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When asked in an interview what she missed the most because of the time she spent
training for the Olympics, a rower, who lived on her own, answered "a normal social
life." She also revealed that she had given up a job that paid $30,000 per year to train
fulltime. She received a grant of $8,000 per year from Sport Canada, but this failed to
cover all her training expenses. Her food and rent were $5,000 per year and training
expenses were $12,000 per year. Aside from the value of a normal social life, what is
the annual opportunity cost, expressed in dollars, to this rower of "Going for Gold"?
A) $25,000
B) $4,000
C) $30,000
D) $39,000
E) $34,000
Use the information below to answer the following questions.
Fact 7.3.2
With free trade between Australia and Canada, Australia would export beef to Canada.
But Canada imposes an import quota on Australian beef.
Refer to Fact 7.3.2. If Canada imposes an import quota on Australian beef, the price that
Canadian consumers pay for beef will ________ and the quantity of beef produced in
Canada will ________.
A) not change; decrease
B) not change; increase
C) rise; not change
D) rise; increase
E) fall; decrease
An increase in the expected rate of inflation shifts the
A) short-run Phillips curve downward.
B) short-run Phillips curve upward.
C) long-run Phillips curve rightward.
D) long-run Phillips curve leftward.
E) long-run Phillips curve upward.
The short-run effect of lowering the overnight loans rate is that the
A) price level rises and real GDP increases.
B) price level rises and real GDP decreases.
C) price level lowers and real GDP increases.
D) price level lowers and real GDP decreases.
E) none of the above
An unanticipated deflation does all of the following except
A) redistributes income.
B) redistributes wealth.
C) lowers real GDP.
D) lowers employment.
E) decreases the real wages of workers with long-term wage contracts.
Which of the following is a nonrenewable natural resource?
A) coal
B) land
C) water
D) trees
E) rain
Use the table below to answer the following question.
Table 14.2.1
Refer to Table 14.2.1. Sara is a dot.com entrepreneur who sells sweatshirts. She pays
$1,000 a week for her Web server and Internet connection. She pays the firm that makes
the sweatshirts $20 a sweatshirt. Sara has no other costs. The table sets out the demand
schedule for Sara's sweatshirts. Other firms ________ enter the Web sweatshirt business
and compete with Sara. In the long run, the demand for Sara's sweatshirts ________
and her economic profit ________.
A) will; decreases; falls to zero
B) will not; decreases; falls to zero
C) will; increases; increases
D) will not; increases; increases
E) will; increases; falls to zero
A production technology that reduces or prevents pollution is
A) anti-pollution technology.
B) Coase technology.
C) abatement technology.
D) cap-and-trade technology.
E) inefficient.
Consider the cartel of Trick and Gear. The game is repeated indefinitely and each firm
employs a tit-for-tat strategy. The equilibrium is called
A) a credible strategy equilibrium.
B) a dominant player equilibrium.
C) a duopoly equilibrium.
D) a trigger strategy equilibrium.
E) a cooperative equilibrium.
Given Fact 2.4.2, the opportunity cost of producing a unit of Y is
A) 1 unit of Y for Agnes and 2 units of Y for Brenda.
B) 1 unit of Y for Agnes and 1/2 unit of Y for Brenda.
C) 1 hour for Agnes and 1/2 hour for Brenda.
D) 1 hour for Agnes and 2 hours for Brenda.
E) 1 unit of X for Agnes and 1/2 unit of X for Brenda.
Firms organize production by using
A) command systems only.
B) incentive systems only.
C) command and incentive systems.
D) market systems only.
E) principal-agent systems only.
The opportunity cost of holding currency is
A) the price level.
B) consumption given up.
C) the real interest rate.
D) the nominal interest rate.
E) the inflation rate.
Factors that influence labour productivity include
A) the inflation rate, the real wage rate, and the exchange rate.
B) the labour demand curve.
C) physical capital, the real wage rate, and technology.
D) the demand for labour, the real wage rate, and technology.
E) physical capital, human capital, and technology.
Complete the following sentence. A household
A) consumes or pays taxes out of disposable income.
B) consumes, saves, or pays taxes out of disposable income.
C) consumes or saves out of disposable income.
D) only consumes out of disposable income.
E) saves more than it consumes.
Use the table below to answer the following questions.
Table 22.3.1
Refer to Table 22.3.1. The tables show the labour market and the aggregate production
function schedule for the country of Pickett. Potential GDP is
A) $40 trillion.
B) $6 trillion.
C) $14 trillion.
D) $25 trillion.
E) $9 trillion.
Use the information below to answer the following questions.
Fact 20.1.3
The components and robots for Toyota auto assembly lines in Canada are built in Japan.
Toyota assembles cars for the Canadian market in Ontario.
Refer to Fact 20.1.3. Choose the correct statement.
A) The assembly line components and robots appear as exports in Canada's GDP.
B) The assembly line components and robots appear as investment in Canada's GDP.
C) The assembly line components and robots appear as a positive entry in calculating
Canada's GDP.
D) The assembly line components and robots appear as imports in Canada's GDP.
E) The assembly line components and robots appear as consumption expenditure in
Canada's GDP.
Debra has an absolute advantage in producing a good when she
A) has a comparative advantage in producing that good.
B) can produce the good at lower opportunity cost than anyone else.
C) can produce more of that good than anyone else, using the same quantity of inputs.
D) has exclusive rights to sell that good.
E) has better technology than anyone else.
In Figure 19.1.3, the second richest 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
Refer to Table 6.4.1. The table shows the demand and supply schedules for rice. With a
production quota of 2,000 boxes a week, the price of a box of rice is ________, the
marginal cost of producing rice is ________ a box, and the quantity of rice produced is
________ boxes a week.
A) $1.30; $1.60; 2,000
B) $1.60; $1.30; 2,000
C) $1.40; $1.40; 2,500
D) $1.40; $1.40; 2,000
E) $1.60; $1.30; 2,500
Without money to act as a medium of exchange,
A) the standard of living in the economy would increase.
B) barter exchange would allow for a much simpler yet increased standard of living.
C) the increased transactions costs associated with trading would prohibit some trades
from taking place.
D) independence in production would lead to a proliferation of new products.
E) all exchanges that take place under a monetary system would still take place.
Which of the following is a microeconomic topic?
A) the reasons why a consumer buys less honey
B) the reasons why the average price level in a country falls
C) the cause of increasing unemployment
D) the effect of the government budget deficit on inflation
E) the reasons why the labour force in a country decreases
In Figure 7.2.2, international trade ________ producer surplus in Canada by ________.
A) decreases; $2.88 billion
B) decreases; $1.92 billion
C) increases; $4.8 billion
D) increases; $3.6 billion
E) decreases; $4.8 billion
Use the figure below to answer the following questions.
Figure 29.3.1
Refer to Figure 29.3.1, which shows the outlays and revenues for the government of
Pianoland. The budget is balanced when real GDP equals
A) $550 billion.
B) $600 billion.
C) $650 billion.
D) $700 billion.
E) $750 billion.
Which one of the following is labour?
A) money
B) a carpenter's hammer
C) a shoe factory
D) a bread-slicing machine
E) a singer's voice
A government budget deficit ________ the demand for loanable funds and ________
investment.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; rises or falls depending on the change in the supply of loanable funds
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. Assume the market is perfectly competitive. If the market
is unregulated, the marginal
A) social cost equals the marginal private benefit.
B) private cost is less than the marginal social benefit.
C) private cost equals the marginal social benefit.
D) social cost equals the marginal private cost.
E) private cost is greater than the marginal social benefit.
An increase in income taxes
A) does not affect potential GDP because potential GDP depends on technology only.
B) does not affect potential GDP as long as the economy's endowments of resources
and the state of technology remain unchanged.
C) increases potential GDP because workers have to work longer hours to maintain the
same standard of living before the tax increase.
D) decreases potential GDP because workers' incentives to work are weakened.
E) decreases potential GDP because real GDP decreases when households have less
disposable income to spend.
Refer to Table 16.3.1. The table shows marginal private benefit and the marginal social
benefit from the consumption of chemical fertilizer and the marginal social cost of the
production of fertilizer. If production is left to the private market, the quantity produced
is
A) 1 unit.
B) 2 units.
C) 3 units.
D) 4 units.
E) 5 units.
The three limitations on human rationality that behavioural economics emphasizes are
A) bounded rationality, bounded utility, and bounded self-interest.
B) bounded rationality, bounded willpower, and bounded self-interest.
C) bounded utility, bounded willpower, and bounded self-interest.
D) bounded rationality, bounded willpower, and bounded utility.
E) bounded rationality, bounded surplus, and bounded utility.
The argument that protection
A) penalizes poor environmental standards is true.
B) allows us to compete with cheap foreign wages is true.
C) is necessary for infant industries is true.
D) saves jobs is flawed.
E) prevents rich countries from exploiting poor countries is true.
What method of resource allocation depends on willingness-to-pay and ability-to-pay?
A) command
B) lottery
C) market price
D) first-come, first-served
E) force
The income effect influences food purchases because when the price of a certain food
rises, other things remaining the same, ________. Consumers ________.
A) demand for that food increases; believe that the price may rise even further so they
buy more now
B) demand for that food decreases; buy less of the food that has experienced the price
rise and more of other foods
C) the price rises relative to income; cannot afford to buy all the things they previously
bought, so they normally buy less of the food that has experienced the price rise
D) demand for that food increases; buy more food because food is a normal good
E) its relative price rises; purchase less of all foods because food is an inferior good
If real GDP is less than potential GDP, we would expect
A) the money wage rate to fall.
B) the money wage rate to rise.
C) potential GDP to increase.
D) potential GDP to decrease.
E) the exchange rate of the Canadian dollar to rise.
