Archives: Quiz

Effective strategies for addressing the problem of negative externalities include A) taxing the profit of polluting companies at twice the rate of non-polluting companies. B) imposing taxes on the activity that generates the pollution. C) stressing the use of renewable […]

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 […]

An assumption of the new growth theory is that A) people earn a subsistence real wage in the long run. B) all technological advances are the result of chance. C) the marginal product of all types of capital increases as […]

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded, the demand curve for this good A) is vertical. B) is horizontal. C) has slope equal to 1. D) is a […]

Sally’s Ski Shoppe maximizes total revenue when the price elasticity of demand for skis is A) greater than 10. B) greater than 1 but less than 10. C) zero. D) 1. E) -1. Use the table below to answer the […]

Consider the market for cell phones. Suppose the price of a cell phone falls. Explain the effect of this event on the quantity of cell phones demanded and on the demand for cell phones. A) The quantity of cell phones […]

Behavioural economics A) studies the activity of the human brain when a person makes an economic decision. B) studies psychology by using the economist’s toolbox. C) studies the ways in which limits on the human brain’s ability to compute and […]

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) […]

Use the figure below to answer the following questions. Figure 13.4.2 Refer to Figure 13.4.2. Assume this monopolist practises perfect price discrimination. This means that A) the monopoly’s behaviour is illegal. B) one price is charged to young people and […]

Which is not a characteristic of oligopoly? A) Each firm faces a downward-sloping demand curve. B) Firms are profit-maximizers. C) The sales of one firm will not have a significant effect on other firms. D) There is more than one […]

Suppose in an industry a firm realizes economies of scale over the entire length of its LRAC curve. In this situation, the firm is A) a natural monopoly. B) a fixed-cost monopoly. C) an output-discriminating monopoly. D) a perfect-price discriminating […]

Suppose that the Reserve Bank of New Zealand is following the Taylor rule. In 2009, it sets the official cash rate (the N.Z. equivalent of the overnight loans rate) at 4.0 percent a year. If the inflation rate in New […]

Use the figure below to answer the following questions. Figure 20.1.1 Refer to Figure 20.1.1, which shows the circular flow of expenditure and income for Venus. During 2014, A was $100, B was $50, C was $30 and D was […]

Two variables are positively related if A) increases in one are associated with decreases in the other. B) increases in one are associated with increases in the other. C) decreases in one are associated with increases in the other. D) […]

Consider a graph that shows the total cost curve and the total variable cost curve. As output increases, the vertical distance between these two curves A) increases. B) decreases. C) becomes smaller and then larger. D) becomes larger and then […]

If the saving function is S = -25 + 0.4YD, then the consumption function is A) C = 25 + 0.6Y. B) C = -25 + 0.4YD. C) C = 25 – 0.4YD. D) C = 25 + 0.6YD. E) […]

If we produce one more bottle of water, A) we cannot be acting efficiently. B) we incur a marginal cost. C) we must move away from market equilibrium. D) the price of a bottle of water must rise. E) the […]

Air pollution generated by a paper mill factory is an example of a A) positive production externality. B) positive consumption externality. C) negative consumption externality. D) marginal external benefit. E) negative production externality. Refer to Table 27.1.1. The marginal propensity […]

The y– axis intercept of the supply curve is 40 and the slope is 6. The equation of the supply curve is A) P = 3 + 40QS. B) P = 40 + 6QS. C) P = 40 – 6QS. […]

If the marginal social cost of producing a public good is greater than the marginal social benefit, then A) more than the efficient quantity of the public good is being produced. B) less than the efficient quantity of the public […]

Use the table below to answer the following questions. Table 11.2.3 Refer to Table 11.2.3. The value of A is A) 1.75. B) 2. C) 3. D) 7. E) 4. Answer: C Use the figure below to answer the following […]

Refer to Figure 6.1.1. If the demand for rental housing increases and the demand curve shifts rightward from D0 to D1, and the market is unregulated, the number of rooms rented is A) 1,500, and the rent rises to $200 […]

Consider some type of industrial pollution that generates air pollution. This industry, if left unregulated, will produce A) more than the efficient level because they will ignore the marginal external costs. B) the efficient level of output. C) less than […]

The largest component of GDP using the expenditure approach is A) investment. B) consumption expenditure. C) exports. D) government expenditure. E) imports. Refer to Figure 20.1.1, which shows the circular flow of expenditure and income for Venus. During 2014, A […]

Use the table below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. Refer to Table 2.1.1. What does point C mean? A) If 8 units of […]

If the Canadian dollar depreciates, it means that A) one Canadian dollar buys less foreign currency. B) inflation has eroded the purchasing power of Canadian money. C) the Canadian economy is becoming less stable. D) Canadians are buying too many […]

The maximum price a consumer is willing to pay for a good is the A) consumer surplus. B) value of the good. C) opportunity cost of producing the good. D) minimum supply-price. E) marginal cost of the good. The marginal […]

Free riding can occur if a good is A) excludable and rival. B) excludable and nonrival. C) a private good. D) nonexcludable and rival. E) nonexcludable and nonrival. Which of the following situations illustrates how monetary policy can influence aggregate […]

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 […]

If the desire for leisure increased, the wage rate would A) rise and employment would fall. B) rise and employment would rise. C) fall and employment would fall. D) fall and employment would rise. E) fall and employment would rise […]

The law of supply of foreign exchange tells us that, other things remaining the same, A) the lower the exchange rate, the greater is the quantity of Canadian dollars supplied. B) the higher the exchange rate, the greater is the […]

A forecast based on all the relevant information is A) an adaptive expectation. B) a future expectation. C) a rational expectation. D) always a correct expectation. E) a perfect forecast. Refer to Fact 9.3.2. If the price of used clothing […]

If the price level in Canada is 120, the price level in South Africa is 140, and the exchange rate is 7 South African rands per dollar, then the real exchange rate is A) 8.2. B) 7. C) 6. D) […]

Approximately, the real interest rate ________ the inflation rate ________ the nominal interest rate. A) plus; equals B) equals; plus C) equals; minus D) minus; equals E) times; divided by 100 equals The minimum efficient scale is the smallest quantity […]

If Canada imposes a tariff of $1 per imported shirt, the tariff A) raises the price of a shirt paid by Canadian consumers. B) benefits Canadian shirt producers. C) decreases imports of shirts into Canada. D) creates a social loss. […]

When a good is rival and excludable, it is a A) natural monopoly good. B) public good. C) regulated good. D) private good. E) common resource. One difference between oligopoly and monopolistic competition is A) there is a smaller number […]

If the cross elasticity of demand between goods A and B is positive, then A) the demands for A and B are both price elastic. B) the demands for A and B are both price inelastic. C) A and B […]

Refer to Table 27.1.1. The marginal propensity to consume is A) increasing as YD increases. B) equal to 1 when YD equals $600. C) 0.75. D) 0.25. E) 1.33. Refer to Fact 30.1.1. Choose the statement that is incorrect. A) […]

The new growth theory holds that growth can persist indefinitely based on the major assumption that A) discoveries result from regulations. B) knowledge capital does not experience diminishing returns. C) knowledge is a public capital good. D) discoveries bring profit. […]

The economy starts out at a full-employment equilibrium. Some events then occur that generate a cost-push inflation. Which of the following events might start a cost-push inflation? A) a decrease in exports B) an increase in the quantity of money […]

Ron starts out in consumer equilibrium, consuming two goods, X and Y. Ron’s income rises. At this point, we can definitely conclude that A) MUX/PX> MUY/PY, and then Ron increases his consumption of X. B) MUX/PX> MUY/PY, and then Ron […]

The outcome from a voucher scheme is efficient when the government makes the value of the voucher equal to A) marginal external cost. B) marginal external benefit. C) private external cost. D) private external benefit. E) marginal social cost. Consider […]

When price rises, the substitution effect A) always increases consumption. B) increases consumption for normal goods only. C) decreases consumption for normal goods only. D) decreases consumption for inferior goods only. E) does none of the above. Autoworkers agree to […]

Refer to Table 3.5.2. If the price is set at $0.80 per cup, there is ________ leading to a price ________. A) a shortage; rise B) a shortage; fall C) a surplus; rise D) a surplus; fall E) an equilibrium; […]

In poorer countries, free trade ________ the demand for labour in these countries and ________ the wages paid in these countries. A) decreases; lowers B) decreases; raises C) increases; lowers D) increases; raises E) increases the supply and decreases; lowers […]

The demand for corn increases. As a result, the price of corn ________, and the less elastic the supply of corn, the ________ will be the effect on the price. A) falls; smaller B) falls; greater C) rises; smaller D) […]

Larry consumes only beer (B) and chips (C). If beer is measured on the vertical axis, the relative price of chips in terms of beer is all of the following except A) PC/PB. B) the magnitude of the slope of […]

If the CPI was 95 at the end of 2013 and 105 at the end of 2014, what was the inflation rate in 2014? A) 10 percent B) 105 percent C) 9.5 percent D) 5 percent E) 10.5 percent Refer […]

A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day. One day, the firm decides it would like to produce 16 units of […]

Refer to the table below to answer the following question. Table 23.3.4 Refer to Table 23.3.4. The table shows an economy’s demand for loanable funds schedule and the private supply of loanable funds schedule when the government’s budget is balanced. […]