ECON 1000

Aairah will choose to eat a seventh orange if Select one: A. the marginal benefit from the seventh orange is greater than its marginal cost. B. the total benefit from all seven orange is greater than their total cost. C. the total benefit from all seven orange is less than their total cost. D. she has enough money to pay for it. E. the marginal benefit from the seventh orange is less than its marginal cost.

A

All of the following statement are true except Select one: A. Marginal benefits are always larger than total benefits. B. Willingness to pay depends on marginal benefit, not total benefit. C. Products or services that are luxuries tend to have high marginal benefits. D. Marginal benefits change with circumstances. E. As you consume more of a product or service, your marginal benefit usually gets smaller.

A

A​ business's fixed costs are​ $100. If total costs are​ $210 for one unit of output and​ $330 for two​ units, what is the marginal cost of the second​ unit? A. ​$120 B. ​$210 C. ​$130 D. ​$110 E. ​$330

A

Economic thinking can be helpful in answering which​ question? A. When will government action fail and produce an outcome worse than market​ failure? B. How much is it worth to know that your toothpaste​ won't poison​ you? C. What is the value of public​ safety? D. Should the buyer​ beware? E. Are higher prices from regulation worth the improvement in public​ safety?

A

Economists use the term demand to describe consumers' Select one: A. willingness and ability to pay for a particular product or service. B. preference. C. ability to pay for a particular product or service. D. want. E. willingness to pay for a particular product or service.

A

In the input market, businesses A. pay wages, interest, rent, and profits. B. neither receive nor pay wages, interest, rent, and profits. C. receive wages, interest, rent, and profits. D. receive and pay wages, interest, rent, and profits.

A

Necessity goods have income elasticities of demand that are _____________ and luxury goods have income elasticities of demand that are _________ . Select one: A. greater than zero but less than 1; greater than 1. B. negative; positive. C. positive; first positive and then negative as income increases. D. greater than 1; greater than zero but less than 1. E. positive; negative.

A

Popeyes Louisiana Kitchen sells both chicken fry and sandwich. Higher prices for chicken fry cause Popeyes Select one: A. supply of sandwich to decrease and supply curve of sandwich to shift leftward. B. quantity supplied of sandwich to increase and supply curve of sandwich to shift rightward. C. quantity supplied of sandwich to decrease and supply curve of sandwich to shift leftward. D. supply of sandwich to decrease and supply curve of sandwich to shift leftward. E. supply of sandwich to increase and supply curve of sandwich to shift leftward.

A

Sue's Sea Shells sold 200 cases of shells last season. Her total costs were​ $1,000. She sells 300 cases this season.​ Sue's Sea Shells has economies of scale if her A. total costs are less than​ $1,500. B. average total costs are less than​ $200. C. average total costs are more than​ $300. D. average total costs are more than​ $5. E. total costs are less than​ $1,000.

A

The English phrase​ "let the buyer​ beware" is often translated into Latin as A. caveat emptor. B. semper​ ubi, sub ubi. C. a mare usque ad mare. D. carpe diem. E. carpe dentum.

A

The income received by a household that lends money to a business is called A. interest. B. salaries. C. profits. D. wages. E. rent.

A

When the price is above the market-clearing price, we see Select one: A. rising inventories, excess supply, cause the price to fall. B. falling inventories, shortages, cause the price to rise. C. rising inventories, excess supply, cause the price to rise. D. falling inventories, shortages, cause the price to fall. E. the market-clearing price rises.

A

When there are positive ​externalities, A. marginal social benefits are greater than marginal private benefits. B. marginal social costs are greater than marginal private costs. C. marginal social benefits are greater than marginal private costs. D. marginal external benefits are greater than marginal private benefits.

A

Which is a microeconomic decision? Select one: A. A 10% tariff on imported wines to protect the Canadian wine-making industry. B. The Government of Canada lends Peru 7 billion dollars. C. The Bank of Canada decides to raise interest rates. D. A decision by the Conservative Party to reduce the role of government in the economy. E. The Government of Canada reduces the HST.

A

Which statement is false? Select one: A. Elasticity is constant along a straight-line demand curve. B. To earn maximum revenue, a business should cut its price when demand is elastic. C. Price elasticity of demand decreases as you move down a straight-line demand curve. D. If a 10 percent increase in price leads to a 5 percent decrease in quantity demanded, total revenue increases. E. To earn maximum revenue, a business should raise its price when demand is inelastic.

A

Which statement is true? Select one: A. An unintended consequence of rent controls is landlords spend less on maintaining their apartment buildings. B. Rent controls re-distribute income from the poorer to the richer. C. Rent controls set a minimum rent that landlords can charge. D. Rent controls are a price floor. E. A rent ceiling set below the market-clearing rent is irrelevant.

A

Which statements are true?1 As the price of a product or service rises smart consumers switch to cheaper substitutes and demand decreases.2 The law of demand says that when the price rises, the quantity demanded decreases. 3 The law of demand works because of the availability of substitutes.4 Consumers economize on products and services that become more expensive by switching to complements. Select one: A. 2 and 3 B. 3 only C. 1 and 2 D. 1 and 4 E. 2 and 4

A

White oaks are renowned for their highly durable wood, and they are prized for furniture. When the price of oaks falls, Select one: A. the supply curve of furniture shifts rightward. B. the supply curve of furniture shifts leftward. C. both the demand curve and supply curves of furniture shift rightward. D. the demand curve for furniture shifts rightward. E. the demand curve for furniture shifts leftward.

A

A hair stylist who charges female clients a higher price than male clients is not a price discriminator because A. female customers do not need to have their hair cut as often. B. the service is not the same for men and women. C. men need haircuts more often than women. D. low−priced male haircuts can be re−sold to female customers. E. male customers have fewer substitutes.

B

A technological breakthrough lowers the cost of electric vehicles. If the demand for electric vehicles is price elastic, electric vehicle sales Select one: A. decrease and total revenue increases. B. increase and total revenue increases. C. increase, but changes in total revenue depend on the elasticity of supply. D. decrease and total revenue decreases. E. increase and total revenue decreases.

B

Barra quit her $65,000-a-year job to open her own business. Her boss offered her a $5,000-a-year raise not to quit. When Barra still insisted on leaving, the boss offered an additional $10,000-a-year raise. Barra's yearly implicit costs of her own business are Select one: A. $15,000. B. $80,000. C. $70,000. D. $65,000. E. $5,000.

B

During the​ 2004/2005 hockey​ lockout, fans should have blamed A. the CBC. B. themselves. C. the players. D. the owners. E. the referees.

B

Homer mistakenly assumes that the price elasticity of demand for elephant rides is _______ but in reality, the price elasticity of demand for elephant rides was _______. Select one: A. elastic, inelastic B. inelastic, elastic C. elastic, perfectly elastic D. inelastic, perfectly inelastic E. inelastic, unit elastic

B

If a price maker sets her price too​ high, A. fixed costs are zero. B. marginal revenue is greater than marginal cost. C. profits are maximized. D. price exceeds average revenue. E. other businesses exit the industry.

B

If bus fares rise but more people are riding the bus, it is likely that Select one: A. demand decreased. B. demand increased. C. supply decreased. D. the bus company is incompetent. E. supply increased.

B

In the absence of​ government, A. the socially best quantity of a public good is produced. B. markets fail when there are positive externalities. C. public goods are likely to be overprovided. D. the​ free-rider problem will occur.

B

Some public washrooms have coin−operated locks on the doors of the stalls. The revenue from the locks is not enough to cover the costs of building and maintaining the washroom. This is an example of A. bad planning. B. public provision with a subsidy. C. key money. D. monopoly pricing based on willingness to pay. E. a negative externality.

B

The quantity decision is to produce all quantities for which A. marginal cost is greater than marginal revenue. B. marginal revenue is greater than marginal cost. C. marginal revenue is greater than total cost. D. total revenue is greater than total cost.

B

The shortage created by a maximum taxi fare is largest when demand by the consumers is ________ and supply by taxi drivers is ________. Select one: A. elastic; inelastic B. elastic; elastic C. inelastic; elastic D. inelastic; inelastic E. unknown; elastic

B

When Canada's Wonderland lowered the 2021 season pass price from $90.00 to $72.00 — a savings of 20% — the number of season pass sales increased by 50%. The price elasticity of demand is Select one: A. 1.25. B. 2.5. C. 2.0. D. 0.4. E. 0.8.

B

Which of the following is not a way to correct for a negative​ externality? A. forcing the business to take all social costs into account B. making the social marginal costs higher than the private marginal costs C. forcing a reduction in the output of the product or service D. creating a tax on the product or service

B

Whitman quits a $70,000 a year job at eBay, borrows $80,000 from her bank at a 15% interest rate, and opens a tourism business giving tours of Blue Mountains Ontario. Whitman pays herself $90,000 a year. After one year she earned accounting profits of $60,000. Her economic profits are Select one: A. - $30,000. B. - $10,000. C. 0. D. - $20,000. E. $48,000.

B

A firm under _________ has no pricing power and under ________ has maximum pricing power. Select one: A. monopoly, perfect competition B. oligopoly, monopoly C. perfect competition, monopoly D. perfect competition, monopolistic competition E. competitive monopoly, monopoly

C

A hairdresser increases revenues by charging higher prices to women than men because the price elasticity of demand for hairdresser services by women is ________ and by men is ________. Select one: A. inelastic; unit elastic B. elastic; elastic C. inelastic; elastic D. elastic; inelastic E. elastic; unit elastic

C

According to the​ public-interest view of government​ regulation, A. industry interests subvert the regulatory process to their own advantage. B. government regulations serve the public interest and the industry being regulated. C. government regulations act to eliminate waste​, among other things. D. regulations are set and enforced in ways that promote the​ self-interests of businesses.

C

At a price of ​$50​, Gina only sold 4 kisses at her charity fundraiser last week. Last​ night, she dropped her price to ​$45 and sold 5 kisses. Gina​'s marginal revenue is A. ​$50. B. ​$5. C. ​$25. D. ​$200.

C

A​ price-discriminating business will charge a lower price in the market where the A. output is lower. B. demand for the product is less elastic. C. demand for the product is more elastic. D. customers cannot be separated.

C

For an exchange to be voluntary, the price must be Select one: A. more than the marginal benefit of the buyer and less than the opportunity cost of the seller. B. less than the opportunity cost of the buyer and more than the marginal benefit of the seller. C. less than the marginal benefit of the buyer and more than the opportunity cost of the seller. D. less than the marginal benefit of the seller and more than the opportunity cost of the buyer. E. more than the opportunity cost of the buyer and less than the marginal benefit of the seller.

C

If using gasoline creates air​ pollution, an economist would recommend a tax on gasoline equal to the A. marginal social benefit. B. marginal external benefit. C. marginal external cost. D. marginal social cost. E. marginal private benefit.

C

Many businesses face increasing marginal costs because A. most businesses are not near capacity. B. when the price rises​, output increases. C. a business may have to shift to more expensive sources of inputs in order to increase output. D. in order to increase​ output, you have to purchase more inputs.

C

Market-driven health care generally Select one: A. provides more care to those who cannot afford it. B. has more waiting lists. C. provides good care to those who can afford it. D. is more inefficient than equitable health care. E. does all of the above.

C

The demand for goods and services increases, the demand curve shifts rightward, when there are Select one: A. decreases in income, but only for normal goods. B. expectations of lower prices tomorrow. C. rise in the price of substitute products or services. D. decreases in the number of consumers who buy this product or service. E. rise in the price of complementary products or services.

C

The figure at right shows the years of jail time that Bonnie and Clyde are facing for their crimes. Bonnie and Clyde each has a single strategic choice—to confess to the crimes or to deny them. The jail time Bonnie will receive will depend on her choice and​ Clyde's choice. The jail time Clyde will receive will depend on his choice and​ Bonnie's choice.​ Bonnie's years of jail time are in​ blue, Clyde's are in red. A. The​ 'deny-deny' and​ 'confess-deny' pairs of strategies are the only Nash equilibria. B. The​ 'deny-deny' and​ 'deny-confess' pairs of strategies are the only Nash equilibria. C. The​ 'confess-confess' pair of strategies is the only Nash equilibrium. D. The​ 'deny-deny' pair of strategies is the only Nash equilibrium.

C

The present value of​ $50 that will be received next year is​ $40. What is the interest​ rate? A. 8 percent B. 20 percent C. 25 percent D. 50 percent E. 10 percent

C

What is the present value of ​$100 you will receive 1 year from now if the interest rate is 5​%? A. ​$75 B. ​$105 C. ​$95 D. ​$112 Suppose that the interest rate falls to 3 percent. The present value will rise to ​____

C

When a product or service has a positive externality and does not have a negative​ externality, A. marginal external cost equals marginal external benefit. B. marginal social cost equals marginal social benefit. C. marginal private cost equals marginal social cost. D. marginal private benefit equals marginal social cost. E. marginal private benefit equals marginal social benefit.

C

When governments set prices below market-clearing levels, the quantity sold at those prices Select one: A. is determined by whichever is price or quantity. B. is determined by the quantity demanded. C. is determined by the quantity supplied. D. is determined by whichever is more, quantity demanded or quantity supplied. E. cannot be determined without knowing if there is a shortage or surplus.

C

Which is not a legal barrier to entry? Select one: A. copyrights B. licenses C. economies of scale D. patents E. government franchise

C

A Nash equilibrium occurs when A. player one has decided to cooperate and player two has decided to cheat. B. each player has a strategy. C. player two has decided to cooperate and player one has decided to cheat. D. both players have no reason to change their choices once they see their​ opponent's choice. E. both players are too confused to choose.

D

A market has 50 identical businesses. When the price of the finished goods is $20, one business's quantity supplied is 30 units and market supply is Select one: A. 30,000 units. B. 600 units. C. 1,000 units. D. 1,500 units. E. impossible to calculate without more information.

D

A perfectly competitive market has the __________ and the __________? Select one: A. lowest barriers to entry, most pricing power. B. highest barriers to entry; highest elasticity of demand C. highest barriers to entry; least pricing power D. lowest barriers to entry; highest elasticity of demand E. lowest barriers to entry; lowest elasticity of demand

D

Anti-combine, or​ anti-trust, laws A. encourage collusion among businesses to raise prices or restrict supplies to customers. B. drive price−fixing agreements into the open. C. make it easier for businesses to combine to form monopolies or near monopolies. D. encourage businesses to be competitors.

D

At a price of​ $1,000 a​ night, a rock bank named Ian and The Animals used to get hired twice a week. They dropped their price to​ $800 a night and now they play three nights a week. The​ band's marginal revenues for a week are A. ​$200. B. ​$1,000. C. ​$800. D. ​$400. E. ​$600.

D

Businesses operating near capacity have 1 increasing marginal costs 2 constant marginal costs 3 upward sloping marginal cost curves 4 horizontal marginal costs curves A. 1 and 4 B. 2 and 4 C. 2 and 3 D. 1 and 3 E. none of the above

D

CEOs of the S&P 500 companies are talking about business. Which quotation refers to a change in quantity demanded? Select one: A. "Because it's been such a warm winter, our sales of wool scarves are down from last year." B. "Since our competitors raised their prices, our sales have tripled." C. "The Green movement has made our biodegradable products best-sellers." D. "We decided to cut our prices, and there has been a big increase in our sales." E. None of the above

D

Denver earns $14 an hour working at Costco. During the school term, he works 20 hours a week. In the summer he works 40 hours a week even though his wage remains the same. The explanation is that Select one: A. the marginal benefit of the wage is higher in the summer. B. the marginal opportunity cost of his time is higher during the summer. C. there has been a fall in the price of a complementary product or service. D. the marginal opportunity cost of his time is lower during the summer. E. he expects his wage will be higher in the future.

D

Economics is about all of the followings except Select one: A. making choices because of scarcity. B. how individuals, businesses, and governments make the best possible choices. C. how choices interact in markets. D. overcoming scarcity. E. none of the above.

D

If a rise in the price of tennis rackets decreases the demand for tennis balls, then Select one: A. the demand for tennis racket is price elastic but the demand for tennis balls is price inelastic. B. the demand for tennis racket and tennis balls are price elastic. C. tennis racket and tennis balls are substitutes. D. tennis racket and tennis balls are complements. E. the cross elasticity of demand between tennis racket and tennis balls is positive.

D

In a day, Linia can bake 16 apple pies or 8 maple pecan danish; Ferdous can bake 9 apple pies or 3 maple pecan danish. Which statement is true? Select one: A. Linia's opportunity cost of a danish is 2 pies. B. Ferdous's opportunity cost of a danish is 3 pies. C. Ferdous's opportunity cost of a pie is 1/3 danish. D. all of the above. E. none of the above.

D

Marginal revenue product equals A. price minus marginal product. B. price divided by marginal product. C. marginal revenue. D. price times marginal product. E. price plus marginal product.

D

Natural monopolies create a challenge for policymakers because A. other firms argue the monopoly is anti−competitive. B. they cannot determine the monopolist's output. C. there is not enough consumer choice in the market. D. there are gains related to the low−cost efficiencies of a monopoly.

D

Opportunity cost measures Select one: A. the true cost of any choice. B. all alternatives are given up. C. the best alternative given up. D. A & C. E. A & B.

D

Positive economic profits gives a signal to a new business to enter an industry causing Select one: A. the market-clearing price to rise. B. other businesses in the industry to exit. C. economic losses to decrease. D. the market-clearing price to fall. E. economic profits to increase.

D

Rank market structures from the least to the most amount of pricing power. Select one: A. perfect competition, monopolistic competition, monopoly, oligopoly B. monopoly, oligopoly, monopolistic competition, perfect competition C. monopoly, monopolistic competition, oligopoly, perfect competition D. perfect competition, monopolistic competition, oligopoly, monopoly E. perfect competition, monopoly, oligopoly, monopolistic competition

D

The sets of players in the Canadian economy include Select one: A. households. B. businesses. C. governments. D. all of the above. E. labour.

D

What is the relationship between economic efficiency and economic​ equity? A. Income is equitably distributed in market economies without intervention by government. B. Redistribution of income reduces economic equality and increases economic efficiency. C. More equality is generally more efficient. D. There is a​ trade-off between equality and efficiency.

D

When prices are fixed above market-clearing levels, Select one: A. sellers are frustrated. B. quantity supplied is greater than quantity demanded. C. there are surpluses. D. all of the above are true. E. none of the above are true.

D

Which statement is false? Select one: A. Price elasticity of demand measures how much quantity demanded changes in response to a change in price. B. A heavy smoker's price elasticity of demand for cigarettes is very low. C. Luxury goods, with many substitutes, have higher price elasticities of demand than necessities. D. If you like Pepsi and Coke about the same, your demand for Coke is inelastic. E. Inelastic demand means a low willingness to shop elsewhere.

D

According to the article, Do Higher Minimum Wages Benefit Workers AND Employers?, positive benefit(s) for workers of higher minimum wages include Select one: A. Increased demand for their products B. Lower recruitment and training costs as a result of lower turnover C. More committed and productive workers D. All of the above E. None of the above.

E

Canned food is an inferior good. Ceteris paribus, literally "holding other things constant", a rise in the price of Canned food causes Select one: A. a leftward shift in the supply curve of Canned food. B. a rightward shift in the supply curve of Canned food. C. a leftward shift in the demand curve for Canned food. D. a rightward shift in the demand curve for Canned food. E. none of the above.

E

Demand will be more inelastic if all of the following hold except Select one: A. income level is lower. B. time to adjust is shorter. C. fewer substitutes are available. D. income level is higher. E. fraction of income spent on the product or service is greater.

E

During this summer Elon has decided to attend summer school, which precludes him from working at his usual summer job in which he normally earns $3,500 for the summer. His tuition cost is $2,000, books and supplies cost $250, and room and board cost $750. The opportunity cost of attending summer school is Select one: A. $5,500. B. $3,500. C. $3,000. D. $6,500. E. $4,500.

E

Equilibrium prices Select one: A. do not tend to change. B. eliminate frustrated buyers and sellers. C. are Market-clearing prices. D. equalize quantity demanded and quantity supplied. E. do all of the above.

E

Families who send their children to private schools and pay high tuition fees make smart choices if their A. marginal social benefits are zero. B. marginal social costs are less than the tuition fee. C. marginal external benefits are greater than the tuition fee. D. marginal private costs are zero. E. marginal private benefits are greater than the tuition fee.

E

If the marginal tax rate decreases as income​ increases, the income tax is defined as A. progressive. B. negative. C. progressive conservative. D. proportional. E. regressive.

E

If the price elasticity of demand for salt is zero, then as the price for salt rises Select one: A. quantity demanded decreases to zero. B. quantity demanded does not change. C. total revenue increases. D. total revenue does not change. E. B & C

E

Jill grows corn and potatoes in her farmhouse. When she grows more corns and fewer potatoes, her marginal Select one: A. cost of growing potatoes increases. B. benefit of growing potatoes decreases. C. cost of growing corn decreases. D. benefit of growing potatoes increases. E. cost of growing potatoes decreases.

E

Minimum wage laws most hurt the working poor when Select one: A. demand for unskilled labour is inelastic. B. gains from workers who remain employed are greater than the lost income of workers who lose their jobs. C. businesses have few substitutes for unskilled labour. D. all of the above are true. E. none of the above are true.

E

Negative externalities are not Select one: A. costs that affect others who are external to a choice or trade B. costs that we create, but don't pay for directly C. part of monetary costs D. part of opportunity costs E. C & D

E

Positive and normative statements differ in that Select one: A. positive statements can be checked and normative statements cannot. B. normative statements can be checked and positive statements cannot. C. positive statements are about what is and normative statements involve value judgments or opinions. D. normative statements are about what is and positive statements involve value judgments or opinions. E. A & C

E

Rolfe and Andy are the only two people on Earth. It takes Rolfe 5 hours to produce a pizza and 5 hours to produce a burger. It takes Andy 3 hours to produce a pizza and 4 hours to produce a burger. Based on the information above, Rolfe and Andy Select one: A. can both gain from trade if Rolfe specializes in producing pizza and Andy specializes in producing burgers. B. cannot both gain from trade because Rolfe has an absolute advantage in producing pizza and burgers. C. can trade, but only Andy will gain. D. can trade, but only Rolfe will gain. E. can both gain from trade if Rolfe specializes in producing burgers and Andy specializes in producing pizza.

E

Smoking creates negative externalities because cigarette smoke A. creates internal benefits for the smoker. B. imposes external costs on the smoker. C. imposes internal costs on the smoker. D. creates external benefits for non−smokers. E. imposes external costs on non−smokers.

E

The above figure shows a willingness to pay by consumers and marginal costs for producers in the butter market. If the 1st unit of butter for $3, what is the consumers surplus and producer surplus on that unit? Select one: A. consumers surplus $7 and producer surplus $5 B. consumers surplus $12 and producer surplus $6 C. consumers surplus -$1 and producer surplus $1 D. consumers surplus $3 and producer surplus $3 E. consumers surplus $1 and producer surplus $1

E

The buyers' share of the tax is greater the more 1 elastic demand is 2 elastic supply is 3 inelastic demand is 4 inelastic supply is Select one: A. 3 only B. 1 and 2 C. 1 and 4 D. 3 and 4 E. 3 and 2

E

The marginal revenue curve for a price−making business A. is the same as the​ business's demand curve. B. is horizontal. C. intercepts the vertical axis at the market price of the product. D. is the same as the market demand curve for all businesses in the industry. E. intercepts the vertical axis at the same price as the​ business's demand curve.

E

When a provincial government sets a maximum rent for rental apartment's that is below the market-clearing price, we see Select one: A. an excess supply of rental apartments. B. long waits for rental apartments. C. a decrease in demand. D. frustrated apartment owners who can't find tenants. E. a decrease in supply.

E

Which statement is inconsistent with product differentiation? Select one: A. A business in monopolistic competition can compete on quality and marketing. B. A business must lower its price to sell more. C. Demand is more inelastic with product differentiation than with identical products. D. A business makes a product that is slightly different from its competitors' products. E. None of the above are inconsistent with product differentiation.

E