Chapter 1
Which of the following statement is correct?
a. a late payment fee gives incentive to pay late
b. a late payment fee gives incentive to pay early
c. pollution tax gives incentive to pollute more
d. when a restaurant is expensive and bad quality, you have an incentive to eat there more
b. a late payment fee gives incentive to pay early
Comparative advantage reflects
terms of trade advantage.
productivity.
efficiency.
opportunity cost.
opportunity cost.
A shift to the right of the demand curve means an increase in Quantity. T/F
True
If a good is a necessity, demand for the good would tend to be
inelastic.
elastic.
unit elastic.
horizontal.
inelastic.
Exports are
goods produced domestically and sold abroad.
goods produced abroad and sold domestically.
a limit placed on the quantity of goods brought into a country.
a country's ability to produce a good.
goods produced domestically and sold abroad.
When two variables have been observed to have a tendency to occur at the same time, we can say there is ____________ but not necessarily ____________.
a. Positivity; Causation
b. Normality; Correlation
c. Causation; Correlation
d. Correlation; Causation
d. Correlation; Causation
When workers have different skills in producing two goods, the production possibilities frontier displays:
a straight line
a curve downwards
a curve upwards
a curve downwards
This type of market structure is characterized by many buyers and sellers, identical products, and firms that are price takers rather than price makers.
Monopoly
Oligopoly
Monopolistic competition
Perfect competition
Perfect competition
If two goods are substitutes, their cross-price elasticity will be
zero.
1.
negative.
positive.
positive.
The forces that make market economies work are
demand and supply.
the Constitution.
price and quantity.
the Senate and House of Commons.
demand and supply.
Factors of production are
the physical relationships between economic inputs and outputs.
weather and social and political conditions that affect production.
the mathematical calculations firms make to determine production.
inputs into the production process.
inputs into the production process.
The amount of a particular good that buyers in a market will purchase at a given price during a specified period is called:
quantity supplied.
demand.
supply.
quantity demanded.
quantity demanded.
After purchasing a froster cup from your Circle K for $3.00, you can always refill your cup for $0.50. The sunk cost of the froster purchased is:
$6.00.
$3.00.
$0.50.
$3.50.
$3.00.
Demand is elastic if elasticity is
equal to 0.
equal to 1.
greater than 1.
less than 1.
greater than 1.
If the government imposes a binding price floor in a market, then:
A surplus exists
A shortage exists
Nothing exists
A surplus exists
Which of the following is a not a positive statement?
a. University tuition rates are rising.
b. Provincial governments should pay for the first two years of university at public institutions.
c. 28 percent of Canadian adults have a bachelor's degree.
d. The average income of a university graduate exceeds that of the average high school graduate.
b. Provincial governments should pay for the first two years of university at public institutions.
In Spain, it takes 2 labor hours to make 1 unit of cheese and 8 labor hours to make 1 unit of bread.
What is the opportunity cost of producing 1 unit of cheese in Spain?
2 breads
1/2 bread
1 bread
1/4 bread
1/4 bread
A decreasing demand together with an increasing supply would necessarily result in
a decrease in equilibrium quantity.
a higher price.
an increase in equilibrium quantity.
a lower price.
a lower price.
You love peanut butter. You hear on the news that 50 % of the peanut crop in the South has been wiped out, which will cause the price to double by the end of the year. As a result,
your demand for peanut butter increases today.
you decide to give up peanut butter completely.
your demand for peanut butter will increase by the end of the year.
your demand for peanut butter increases today.
Total surplus is:
The triangle to the left of the equilibrium
The triangle to the right of the equilibrium
The top half of the triangle to the right of equilibrium
The bottom half of the triangle to the left of equilibrium
The triangle to the right of the equilibrium
Economists use models in order to:
Learn how the economy works
Make their profession more precise
Imitate reality
Make sure that all the details of the economy are included in their analysis
Learn how the economy works
A company manufactures refrigerators and has plants in Germany and Turkey. A German worker produces 6 bundles of parts or assembles 3 refrigerators per day. In Turkey, a worker makes 1 bundle of parts or assembles 4 refrigerators. Which plant has a comparative advantage in producing parts, and which has a comparative advantage in assembling refrigerators?
Germany has a comparative advantage in both producing parts and assembling refrigerators.
Germany has a comparative advantage in assembling refrigerators. Turkey has a comparative advantage in producing parts.
Germany has a comparative advantage in producing parts. Turkey has a comparative advantage in assembling refrigerators.
Turkey has a comparative advantage in both producing parts and assembling refrigerators.
Germany has a comparative advantage in producing parts. Turkey has a comparative advantage in assembling refrigerators.
When income falls, the quantity of a good demanded:
falls if the good is a normal good and falls if the good is an inferior good.
rises if the good is a normal good and falls if the good is an inferior good.
rises if the good is a normal good and rises if the good is an inferior good.
falls if the good is a normal good and rises if the good is an inferior good.
falls if the good is a normal good and rises if the good is an inferior good.
A linear supply curve has a
constant slope and changing elasticity of supply.
both a constant slope and a constant elasticity of supply.
both a changing slope and a changing elasticity of supply.
changing slope and a constant elasticity of supply.
constant slope and changing elasticity of supply.
Canada could benefit by
restricting both imports and exports.
promoting imports and restricting exports.
not restricting trade.
restricting imports and promoting exports.
not restricting trade.