $0.10 a bottle
E) $0.20 a bottle
Use the table below to answer the following questions.
Table 20.2.6
There are only two goods in this economy.
Refer to Table 20.2.6. Consider the data in this table. What is current nominal GDP?
A) $189,900
B) $192,000
C) $95,000
D) $93,000
E) 75,000 loaves of bread and 18,000 computer disks
Refer to Figure 12.4.2, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive market. In the long run,
A) firms that remain in the market will expand production.
B) market demand will increase.
C) market supply will decrease.
D) firms will exit the market.
E) firms that remain in the market will decrease production.
Consider Fact 22.2.1. In 1890, the United States surpassed China to become the world’s
largest economy because
A) the benefits of the Industrial Revolution were greater in the United States than in
China.
B) the United states was a strong, united country following the Civil War and
reconstruction.
C) the U.S. population growth rate was much lower than China’s population growth
rate.
D) the U.S. population exceeded China’s population.
E) China began to import a significant portion of life-sustaining goods and services.
What is the relationship between goods and the income effect?
A) An inferior good has a positive income effect.
B) A normal good has a positive income effect.
C) An inferior good has no income effect.
D) A normal good has no income effect.
E) A normal good has a negative income effect.
Refer to Fact 24.4.2. Bilbo Baggins comes to the bank and deposits a $100 bill. After
Bilbo’s deposit, but before any other actions occur, the total quantity of money in the
economy
A) has stayed the same, with its components unchanged.
B) has stayed the same, with currency decreasing and deposits increasing.
C) has fallen, with currency decreasing and deposits staying the same.
D) has risen, with currency unchanged and deposits increasing.
E) has fallen, with currency decreasing and deposits unchanged.
Sustainable production is
A) the rate of production that can be maintained indefinitely.
B) the production output with the lowest average total cost.
C) the production output where MC = ATC.
D) the rate of production that maximizes marginal private benefit.
E) the rate of production where MB = MC.
If the Bank of Canada lowers the overnight loans rate, other short-term interest rates
________ and the exchange rate ________.
A) fall; falls
B) fall; does not change
C) fall; rises
D) do not change; falls
E) fall, and the long-term interest rate rises; falls