TEST BANK for Microeconomics 16th Canadian Edition by Christopher Ragan.

TEST BANK for Microeconomics 16th Canadian Edition by Christopher Ragan.

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Economics - Canadian Edition, 16e (Ragan) Chapter 1 Economic Issues and Concepts 1.1 What Is Economics? 1) Which of the following statements provides the best definition of economics? A) The study of the most equitable distribution of scarce resources. B) The study of the use of scarce resources to satisfy unlimited human wants. C) The study of the production of goods and services. D) The study of the productive capacity of a nation's factors of production. E) The study of production and increasing its efficiency. Answer: B Diff: 1 Type: MC Topic: 1.1a. economics/resources Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 2) Society's resources are often divided into broad categories. They are A) goods and services. B) factors of consumption. C) land, labour, and capital. D) population and natural resources. E) tangible commodities and intangible commodities. Answer: C Diff: 1 Type: MC Topic: 1.1a. economics/resources Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

3) Consider the following list: a worker with training in video gaming technology, 10 hectares of arable land in southern Ontario, a fishing trawler in Nova Scotia, an ice-cream truck at a park in Quebec. Each of these is an example of A) a factor of production. B) a capital resource. C) a commodity. D) goods and services. E) an economic service. Answer: A Diff: 1 Type: MC Topic: 1.1a. economics/resources Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 4) Which of the following is NOT considered a "factor of production" in economics? A) the espresso machine at your local cafe B) the barista who makes the coffee C) the espresso drink you purchase D) the wood stir sticks E) the land on which the cafe sits Answer: C Diff: 2 Type: MC Topic: 1.1a. economics/resources Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

5) Consider the following factors of production: - a pharmaceutical research centre - a hairstylist's scissors - Google headquarters - a cloud computing system - a stapler at a checkout counter. Each of these is an example of A) land. B) goods. C) services. D) capital. E) labour. Answer: D Diff: 2 Type: MC Topic: 1.1a. economics/resources Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 6) In economics, what word is used to describe the act of using goods or services to satisfy wants? A) consumption B) production C) purchasing power D) investment E) shopping Answer: A Diff: 2 Type: MC Topic: 1.1a. economics/resources Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

7) A basic underlying point in economics is that A) people have unlimited wants in the face of limited resources. B) there are unlimited resources. C) governments should satisfy the needs of the people. D) people have limited wants in the face of limited resources. E) governments should never interfere in the workings of a market economy. Answer: A Diff: 1 Type: MC Topic: 1.1b. scarcity and choice Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 8) Which of the following best describes the study of economics? A) how to plan an economy B) how to limit human wants so that scarce resources are sufficient C) why resources are scarce D) the allocation of scarce resources among alternative uses E) how to distribute income as equally as possible Answer: D Diff: 1 Type: MC Topic: 1.1b. scarcity and choice Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 9) Economics can best be described as A) the study of how a society ought to allocate its resources. B) the study of the use of scarce resources to satisfy unlimited human wants. C) the application of sophisticated mathematical models to address social problems. D) a normative science. E) the study of how to reduce inflation and unemployment. Answer: B Diff: 1 Type: MC Topic: 1.1b. scarcity and choice Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

10) Scarcity is likely to be A) a problem that will be solved by the proper use of available resources. B) unique to the twenty-first century. C) a problem that will always exist. D) a result of the work ethic. E) eliminated with a better understanding of economics. Answer: C Diff: 2 Type: MC Topic: 1.1b. scarcity and choice Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 11) Which of the following statements best describes the economic concept of scarcity? A) Society is not employing all of its available resources in an efficient manner. B) People's wants can never be satisfied by the available resources. C) Scarcity afflicts only poor countries. D) Too many frivolous goods and services are produced at the expense of socially desirable goods and services. E) Production is efficient, but distribution is inefficient. Answer: B Diff: 2 Type: MC Topic: 1.1b. scarcity and choice Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 12) Which of the following statements best describes the underlying feature of most economic problems? A) People have unlimited wants in the face of limited resources. B) There are unlimited resources. C) Resources are distributed fairly. D) People have limited wants in the face of limited resources. E) Governments should never interfere in the workings of a market economy. Answer: A Diff: 1 Type: MC Topic: 1.1b. scarcity and choice Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

13) Because resources are scarce, individuals are required to A) make choices among alternatives. B) use resources inefficiently. C) sacrifice production but not consumption. D) improve distribution but not production. E) improve production but not distribution. Answer: A Diff: 2 Type: MC Topic: 1.1b. scarcity and choice Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 14) Scarcity implies that choices must be made. Making choices implies A) the wasteful use of resources. B) that scarcity can be eliminated. C) the existence of costs of production. D) the existence of opportunity costs. E) both C and D above. Answer: D Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 15) Which of the following best completes the definition of opportunity cost? The opportunity cost of choosing any one alternative is the A) market cost of the next best alternative. B) value of the next best alternative that is given up. C) the revenues that would be given up if that alternative is not chosen. D) value of all other alternatives combined. E) value of resources used to make that alternative available to the market. Answer: B Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

16) With a budget of $200 million, the government can choose to purchase 4 helicopters or repair 200 km of highway.

FIGURE 1-1 Refer to Figure 1-1. For the government, the opportunity cost of one search and rescue helicopter is A) 0 kilometres of highway repair. B) 50 kilometres of highway repair. C) 100 kilometres of highway repair. D) 150 kilometres of highway repair. E) 200 kilometres of highway repair. Answer: B Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

17) With a budget of $200 million, the government can choose to purchase 4 helicopters or repair 200 km of highway.

FIGURE 1-1 Refer to Figure 1-1. For the government, the opportunity cost of one kilometre of highway repair is A) 1 search and rescue helicopter. B) 1/2 of a search and rescue helicopter. C) 1/10 of a search and rescue helicopter. D) 1/50 of a search and rescue helicopter. E) 1/100 of a search and rescue helicopter. Answer: D Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

18) With a budget of $200 million, the government can choose to purchase 4 helicopters or repair 200 km of highway.

FIGURE 1-1 Refer to Figure 1-1. If the government chooses to allocate all $200 million to highway repair, we can say that A) the opportunity cost of the highway repair is uncertain. B) the opportunity cost of the highway repair is $0. C) the opportunity cost of the highway repair is 4 search and rescue helicopters. D) there is no opportunity cost involved because the government has achieved its objectives. E) there is no opportunity cost involved because the government stayed within its budget. Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

19) With a budget of $200 million, the government can choose to purchase 4 helicopters or repair 200 km of highway.

FIGURE 1-1 Refer to Figure 1-1. Which of the following combinations of kilometres of highway repair and helicopters is unaffordable, given the government's budget of $200 million? A) B B) D C) E D) F E) G Answer: E Diff: 1 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

20) With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms.

FIGURE 1-2 Refer to Figure 1-2. For the school board, what is the opportunity cost of one additional laptop computer? A) 0 textbooks B) 1/10 of a textbook C) 10 textbooks D) 20 textbooks E) 2000 textbooks Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

21) With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms.

FIGURE 1-2 Refer to Figure 1-2. For the school board, what is the opportunity cost of one additional textbook? A) 2000 laptops B) 1000 laptops C) 1/100 of a laptop D) 1/1000 of a laptop E) 1/10 of a laptop Answer: E Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

22) With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms.

FIGURE 1-2 Refer to Figure 1-2. Suppose the school board chooses to allocate all $500 000 to the purchase of laptop computers. What is the opportunity cost of this entire purchase? A) The opportunity cost is 2000 laptops. B) The opportunity cost is 20,000 textbooks. C) The opportunity cost is uncertain. D) The opportunity cost is $0. E) There is no opportunity cost because the purchase was made within the available budget. Answer: B Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

23) With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms.

FIGURE 1-2 Refer to Figure 1-2. Which of the following combinations of textbooks and laptops is unaffordable, given the school board's budget of $500 000? A) A B) B C) C D) D E) E Answer: D Diff: 1 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

24) With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms.

FIGURE 1-2 Refer to Figure 1-2. What is the price of a textbook in this example? A) $25 B) $40 C) $50 D) $100 E) $250 Answer: A Diff: 1 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

25) With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms.

FIGURE 1-2 Refer to Figure 1-2. What is the price of a laptop computer in this example? A) $25 B) $40 C) $50 D) $100 E) $250 Answer: E Diff: 1 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

26) The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce either 6 fishing lures or mow 6 lawns.

Tristan Thomas

Fishing Lures 12 6

Mowed Lawns 3 6

TABLE 1-1 Refer to Table 1-1. What is Tristan's opportunity cost of producing one fishing lure? A) one mowed lawn B) 3 mowed lawns C) 1/3 of a mowed lawn D) 1/4 of a mowed lawn E) 4 mowed lawns Answer: D Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Table Category: Quantitative 27) The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce either 6 fishing lures or mow 6 lawns.

Tristan Thomas

Fishing Lures 12 6

Mowed Lawns 3 6

TABLE 1-1 Refer to Table 1-1. What is Thomas's opportunity cost of producing one fishing lure? A) 5 lures B) 1 mowed lawn C) 1/6 of a lure D) 1/6 of a mowed lawn E) There is no opportunity cost. Answer: B Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Table

Category: Quantitative 28) The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce either 6 fishing lures or mow 6 lawns.

Tristan Thomas

Fishing Lures 12 6

Mowed Lawns 3 6

TABLE 1-1 Refer to Table 1-1. What is Tristan's opportunity cost of producing one mowed lawn? A) one fishing lure B) 3 fishing lures C) 4 fishing lures D) 6 fishing lures E) 12 fishing lures Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Table Category: Quantitative 29) The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce either 6 fishing lures or mow 6 lawns.

Tristan Thomas

Fishing Lures 12 6

Mowed Lawns 3 6

TABLE 1-1 Refer to Table 1-1. What is Thomas's opportunity cost of producing one mowed lawn? A) 0 fishing lures B) 1/6 fishing lure C) one fishing lure D) 6 fishing lures E) 12 fishing lures Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and

how each is illustrated by the production possibilities boundary. Graphics: Table Category: Quantitative 30) The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce either 6 fishing lures or mow 6 lawns.

Tristan Thomas

Fishing Lures 12 6

Mowed Lawns 3 6

TABLE 1-1 Refer to Table 1-1. If Tristan and Thomas want to maximize their joint output from one day of work, how should they specialize their production? A) Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns B) Tristan produces 6 lures; Thomas produces 6 lures C) Tristan produces 6 lures and 3 mowed lawns D) Tristan produces 12 lures; Thomas produces 6 mowed lawns E) Tristan produces nothing, Thomas produces 6 lures and 6 mowed lawns Answer: D Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Table Category: Quantitative

31) The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce either 6 fishing lures or mow 6 lawns.

Tristan Thomas

Fishing Lures 12 6

Mowed Lawns 3 6

TABLE 1-1 Refer to Table 1-1. Which of the following statements about Tristan's and Thomas's opportunity costs is correct? A) Tristan has a higher opportunity cost of producing mowed lawns. B) Thomas has a higher opportunity cost of producing mowed lawns. C) Tristan has a higher opportunity cost of producing fishing lures. D) Thomas has a higher opportunity cost of producing fishing lures. E) Both A and D are correct. Answer: E Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Table Category: Qualitative

32) Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her in each month.

FIGURE 1-3 Refer to Figure 1-3. For Madeleine, the opportunity cost of one regular coffee is A) 1/4 of a regular coffee. B) 20 lattes. C) 4 lattes. D) 1/4 of a latte. E) 80 lattes. Answer: D Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

33) Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her in each month.

FIGURE 1-3 Refer to Figure 1-3. For Madeleine, the opportunity cost of one latte is A) 1/4 of a regular coffee. B) 1/4 of a latte. C) 8 regular coffees. D) 80 regular coffees. E) 4 regular coffees. Answer: E Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

34) Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her in each month.

FIGURE 1-3 Refer to Figure 1-3. If Madeleine chooses to allocate all $100 to buying lattes, we can say that her opportunity cost in one month is A) zero because she bought what she desired. B) zero because she stayed within her budget. C) 80 cups of regular coffee. D) 40 cups of regular coffee. E) 20 cups of regular coffee. Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

35) Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her in each month.

FIGURE 1-3 Refer to Figure 1-3. Which of the following combinations of regular coffees and lattes is affordable over the one-month period, given Madeleine's budget? A) 15 lattes and 30 coffees B) 16 lattes and 16 coffees C) 8 lattes and 50 coffees D) 4 lattes and 66 coffees E) 20 lattes and 80 coffees Answer: B Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

36) Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her in each month.

FIGURE 1-3 Refer to Figure 1-3. What is the price of a regular coffee in this example? A) $0.80 B) $1.25 C) $2.00 D) $5.00 E) $8.00 Answer: B Diff: 1 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

37) Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her in each month.

FIGURE 1-3 Refer to Figure 1-3. What is the price of a coffee latte in this example? A) $0.80 B) $1.00 C) $1.25 D) $2.00 E) $5.00 Answer: E Diff: 1 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

38) Suppose you own a courier service and you use two types of delivery vehicles — Model A, which costs to purchase, and Model B, which costs $50 000 to purchase. You have a budget of for the purchase of new vehicles. If you were to draw a budget line to illustrate the choice between Model A and Model B vehicles, with A on the vertical axis and B on the horizontal axis, the vertical intercept and the horizontal intercept, respectively, would be A) 10 and 10. B) 6 and 6. C) 0 and 10. D) 0 and 0. E) 10 and 6. Answer: E Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 39) Suppose you own a courier service and you use two types of delivery vehicles — Model A, which costs to purchase, and Model B, which costs $50 000 to purchase. You have a budget of for the purchase of new vehicles. What is the opportunity cost of one Model A vehicle? A) 0 B) 3/5 of a Model B vehicle C) 5/3 of Model B vehicle D) 5 Model B vehicles E) 3 Model B vehicles Answer: B Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative

40) Suppose you own a courier service and you use two types of delivery vehicles — Model A, which costs to purchase, and Model B, which costs $50 000 to purchase. You have a budget of for the purchase of new vehicles. What is the opportunity cost of one Model B vehicle? A) 0 B) 3/5 of a Model A vehicle C) 5/3 of a Model A vehicle D) 5 Model A vehicles E) 3 Model A vehicles Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 41) Suppose you own a courier service and you use two types of delivery vehicles — Model A, which costs to purchase, and Model B, which costs $50 000 to purchase. You have a budget of for the purchase of new vehicles. Which of the following statements best describes the shape of your budget line? A) The budget line is concave to the origin, indicating that the opportunity cost of each model of vehicle increases with each additional unit purchased. B) The budget line is convex to the origin, indicating that the opportunity cost of each vehicle decreases with each additional unit purchased. C) The budget line is a straight line, indicating that the opportunity cost of each vehicle decreases with each additional unit purchased. D) The budget line is a straight line, indicating that the opportunity cost of each model of vehicle is independent of how many are purchased. E) The budget line is a straight line, indicating that the opportunity cost of each vehicle increases with each additional unit purchased. Answer: D Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative

42) Scarcity arises from limited resources. For this reason, all economic choices involve A) a value judgement. B) an educated decision. C) an opportunity cost. D) complementary ends. E) greed. Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 43) The opportunity cost of going to college or university for four years is A) equal to the wage rate a person will earn after graduation. B) the least valued alternative one forfeits to attend. C) the cost of tuition and books and four years of lost wages from employment. D) the cost of tuition, residence fees and books. E) zero. Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 44) Suppose there are only three alternatives to attending a "free" social event: read a novel (you value this at $10), go to work (you could earn $20), or watch videos with some friends (you value this at $25). The opportunity cost of attending the social event is A) $10. B) $20. C) $25. D) $45. E) $55. Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative

45) The opportunity cost of producing good A is defined to be A) the money cost of the factors of production used in good A. B) the retail price of good A. C) the cheapest method of producing good A. D) what must be sacrificed of other goods to get an additional unit of good A. E) the cost of having to get by using something else in place of good A. Answer: D Diff: 1 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 46) Suppose one unit of labour can produce either 5 wool sweaters or 2 pineapples. What is the opportunity cost of producing one wool sweater? A) 5 pineapples B) 2 pineapples C) 2/5 of a pineapple D) 5/2 pineapples E) zero pineapples Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 47) Suppose one unit of labour can produce either 5 units of wool or 2 pineapples. What is the opportunity cost of producing 1 pineapple? A) 5 units of wool B) 2 units of wool C) 2/5 unit of wool D) 5/2 units of wool E) zero Answer: D Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative

48) A small landscaping firm purchases a tractor that, in one day, is capable of drilling 60 fence-post holes or removing 12 tree stumps (or some intermediate combination). For this landscaper, what is the opportunity cost of removing one extra tree stump? A) 1/12th of the cost of the tractor B) 1/5 of the cost of the tractor C) drilling 12 fence-post holes D) drilling 5 fence-post holes E) There is no opportunity cost. Answer: D Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 49) Suppose a bakeshop with 5 employees can produce both pies and cakes. In one day, if all resources are devoted to baking pies, the shop can produce 125 pies; if all resources are devoted to baking cakes, the shop can produce 50. What is the shop's opportunity cost of producing any one cake? A) 0.4 pies B) 0.25 pies C) 2.5 pies D) 0.4 cakes E) 2.5 cakes Answer: C Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative

50) Suppose a bakeshop with 5 employees can produce both pies and cakes. In one day, if all resources are devoted to baking pies, the shop can produce 125 pies; if all resources are devoted to baking cakes, the shop can produce 50. What is the shop's opportunity cost of producing any one pie? A) 125 pies B) 0.4 cakes C) 2.5 pies D) 0.4 pies E) 50 cakes Answer: B Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 51) Katie and Hugh are producing pies and jars of pickles. Katie can produce either 200 jars of pickles or 100 pies per month. Hugh can produce either 800 jars of pickles or 200 pies per month. Which of the following statements is correct? A) Katie's opportunity cost of producing 1 jar of pickles is 2 pies. B) Katie's opportunity cost of producing 1 jar of pickles is 1/2 of a pie. C) Hugh's opportunity cost of producing 1 jar of pickles is 4 pies. D) Hugh's opportunity cost of producing 1 pie is 1/4 jar of pickles. E) Hugh's and Katie's opportunity costs of producing are the same. Answer: B Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative

52) Suppose Andrea has a job that pays her $50 000 per year (after taxes). She is considering quitting her job and going to university full time for four years. Tuition fees and books will cost $12 000 per year. Living expenses in either situation will cost $20 000 per year. What is the opportunity cost of Andrea's four-year university degree? A) $128 000 B) $200 000 C) $240 000 D) $248 000 E) $288 000 Answer: D Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 53) Suppose Amin has a job that pays him $87 000 per year (after taxes). He is considering taking an unpaid leave of absence from his job to complete a 12-month MBA program. Tuition is $75 000 and books and materials will cost $5000. Living expenses for the 12-month period will be cheaper by $500 per month, mostly due to lower apartment rental costs. What is the opportunity cost of Amin's 1-year MBA program? A) $75 000 B) $76 000 C) $161 000 D) $167 000 E) $175 000 Answer: C Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative

54) It has been observed that university enrollment in Canada is higher during periods of high unemployment. A possible explanation for this is that A) when prospects for getting a job are poor, the opportunity cost of getting a job is lower. B) when prospects for getting a job are poor, the opportunity cost of doing nothing is higher. C) during periods of high unemployment, tuition fees are reduced. D) during periods of high unemployment, the opportunity cost is no longer relevant. E) when prospects for getting a job are poor, the opportunity cost of going to university is lower. Answer: E Diff: 2 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 55) Chantal has a full-time job as a geological engineer and earns an annual after-tax salary of $85 000. She decides to leave her job for 6 months to scuba dive on the Great Barrier Reef in Australia, and incurs costs of $7500 for course equipment and certification, $2500 for airfare, and $12 000 for regular living expenses in Australia (equal to her living expenses at home). What is Chantal's opportunity cost for this 6month, unpaid leave of absence? A) $12 000 B) $22 000 C) $42 000 D) $52 500 E) $65 000 Answer: D Diff: 3 Type: MC Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 56) During economic recessions, the opportunity cost of going to university ________ because the wages a student can expect to earn working in the best alternative ________. A) increases; decrease B) decreases; increase C) increases; increase D) decreases; decrease E) remains the same; remain the same Answer: D Diff: 2 Type: MC

Topic: 1.1c. opportunity cost Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 57) A country's production possibilities boundary shows that when a society uses its resources efficiently, A) it cannot produce more of one good without producing less of the other good. B) it can produce more of only one good. C) it is always possible to produce more of all goods. D) all points inside the boundary are preferred to all points on the boundary. E) the supply for goods always exceeds the demand. Answer: A Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 58) Consider a production possibilities boundary that is drawn concave to the origin and shows the possible combinations of military goods and civilian goods that a country can produce. Suppose the country is currently at a point on the boundary. If the production of military goods is increased, the production of civilian goods will necessarily A) decrease. B) remain the same. C) increase. D) increase at a decreasing rate. E) increase at a increasing rate. Answer: A Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 59) A point lying inside the production possibilities boundary is one at which A) there is no scarcity. B) the opportunity cost of producing more output is negative. C) it is not possible to produce more output with existing resources. D) the economy has run out of resources. E) more output could be produced with existing resources. Answer: E Diff: 2 Type: MC

Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 60) If a country's production possibilities boundary is drawn as a straight (downwardsloping) line it indicates A) decreasing opportunity cost of producing more of either good. B) the use of the scarce resources in an economy. C) constant opportunity cost of producing more of either good. D) an unfair distribution of resources in an economy. E) increasing opportunity cost of producing more of either good. Answer: C Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

61) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. The production possibilities boundaries are drawn concave to the origin. What does this shape of the PPB demonstrate? A) the decreasing opportunity cost of producing more of either good B) the scarcity of resources in the economy C) the constant opportunity cost of producing more of either good D) the unfair distribution of resources in the economy E) the increasing opportunity cost of producing more of either good Answer: E Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

62) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. If Country X, constrained by the production possibilities boundary PPB1, is producing the combination of goods indicated at point F, it can produce more consumer goods by moving to one of the points A) A or E. B) D or E. C) A, B, or C. D) A or B, but not C. E) A, B, C, D, or E. Answer: C Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

63) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. If Country X is currently producing at point A, it could move to point B if A) the cost of producing capital goods were to increase. B) some resources were switched from the capital goods industries to the consumer goods industries. C) the cost of producing consumer goods were to increase. D) some resources were switched from the consumer goods industries to the capital goods industries. E) Country X is no longer able to produce the quantity of capital goods at point A. Answer: B Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

64) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. If Country X were producing at point C, A) the opportunity cost of moving to point A is to give up an increase in the production of consumer goods. B) the opportunity cost of moving to point A is zero. C) the opportunity cost of moving to point A is to give up some capital goods. D) this is the maximum output possible from given resources. E) it is not possible to move to any point on PPB1 or PPB2 without technological progress. Answer: A Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

65) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. At point B, A) the price of capital goods is higher than the price of consumer goods. B) Country X is producing too many consumer goods and too few capital goods. C) the price of consumer goods is equal to the price of capital goods. D) the opportunity cost of producing an extra unit of capital goods is higher than at point A. E) the opportunity cost of producing an extra unit of consumer goods is higher than at point A. Answer: E Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

66) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. If Country X, constrained by the production possibilities boundary PPB1, is currently producing at point A, it can produce more capital goods by moving to point A) F. B) E. C) D. D) C. E) B. Answer: A Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

67) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. Suppose Country X is currently producing at point E. Country X could achieve production at point D if A) the given resources were fully employed. B) the given resources were more efficiently employed. C) sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries. D) firms reduced output of capital goods. E) the prices of capital goods and consumption goods fell. Answer: C Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

68) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. A shift of the production possibilities boundary from PPB1 to PPB2 implies A) a movement from full employment to some unemployment. B) that if point E is the new choice of outputs, productivity has increased in the consumer goods industry. C) that productive capacity in the capital goods industries has improved. D) an inevitable decrease in total output. E) that productive capacity in the consumer goods industry has improved. Answer: C Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

69) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. Growth in the country's productive capacity is illustrated by A) a point like D outside the boundary. B) a movement from a point inside the boundary such as C to the boundary. C) the movement between points on a given boundary. D) a single point such as A on the boundary. E) an outward shift of the boundary, for example from PPB1 to PPB2. Answer: E Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

70) The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-4 Refer to Figure 1-4. An outward shift of the production possibilities boundary from to indicates which of the following? A) an increase in the price of raw materials for consumer goods B) growth in the country's productive capacity C) an increase in the price of raw material for capital goods D) more of the country's resources are being used E) the country's resources are being used less efficiently Answer: B Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

71)

FIGURE 1-5 Refer to Figure 1-5. Suppose the relevant production possibilities boundary is the one labelled B. This boundary implies that A) the concept of opportunity cost is not at work in this economy. B) the opportunity cost of producing either capital goods or consumer goods does not depend on how much of each good is produced. C) consumer goods are preferred to capital goods. D) in this society, the resources are not efficiently employed. E) capital goods are preferred to consumer goods. Answer: B Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

72)

FIGURE 1-5 Refer to Figure 1-5. Which production possibilities boundaries are consistent with increasing opportunity costs? A) boundary A only B) boundaries A and B C) boundary C only D) boundaries B and C E) boundaries A, B, and C Answer: C Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

73)

FIGURE 1-5 Refer to Figure 1-5. Which production possibilities boundaries exhibit decreasing opportunity costs? A) boundary B only B) boundaries A and C C) boundaries A and B D) boundary A only E) boundary C only Answer: D Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

74) If there is always a three-for-one trade-off between the production of goods X and Y, then the production possibilities boundary for X and Y is A) a downward-sloping curve convex to the origin. B) semicircular. C) a downward-sloping straight line. D) a downward-sloping straight line that is broken at one point. E) a downward-sloping curve concave to the origin. Answer: C Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Quantitative 75) On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the A) points on the boundary. B) area within the boundary. C) distance from the origin to the boundary. D) negative slope of the boundary. E) unattainable points outside the boundary. Answer: E Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 76) On a diagram of a production possibilities boundary, the concept of opportunity cost is illustrated by the A) distance from the origin to the boundary. B) negative slope of the boundary. C) boundary being concave to the origin. D) unattainable points outside the boundary. E) area bounded by the two axes and the boundary. Answer: B Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

77) On a diagram of a production possibilities boundary, the concept of choice is illustrated by the A) negative slope of the boundary. B) unattainable combinations outside the boundary. C) need to select among the alternative attainable points along or inside the boundary. D) the concave shape of the boundary. E) the distance from the origin to the boundary. Answer: C Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Recall Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 78) Consider the production possibilities boundary (PPB) of an economy. Economic growth is illustrated by A) the negative slope of the PPB. B) an outward shift of the PPB. C) a movement onto the PPB. D) a movement along the PPB. E) the movement to a point outside of the PPB. Answer: B Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 79) Suppose there are only two goods produced in our economy—snowplows and helicopters. If there is always a two-for-one tradeoff between the production of these two goods (in terms of opportunity cost), then the production possibilities boundary between snowplows and helicopters is A) a downward-sloping curve convex to the origin. B) circular. C) a downward-sloping straight line. D) a downward-sloping straight line with slope equal to -1. E) a downward-sloping curve concave to the origin. Answer: C Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

80) A straight-line production possibilities boundary differs from a concave boundary in which of the following ways? A) The straight-line boundary illustrates constant opportunity costs, whereas the concave boundary illustrates increasing opportunity costs. B) The concave boundary illustrates constant opportunity costs, whereas the straight-line boundary illustrates decreasing opportunity costs. C) The straight-line boundary does not show scarcity, whereas the concave boundary does. D) The straight-line boundary shows opportunity cost, whereas the concave boundary does not. E) A straight-line boundary is associated with a command economy, whereas a concave boundary is associated with a free-market economy. Answer: A Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 81) Consider Canada's production possibilities boundary. Suppose a scientific breakthrough leads to a lower-cost method of producing battery-operated cars in Canada. The likely effect would be to move Canada's current production A) to a point beyond its new production possibilities boundary. B) to a point inside its new production possibilities boundary. C) possibilities boundary outward. D) possibilities boundary inward. E) above the level of U.S. production. Answer: C Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

82) Consider Canada's production possibilities boundary. Suppose fire destroys many millions of hectares of valuable Canadian forest. The effect on the Canadian economy would be best illustrated by ________ the production possibilities boundary. A) a movement inside B) a movement along C) a movement to a point beyond D) a shift outward of E) an inward shift of Answer: E Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 83) Consider Canada's production possibilities boundary. During the nineteenth and early twentieth centuries, millions of people immigrated to western Canada. The effect on the Canadian economy was to A) move it to a point beyond its new production possibilities boundary. B) move it inside its new production possibilities boundary. C) shift its production possibilities boundary inward. D) shift its production possibilities boundary outward. E) move it along an unchanged production possibilities boundary. Answer: D Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 84) In recent years, several large Canadian-owned mining and resource companies have been sold to foreign owners. The immediate effect on Canada's production possibilities boundary is A) a shift outward. B) a shift inward. C) no change. D) a movement along. E) a movement to a point beyond the boundary. Answer: C Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary.

Category: Qualitative 85) The world price of oil fell in 2014-2015 from over $100 per barrel to less than $50. As a producer of oil, what effect did this change have on Canada's production possibilities boundary? A) a shift outward B) a shift inward C) movement to a point beyond the boundary D) movement to a point within the boundary E) no change Answer: E Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 86) Suppose drought destroys many millions of acres of valuable Canadian farmland. The effect on the Canadian economy would be to move A) it along its production possibilities boundary. B) its production possibilities boundary inward. C) it beyond its production possibilities boundary. D) its production possibilities boundary outward. E) None of the above. There would be no change in Canada's production possibilities boundary. Answer: B Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative 87) A move from inside the production possibilities boundary to the boundary itself could be caused by A) the employment of previously idle resources. B) a reallocation of resources from military to civilian goods. C) technological progress. D) an increase in the labour supply. E) an improvement in the government's ability to control its spending. Answer: A Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and

how each is illustrated by the production possibilities boundary. Category: Qualitative

88) Consider a production possibilities boundary showing the quantity of military goods and the quantity of civilian goods on the two axes. A movement along the production possibilities boundary could be caused by A) the employment of previously idle resources. B) the reallocation of resources between military and civilian goods. C) the growth of productive capacity. D) an increase in the labour supply. E) technological progress. Answer: B Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Category: Qualitative

89) The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue.

FIGURE 1-6 Refer to Figure 1-6. The levels of health and education expenditures at point C A) are less than at point D. B) are equal to those of point A and point B. C) are more cost-effective than those at points A, B, and D. D) could be achieved if the prices of health and/or education increased. E) are not attainable with the government's current budget. Answer: E Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

90) The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue.

FIGURE 1-6 Refer to Figure 1-6. If the government's spending on health and education is given by point B, a move to point A must involve A) less spending on health. B) zero opportunity cost. C) less spending on education. D) less spending in total. E) more spending on education. Answer: C Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

91) The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue.

FIGURE 1-6 Refer to Figure 1-6. Suppose the government's current spending is shown by point D. In this case, A) the government is not spending its total available budget for these two items. B) more education expenditures can be achieved only by sacrificing some existing health expenditures. C) more health expenditures can be achieved only by sacrificing some existing education expenditures. D) the government is spending more than its total budget. E) the prices of education and health care have increased beyond the government's ability to pay. Answer: A Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Qualitative

92) Figure 1-7 shows the production possibilities boundary for an economy that produces two goods—cotton and bananas.

FIGURE 1-7 Refer to Figure 1-7. A production possibilities boundary is shown for an economy that produces two goods—cotton and bananas, both measured in tonnes produced per year. Suppose the economy is currently producing at point A. What is the opportunity cost to this economy of increasing production of bananas by 100 tonnes? A) There is no opportunity cost. B) 60 tonnes of cotton C) 100 tonnes of cotton D) 1440 tonnes of bananas E) 1500 tonnes of bananas Answer: B Diff: 1 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

93) Figure 1-7 shows the production possibilities boundary for an economy that produces two goods—cotton and bananas.

FIGURE 1-7 Refer to Figure 1-7. A production possibilities boundary is shown for an economy that produces two goods—cotton and bananas, both measured in tonnes produced per year. Suppose the economy is currently producing at point D. What is the opportunity cost of increasing production of bananas by 100 tonnes? A) There is no opportunity cost. B) 420 tonnes of cotton C) 100 tonnes of cotton D) 60 tonnes of cotton E) 920 tonnes of cotton Answer: E Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

94) Figure 1-7 shows the production possibilities boundary for an economy that produces two goods—cotton and bananas.

FIGURE 1-7 Refer to Figure 1-7. A production possibilities boundary is shown for an economy that produces two goods—cotton and bananas, both measured in tonnes produced per year. Suppose this economy is currently producing 1280 tonnes of cotton and 200 tonnes of bananas. What is the opportunity cost of increasing production of bananas by 100 tonnes? A) 100 tonnes of cotton B) 360 tonnes of cotton C) 360 tonnes of bananas D) 920 tonnes of cotton E) There is no opportunity cost. Answer: B Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

95) Figure 1-7 shows the production possibilities boundary for an economy that produces two goods—cotton and bananas.

FIGURE 1-7 Refer to Figure 1-7. A production possibilities boundary is shown for an economy that produces two goods—cotton and bananas, both measured in tonnes produced per year. Suppose this economy moves from point D to point F, where it is then producing bananas exclusively. Which of the following explanations best describes the opportunity cost involved in producing this extra 100 tonnes of bananas? A) The opportunity cost is very high in this case because resources that are probably much better suited to producing cotton are now being devoted to producing bananas. B) The opportunity cost is very low in this case because resources that are probably much better suited to producing cotton are now being devoted to producing bananas. C) The opportunity cost is very high in this case because resources that are probably much better suited to producing bananas are now being devoted to producing cotton. D) The opportunity cost is very low in this case because resources that are probably much better suited to producing bananas are now being devoted to producing cotton. E) The opportunity cost of producing the extra bananas is independent of the amount being produced. Answer: A Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph

Category: Quantitative 96) Figure 1-7 shows the production possibilities boundary for an economy that produces two goods—cotton and bananas.

FIGURE 1-7 Refer to Figure 1-7. A production possibilities boundary is shown for an economy that produces two goods—cotton and bananas, both measured in tonnes produced per year. If the economy moves from point C to point D, what is the opportunity cost of each extra tonne of bananas produced? A) 0.36 tonnes of cotton B) 3.6 tonnes of cotton C) 3.75 tonnes of cotton D) 36 tonnes of cotton E) 375 tonnes of cotton Answer: B Diff: 3 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

97) Figure 1-7 shows the production possibilities boundary for an economy that produces two goods—cotton and bananas.

FIGURE 1-7 Refer to Figure 1-7. A production possibilities boundary is shown for an economy that produces two goods—cotton and bananas, both measured in tonnes produced per year. Which of the following statements best describes the difference in opportunity costs that this economy faces at point A compared to point E? A) The opportunity cost is 1500 tonnes of cotton at point A, compared to 500 tonnes at point E. B) The opportunity cost is 500 tonnes of cotton at point A, compared to 1500 tonnes at point E. C) The opportunity cost of producing an extra tonne of bananas is much higher at point A than at point E. D) The opportunity cost of producing an extra tonne of bananas is much lower at point A than at point E. E) The opportunity cost of producing an extra tonne of bananas is the same at point A as at point E. Answer: D Diff: 2 Type: MC Topic: 1.1d. production possibilities boundary Skill: Applied Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Graphics: Graph Category: Quantitative

1.2 The Complexity of Modern Economics 1) A modern economy like Canada's is largely organized by A) governments at all levels coordinating the activities of firms and citizens. B) individuals forming cooperative enterprises and labour unions. C) individuals following their own self-interest, doing what seems best for themselves. D) benevolent individuals pursuing the public interest. E) the self-interested behaviour of a small number of individuals. Answer: C Diff: 2 Type: MC Topic: 1.2a. self-organizing economy Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative 2) An insight first fully developed by Adam Smith is that A) without benevolence production would not occur. B) all individuals are motivated solely by self-interest. C) self-interest, not benevolence, is the foundation of economic order. D) self-interest undermines effective economic order. E) individual self-interest is the only necessary force for social order. Answer: C Diff: 1 Type: MC Topic: 1.2a. self-organizing economy Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative 3) An important insight by Adam Smith, which was more fully developed over the next century, is that in a free market the resources available to a nation are organized so as to produce the goods and services that people want with the least possible amount of resources. This concept is known in economics as A) productivity. B) division of labour. C) specialization. D) benevolence. E) efficiency. Answer: E Diff: 2 Type: MC Topic: 1.2a. self-organizing economy Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative

4) In the Canadian economy, most decisions regarding resource allocation are made by A) consumers and producers interacting in the price system. B) the various levels of government. C) negotiation between unions and firms. D) business firms only. E) legal contract. Answer: A Diff: 1 Type: MC Topic: 1.2a. self-organizing economy Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative 5) With reference to the circular flow of income, how is the allocation of resources largely decided? A) by central authorities only B) by central authorities and firms only C) by firms and individuals acting independently D) by political parties and firms only E) by individuals only Answer: C Diff: 1 Type: MC Topic: 1.2b. circular flow of income and expenditure Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative 6) The key decision makers in a market economy are A) individuals, firms, and government. B) individuals, non-profit organizations, and the Bank of Canada. C) governments and all institutions under government control. D) large corporations and labour organizations. E) corporations and governments. Answer: A Diff: 1 Type: MC Topic: 1.2b. circular flow of income and expenditure Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative

7) Economists usually assume that individuals and firms, respectively, maximize A) income and sales. B) savings and profits. C) wages and revenues. D) utility and profits. E) expenditures and profits. Answer: D Diff: 2 Type: MC Topic: 1.2b. circular flow of income and expenditure Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative 8) Which of the following is illustrated by the circular flow of income? A) the flows of expenditures and income in a household B) that firms own the factors of production C) the interaction of individuals and firms through the factors and goods markets D) that the flow of payments moves in the same direction as the flow of goods E) that there is no relationship between goods markets and factor markets Answer: C Diff: 2 Type: MC Topic: 1.2b. circular flow of income and expenditure Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative 9) Which of the following represents a typical "real" flow (as opposed to a financial flow) in the circular flow of income? A) goods going from producers to consumers B) factor services going from producers to consumers C) goods going from consumers to producers D) money payments going from consumers to producers E) money payments going from producers to consumers Answer: A Diff: 1 Type: MC Topic: 1.2b. circular flow of income and expenditure Skill: Recall Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative

10) If some income earned by households is not spent on output, or if some income earned by firms is not spent on factor services, the circular flow of income will A) stop. B) run over. C) expand. D) contract. E) explode. Answer: D Diff: 2 Type: MC Topic: 1.2b. circular flow of income and expenditure Skill: Applied Learning Obj.: 1-2 View the market economy as self-organizing in the sense that order emerges from a large number of decentralized decisions. Category: Qualitative 11) The famous economist who first described the division of labour was A) Karl Marx. B) Milton Friedman. C) David Ricardo. D) John Maynard Keynes. E) Adam Smith. Answer: E Diff: 1 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 12) Which of the following statements about specialization and trade are correct? A) They developed only in the twentieth century. B) They exist only in capitalist economies. C) They arose as humans changed from nomadic and self-sufficient food gatherers to settled food producers. D) They developed only where government and political institutions were stable. E) They occur only in the private sector. Answer: C Diff: 1 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative

13) If an economy exhibits the specialization of labour, we know that A) a barter economy is more suitable. B) most production is artisanal in nature. C) each worker is self-sufficient. D) job security is ensured. E) different individuals are producing different products. Answer: E Diff: 1 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 14) Which of the following statements best describes a barter system of exchange? A) It involves the trading of goods directly for other goods. B) It requires the use of money. C) It eliminates the transactions costs involved in exchange. D) It developed late in history. E) It is the most efficient form of exchange. Answer: A Diff: 1 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 15) Specialization of labour led to greater efficiency in the allocation of resources because of A) greater reliance on self-sufficiency. B) the use of barter. C) the principle of comparative advantage. D) an increase in total work effort. E) the opportunity cost of labour increased. Answer: C Diff: 2 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative

16) A greater specialization of labour leads to which of the following major results? A) The overall output of the economy declines. B) There is an increased need for government to intervene in the marketplace. C) The circular flow of income contracts. D) There is a greater need for trade. E) Each worker must become more self-sufficient. Answer: D Diff: 2 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 17) A farmer selling tomatoes and corn at a roadside, and a currency trader in Hong Kong are each participating in A) barter. B) a market. C) an involuntary transaction. D) flexible manufacturing. E) international trade. Answer: B Diff: 1 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Applied Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 18) Which of the following has most contributed to the globalization of the economy? A) the decreased importance of agriculture B) reductions in transportation and communication costs C) the shift toward a market economy in China D) tariffs and trade barriers E) the decline in the relative importance of manufacturing Answer: B Diff: 1 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative

19) Which of the following results from the introduction of money for use in transactions? A) exchange becomes easier and this promotes the specialization of labour B) an increased use of barter C) the specialization of labour becomes more difficult D) self-sufficiency is assured E) society is able to satisfy all wants Answer: A Diff: 2 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 20) The barter system of exchange is inefficient because A) "fair" values cannot be defined without the use of money. B) bargaining power is unequal between rich and poor. C) the double coincidence of wants may not exist. D) markets do not exist. E) exchange partners need to know each other. Answer: C Diff: 2 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Applied Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 21) Which of the points below are true of money? 1) Money eliminates the need for barter. 2) Money allows for specialization of labour and expansion of trade. 3) Money facilitates the development of a market economy. 4) Trade did not take place before the introduction of money. A) only 1 B) only 1 and 2 C) only 1 and 4 D) only 1, 2, and 3 E) All of the points are true. Answer: D Diff: 2 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative

22) Money facilitates trade and specialization by A) allowing an efficient barter system to develop. B) increasing the value of gold. C) eliminating the need for barter. D) reducing the shift of resources between uses. E) providing employment for coin makers. Answer: C Diff: 1 Type: MC Topic: 1.2c. division of labour, specialization and trade Skill: Recall Learning Obj.: 1-3 Explain how specialization gives rise to the need for trade, and how trade is facilitated by money. Category: Qualitative 1.3 Is There an Alternative to the Market Economy? 1) An economic system that relies primarily upon custom and habit in economic decision making is referred to as a A) market system. B) traditional system. C) command system. D) mixed system. E) communist system. Answer: B Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 2) In practice, the term "centrally planned economy" refers to an economy in which A) the government makes ALL production and consumption decisions. B) the mix of market and command principles is heavily weighted towards the latter. C) all commodities are rationed. D) the military is in control of the government. E) economic decisions are made in the geographic centre of the country. Answer: B Diff: 2 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative

3) Karl Marx argued that A) technological change was not important in improving living standards. B) a free-market system would produce a low level of total output. C) benevolence, not self-interest, produced an effective economic order. D) centrally planned economies could provide a more equitable distribution of total output than capitalist economies. E) the unfettered market system driven by self-interest leads to the best social outcome. Answer: D Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 4) When discussing types of economic systems, the Canadian economy is best described as A) primarily a public ownership economy. B) primarily free-market decision making. C) traditional. D) a command economy. E) a mixed economic system. Answer: E Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Applied Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 5) With regard to various economic systems, most economists agree that A) the mix of market and command principles that exists in Canada is the best. B) the optimal mix of market and command systems remains constant over time. C) most production and consumption decisions are more efficiently coordinated by markets than through central planning. D) government intervention in the economy is only justified in time of war. E) command economies have been very successful in distributing income in socially just ways. Answer: C Diff: 2 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative

6) Which countries have mostly public ownership of resources? A) United States and Canada B) Cuba and North Korea C) France and Germany D) Sweden and Norway E) Brazil and Argentina Answer: B Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 7) Behaviour in free-market economies is A) determined by a central authority. B) based primarily on custom and habit. C) mostly directed by self-interest. D) mostly affected by elements of tradition and government command. E) random and unpredictable. Answer: C Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 8) In command economies, economic behaviour is A) largely determined by a central authority. B) based primarily on custom and habit. C) directed by individual self-interest. D) largely affected by elements of tradition and market incentives. E) random and unpredictable. Answer: A Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative

9) In mixed economies, economic behaviour is A) largely determined by a central authority. B) based primarily on custom and habit. C) directed only by self-interest. D) affected by elements of tradition, government command, and market incentives. E) random and unpredictable. Answer: D Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 10) In traditional economies, economic behaviour is A) largely determined by a central authority. B) based primarily on custom and habit. C) directed only by self-interest. D) affected by elements of tradition, government command, and market incentives. E) random and unpredictable. Answer: B Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 11) Complex economic plans for many economic sectors are most associated with a A) free-market system. B) mixed market system. C) command economy. D) feudal system. E) traditional economy. Answer: C Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative

12) Most modern economies in the world today A) have pure market exchange. B) are similar to feudal systems. C) are mostly run by government decree. D) have a mix of traditional, command and market elements. E) are complex systems that defy description and analysis. Answer: D Diff: 2 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 13) In the current Canadian economy, the majority of choices on how resources are allocated are made by A) the various levels of government. B) negotiation between unions and firms. C) business firms only. D) legal contracts. E) consumers and firms through the price system. Answer: E Diff: 1 Type: MC Topic: 1.3. alternative economic systems Skill: Applied Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 14) Comparison of economic systems indicates that A) most nations have either a purely socialist economy or a purely capitalist economy. B) most countries have mixed economies. C) socialist economies are clearly superior in producing consumer goods. D) capitalist economies are clearly superior in distributing income. E) all countries have largely traditional economies. Answer: B Diff: 2 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative

15) Many economies in central and Eastern Europe, including the countries of the former Soviet Union, are still in the process of moving from a command economy to a market economy. In the first years of this transition, most of these countries experienced sharp drops in output and reductions in living standards. Economists generally see this as A) the failure of the market system. B) the triumph of capitalism over communism. C) an indication of the extreme difficulty of transition from one type of economic system to another. D) an indication that these economies should return to being command economies. E) the difficulty of corruption in non-market economies. Answer: C Diff: 2 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative 16) In a pure market economy, the role of government is limited to provision of : i) a basic legal and institutional structure. ii) intervention in the allocation of resources in some areas of the economy. iii) redistribution of income. iv) stabilization of economic conditions generally. Which of the above points is true? A) Only i). B) Only i) and ii). C) Only i) and iv). D) Only i), ii), and iv). E) All of the points are provided by government in a pure market economy. Answer: A Diff: 2 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative

17) In a modern mixed economy the government ensures that key institutions are in place to facilitate voluntary transactions between economic agents. These key institutions are A) labour and capital markets. B) the House of Commons and the Senate. C) the Department of Finance and the Bank of Canada. D) securities regulators and the court system. E) private property and freedom of contract. Answer: E Diff: 2 Type: MC Topic: 1.3. alternative economic systems Skill: Recall Learning Obj.: 1-5 Describe how all actual economies are mixed economies, having elements of free markets, tradition, and government intervention. Category: Qualitative Economics - Canadian Edition, 16e (Ragan) Chapter 2 Economic Theories, Data, and Graphs 2.1 Positive and Normative Statements 1) Disagreements over positive statements A) cannot arise because positive statements are facts. B) are best handled by an appeal to the facts. C) arise from the failure to distinguish between a positive and a normative statement. D) are basically devoid of any emotion. E) never occur. Answer: B Diff: 1 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 2) A positive statement is one that states A) what is, was, or will be. B) what is and what should be. C) what should be but is not. D) what is desirable. E) non-negative numbers. Answer: A Diff: 2 Type: MC Topic: 2.1. positive and normative statements Skill: Recall Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 3) Which is the best description of positive statements? Positive statements

A) have been verified by appeal to factual evidence. B) form the basis of all normative arguments. C) are falsifiable in principle by appeal to factual evidence. D) are seldom employed in social sciences like economics. E) have no place in economics because economics deals only with value judgments. Answer: C Diff: 2 Type: MC Topic: 2.1. positive and normative statements Skill: Recall Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative

4) Which is an example of a positive statement? A) There should be one price for gasoline throughout Canada. B) The higher the price for gasoline, the less of it will be consumed. C) Substitutes for fossil fuels should be developed. D) Canada should reduce its imports of consumer goods. E) Corporations in Canada should pay more taxes. Answer: B Diff: 1 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 5) Which is the best description of a normative statement? A normative statement A) can be derived logically from facts. B) concerns what is provable. C) is a statement that is empirically testable. D) is one that involves a value judgment. E) has no place in the study and practice of economics. Answer: D Diff: 1 Type: MC Topic: 2.1. positive and normative statements Skill: Recall Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 6) Which of the following is a normative statement? A) The sun rises in the west and sets in the east. B) A government deficit will reduce unemployment and cause an increase in prices. C) Reducing unemployment is more important than reducing inflation. D) Queen Elizabeth II is the wealthiest woman in the world. E) An increase in the price of lumber is followed by a decrease in the construction of new houses. Answer: C Diff: 1 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative

7) Which of the following is a normative statement? A) The higher is the level of taxes, the lower is consumption spending. B) The higher is the level of taxes, the higher are wage demands. C) A reduction in export taxes on petroleum would result in higher wages. D) Tuition fees should be waived for low-income students. E) A free-trade agreement between two countries will result in an increase in trade. Answer: D Diff: 1 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 8) Suppose an economist tells you that the unemployment rate in Canada last year was 7.8%. This is an example of a(n) ________ statement. A) autonomous B) positive C) normative D) induced E) imputed Answer: B Diff: 1 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 9) Suppose an economist tells you that, on average, people in Canada have too much personal debt. This is an example of a(n) ________ statement. A) autonomous B) positive C) normative D) independent E) induced Answer: C Diff: 1 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative

10) Which of the following statements belongs more properly in the field of normative economics than positive economics? A) An increase in the minimum wage leads to more unemployment. B) The price of one Canadian dollar is $0.85 U.S. C) When a drought occurs, the price of vegetables tends to rise. D) Canadian governments should provide assistance to the auto industry. E) Technological change has reduced the cost of cell phone service. Answer: D Diff: 2 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 11) Which of the following best describes the relationship between positive and normative statements in economics? A) Normative statements are those with which all economists agree; positive statements may give rise to some disagreement. B) Positive and normative statements are alternate ways of describing the desirability of certain economic policies. C) Normative statements evaluate the desirability of certain economic changes; positive statements do not. D) Neither positive nor normative statements are concerned with the desirability of certain economic changes. E) Economists generally agree with each other regardless of whether a question is positive or normative. Answer: C Diff: 2 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative 12) An assertion about the desirability of reducing unemployment by lowering payroll taxes is most likely A) a theory. B) a testable proposition. C) a hypothesis. D) a normative statement. E) a positive statement. Answer: D Diff: 2 Type: MC Topic: 2.1. positive and normative statements Skill: Applied Learning Obj.: 2-1 Distinguish between positive and normative statements. Category: Qualitative

2.2 Building and Testing Economic Theories 1) Which of the following best describes a theory? A theory A) enables one to predict the future with certainty. B) is designed to explain and predict what we observe. C) is used to impose order on the world. D) can only be tested with a controlled experiment. E) assumes definitions for variables. Answer: B Diff: 1 Type: MC Topic: 2.2a. economic theories Skill: Recall Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 2) An economic theory requires, among other things, A) a set of definitions of the variables to be considered. B) a controlled laboratory setting in which the theory can be tested. C) that the set of predictions be correct. D) a set of value judgments to interpret the empirical evidence. E) the use of endogenous variables only. Answer: A Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Recall Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 3) Choose the statement that best describes how endogenous variables differ from exogenous variables. A) An endogenous variable is a flow, while an exogenous variable is a stock. B) An endogenous variable is explained outside the theory and influences an exogenous variable while an exogenous variable is explained within the theory. C) An exogenous variable is a function of the endogenous variable, and both are flow variables. D) An endogenous variable is a function of the exogenous variable, and both are stock variables. E) An endogenous variable is explained within the theory, while an exogenous variable influences the endogenous variables but is determined outside the theory. Answer: E Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Recall

Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 4) Suppose there is a theory that several things influence the price of fish in Halifax, one of which is the weather during the fishing season. When examining the determinants of the price of fish, the weather is A) an endogenous variable, as it influences the price of fish. B) an exogenous variable, as it is determined outside the theory. C) a stock, as it influences the quantity of fish caught. D) an act of God and, therefore, has no legitimate connection with the theory. E) an endogenous variable, as it is determined within the theory. Answer: B Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 5) The statement that a country's rate of economic growth is positively influenced by its level of investment is an example of a(n) A) variable. B) definition. C) normative statement. D) theory. E) economic law. Answer: D Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 6) The statement that a 2% increase in the money supply leads to a 2% increase in the price level is an example of a(n) A) prediction. B) assumption. C) normative statement. D) variable. E) model. Answer: A Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied

Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative

7) The statement that introducing a policy of legislated rent controls will lead to a housing shortage is an example of a(n) A) assumption. B) prediction. C) theory. D) normative statement. E) model. Answer: B Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 8) Choose the statement that best characterizes an economic theory. A valid theory A) allows one to deduce a normative statement. B) appeals to the law of large numbers. C) generates a hypothesis that can predict future events. D) extrapolates from the past behaviour of a variable to predict its future course. E) allows one to prove irrefutably one's hypothesis. Answer: C Diff: 1 Type: MC Topic: 2.2a. economic theories Skill: Recall Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 9) Choose the statement that best characterizes an economic theory. An economic theory A) is only useful if its underlying assumptions are realistic. B) will be useful as long as it is logically consistent. C) must be judged on its ability to explain and predict real-world phenomena. D) will predict more accurately if it contains a greater number of mathematical equations. E) will be useful only if all human behaviour is rational. Answer: C Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative

10) Which of the following pairs of words have similar meanings? A) induced and autonomous B) endogenous and autonomous C) independent and exogenous D) dependent and exogenous E) induced and exogenous Answer: C Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Recall Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 11) Choose the answer that best explains why economists build models that abstract from the complexities of reality. A) Because the complexities of reality are unimportant. B) Because they believe they gain a greater understanding of reality. C) Because economists are not interested in reality. D) Because this allows economists to conduct controlled experiments to test their theories. E) Because economics deals only in the abstract. Answer: B Diff: 1 Type: MC Topic: 2.2a. economic theories Skill: Recall Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 12) Suppose an individual wheat farmer's income is influenced by the region's average daily temperature. When examining the determinants of individual farmer income, the average daily temperature is a(n) ________ variable. A) endogenous B) exogenous C) flow D) dependent E) induced Answer: B Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative

13) If we seek to explain the number of seats sold on a particular air route, say Toronto to Halifax, over a one-year period, we would consider many variables. Which of the following variables would be endogenous to our theory? A) the average salary of Canadian airline pilots B) the number of airline seats sold on this route C) the price of jet fuel D) the number of fog days in Halifax E) the unemployment rate in Toronto Answer: B Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 14) When an economist assumes that the owners of firms are motivated only by the desire to maximize profits, the economist most likely believes that A) all people enter business for their own selfish gain. B) the assumption is descriptively accurate, since surveys have been taken and the owners of firms have admitted that their only objective is to maximize profits. C) it doesn't matter whether or not the assumption is descriptively accurate; what matters is whether a theory built on the assumption predicts well. D) the assumption is inaccurate, since surveys have been taken and the owners of firms have admitted that they care about more than just profits. E) individuals entering business are quite narrow in their personal objectives. Answer: C Diff: 2 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 15) An economic model that contains a highly realistic set of assumptions is A) useful because there is then very little difference between "theory" and "reality." B) necessarily better able to predict the future. C) certainly superior to a model whose assumptions are somewhat unrealistic. D) more abstract than a model whose assumptions are further removed from reality. E) not likely to be useful because of its particularized nature and its complexity. Answer: E Diff: 3 Type: MC Topic: 2.2a. economic theories Skill: Applied Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy.

Category: Qualitative 16) Economists build models that abstract from the complexities of reality because A) it is easier to do so. B) they believe they gain a greater understanding of reality. C) economists are not interested in reality. D) economists do not understand the real world. E) the complexities of reality are unimportant. Answer: B Diff: 1 Type: MC Topic: 2.2a. economic theories Skill: Recall Learning Obj.: 2-2 Explain why and how economists use theories to help them understand the economy. Category: Qualitative 17) Suppose we have data for 1000 students for a period of one year. The data show that those students who spend more hours studying have a higher grade point average (GPA). We can say that A) if hours of study time increase, then GPA will automatically increase. B) having a higher GPA leads students to spend more time studying. C) there is a causal relationship between hours of study time and GPA. D) more hours spent studying leads to a higher GPA. E) there is a positive correlation between hours of study time and GPA. Answer: E Diff: 3 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 18) Suppose economists at the World Bank discover a positive correlation between family income and female education levels in developing countries. We can say that A) the correlation is inconsistent with a theory that an increase in female education levels causes an increase in family income. B) an increase in family income causes an increase in female education levels. C) an increase in female education levels causes an increase in family incomes. D) there is a causal relationship between family income and female education. E) the observed correlation is consistent with a theory that an increase in female education levels causes an increase in family income. Answer: E Diff: 3 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical

observation. Category: Qualitative 19) Economists at the Department of Finance in Ottawa employ an economic model that predicts the effects of an increase in the GST. After implementation of the change, suppose researchers find that the empirical data is in conflict with the model's prediction. They are likely to A) modify the prediction in light of the new evidence. B) ignore the empirical evidence and continue using the model. C) modify the model in light of this newly acquired empirical knowledge. D) reject the empirical data as faulty because it did not support the theory. E) modify the data to suit the definitions and assumptions. Answer: C Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 20) Suppose economists at the World Bank develop a theory with a prediction that increased levels of foreign aid lead to increases in per capita GDP in the recipient developing countries. They find empirical evidence that is consistent with this theory. The economists are able to conclude that A) the theory is valid, but should be subjected to continued scrutiny. B) the theory has been proven correct. C) the theory is always reliable. D) the evidence is rejected by the theory. E) the assumptions used in the theory have been proven correct. Answer: A Diff: 3 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative

21) Suppose a theory predicts that lowering tuition fees at Canadian universities will increase enrollment from low-income households. If empirical evidence is inconsistent with this prediction, then we A) need to amend the theory. B) should test the theory again. C) should change the empirical data. D) should increase tuition fees back to their initial level. E) change the exogenous variables in the theory. Answer: A Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 22) A hypothesis (or a prediction) is a statement about A) how assumptions affect theories. B) those things which we believe to be true, but cannot prove. C) what will certainly happen in the future. D) the relationship between facts explained by the hypothesis. E) how two or more variables are related to each other. Answer: E Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 23) The scientific approach is central to the study of economics. In economic theory, a prediction is A) not testable. B) a prophesy of how the future will unfold. C) a causal statement of the following form: A will occur because B occurred. D) a conditional statement of the following form: if A occurs, then B will follow. E) always based on the law of large numbers. Answer: D Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Recall Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative

24) Of the following, which is the most important characteristic of a successful theory? A) The theory provides a basis for facts about economic behaviour. B) The theory could never be refuted. C) The theory adequately explains all economic behaviour. D) All assumptions on which the theory is based are true. E) The theory allows us to predict behaviour reasonably accurately. Answer: E Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 25) The scientific approach to economic inquiry involves A) choosing data that will support the predictions. B) using only endogenous variables in economic models. C) testing the predictions with empirical data. D) testing the reality of the assumptions of the model. E) using only independent variables. Answer: C Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 26) Economics is scientific because A) economists routinely conduct controlled experiments. B) individual behaviour is predictable. C) economists routinely conduct laboratory experiments. D) economists use data. E) economists test hypotheses by appealing to empirical evidence. Answer: E Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Recall Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative

27) In order to test a theory, one must A) develop a better explanation than the one presented. B) present a series of normative statements and positive statements. C) use assumptions that most closely reflect reality. D) develop normative statements from the law of large numbers. E) confront the predictions of the theory with evidence. Answer: E Diff: 1 Type: MC Topic: 2.2b. testing theories Skill: Recall Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 28) Suppose a particular theory predicts that on Monday, Wednesday, and Friday the stock market will rise and that on Tuesday and Thursday the stock market will fall. If an economist tests this theory and finds that over a six-month period the theory predicts accurately, the economist would likely say that the theory A) has been proven correct. B) is reliable. C) is not in conflict with the evidence. D) shouldn't be taken seriously. E) is not useful because stock markets involve irrational human behaviour. Answer: C Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 29) If a theory's prediction is tested and is in conflict with the evidence, A) the original data and assumptions should be discarded. B) it is rejected with certainty, because it is not possible to reject a hypothesis that is actually true. C) the statistical tolerance of risk for accepting a false hypothesis should be increased. D) inquiry into the matter should cease. E) a new hypothesis is usually suggested and tested. Answer: E Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative

30) When testing theories, economics is disadvantaged compared to the natural sciences because A) it deals with human behaviour and thus is not open to empirical testing. B) it is usually not possible to conduct controlled experiments in economics, in contrast with certain other sciences. C) economic hypotheses cannot be accepted with complete certainty, by contrast with the other sciences. D) economic variables do not change enough to provide reliable data for testing hypotheses. E) some economic variables are determined within the theory. Answer: B Diff: 2 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative 31) Most economists believe that economic analysis ________ be made completely free of judgement, in part because it is ________ to absolutely refute a theory on the basis of factual evidence. A) can; possible B) can; impossible C) cannot; possible D) cannot; impossible E) will; necessary Answer: D Diff: 3 Type: MC Topic: 2.2b. testing theories Skill: Applied Learning Obj.: 2-3 Understand the interaction between economic theories and empirical observation. Category: Qualitative

2.3 Economic Data 1) When studying economic data, and when comparing the magnitude of changes in variables with different scales it is best to A) compare the absolute data on each variable. B) compare the relative data on each variable. C) express each variable as an index number. D) express each variable as a logarithmic number. E) use only time-series data. Answer: C Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 2) When studying economic data, index numbers are especially valuable when comparing A) relative movements in different variables measured in different units. B) relative movements in real and nominal variables. C) linear and logarithmic data. D) time-series data with cross-sectional data. E) government data with private-sector data. Answer: A Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 3) The base year for an index number is A) determined by the year the variable equals exactly 100. B) dependant upon the type of data. C) declared by the federal government. D) chosen arbitrarily by those who construct the data series. E) the year in which 2 or more index numbers are equal to 100. Answer: D Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative

4) For a given year, an index number of average prices across the economy (in Canada, the Consumer Price Index) is the ratio of the A) price of several goods in the given year to that in the base year. B) simple average price of all goods in the given year to that in the base year. C) average price of several goods in the base year to that in the given year. D) weighted prices of a typical bundle of goods purchased in a given year to that in the base year. E) weighted prices of a typical bundle of goods purchased in the base year to that in the given year. Answer: D Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 5) An index number expresses the value of a variable in any given period A) as a percentage of its value in the base period. B) as a weighted average. C) as a proportional weighted average. D) as an average of its value in the base period. E) as an absolute compared to the base period. Answer: A Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative

6) Let 1 stand for "any given period" and 2 stand for "base period." The formula of any index number can be written as A) value of index at 1 = × 100. B) value of index at 1 =

× 100.

C) value of index at 1 =

× 100.

D) value of index at 1 =

.

E) value of index at 1 =

.

Answer: A Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Quantitative 7) The table below shows hypothetical tuition costs at a Canadian university. Year 2015 2016 2017 2018 2019

Tuition $5000 $5050 $5100 $5150 $5200

TABLE 2-1 Refer to Table 2-1. Assume that 2015 is used as the base year, with the index number = 100. The value of the index number in 2017 is calculated as follows: A) (5000/5100) × 100 = 98. B) 5100/5000 = 1.02. C) 5000/5100 = 0.98. D) 5100/5100 = 100. E) (5100/5000) × 100 = 102. Answer: E Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

8) The table below shows hypothetical tuition costs at a Canadian university. Year 2015 2016 2017 2018 2019

Tuition $5000 $5050 $5100 $5150 $5200

TABLE 2-1 Refer to Table 2-1. Assume that 2015 is used as the base year, with the index number = 100. The value of the index number in 2019 is A) 100. B) 104. C) 1.04. D) 96. E) 0.96. Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

9) The table below shows hypothetical tuition costs at a Canadian university. Year 2015 2016 2017 2018 2019

Tuition $5000 $5050 $5100 $5150 $5200

TABLE 2-1 Refer to Table 2-1. The increase in tuition fees from 2015 to 2019 is A) 200. B) 100/5000. C) 4%. D) 0.04%. E) 200/5200. Answer: C Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

10) The table below shows hypothetical tuition costs at a Canadian university. Year 2015 2016 2017 2018 2019

Tuition $5000 $5050 $5100 $5150 $5200

TABLE 2-1 Refer to Table 2-1. Assume that 2017 is used as the base year, with the index number = 100. The value of the index number in 2015 is calculated as follows: A) 5000/5100 = 0.98. B) (5100/5000) × 100 = 102. C) 5100/5000 = 1.02. D) 5100/5100 = 100. E) (5000/5100) × 100 = 98. Answer: E Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

11) The table below shows hypothetical monthly cell phone plan fees for the identical service over several years. 2015 2016 2017 2018 2019

$55 $50 $40 $35 $25

TABLE 2-2 Refer to Table 2-2. Assume that 2015 is used as the base year, with the index number = 100. The value of the index number in 2018 is calculated as follows: A) (35/100) × 100 = 35. B) 35/55 = 0.64. C) 55/35 = 1.57. D) (35/55) × 100 = 63.64. E) (55/35) × 100 = 157.14. Answer: D Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

12) The table below shows hypothetical monthly cell phone plan fees for the identical service over several years. 2015 2016 2017 2018 2019

$55 $50 $40 $35 $25

TABLE 2-2 Refer to Table 2-2. Assume that 2015 is used as the base year, with the index number = 100. The value of the index number in 2019 is A) 0.25. B) 2.5. C) 25.0. D) 0.45. E) 45.45. Answer: E Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

13) The table below shows hypothetical monthly cell phone plan fees for the identical service over several years. 2015 2016 2017 2018 2019

$55 $50 $40 $35 $25

TABLE 2-2 Refer to Table 2-2. Assume that 2015 is used as the base year, with the index number = 100. The value of the index number in 2017 is A) 100. B) 0.72. C) 72.73. D) 1.375. E) 137.5. Answer: C Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

14) The table below shows hypothetical monthly cell phone plan fees for the identical service over several years. 2015 2016 2017 2018 2019

$55 $50 $40 $35 $25

TABLE 2-2 Refer to Table 2-2. Assume that 2015 is used as the base year, with the index number = 100. What is the percentage change in the monthly fee from 2018 to 2019? A) -28.6% B) -10.0% C) -71.4% D) -25.0% E) -35.0% Answer: A Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

15) The table below shows hypothetical monthly cell phone plan fees for the identical service over several years. 2015 2016 2017 2018 2019

$55 $50 $40 $35 $25

TABLE 2-2 Refer to Table 2-2. Assume that 2015 is used as the base year, with the index number = 100. Which of the following series is the correct set of index numbers for the monthly cell phone charges from 2015 to 2019? A) 0.55; 0.50; 0.40; 0.35; 0.25 B) 100; 91; 73; 64; 45 C) 55; 50; 40; 35; 25 D) 1.0; 0.91; 0.73; 0.64; 0.45 E) 100%; 91%; 73%; 64%; 45% Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

16) The table below shows hypothetical data for volumes of e-books and hardcover books sold over a 3-year period in a particular city.

Year 1 Year 2 Year 3

E-books 23 000 52 000 106 000

Hardcover Books 72 000 59 000 31 000

TABLE 2-3 Refer to Table 2-3. Suppose we choose Year 1 as the base year and construct a series of index numbers with which to analyze the sales data. The index numbers for volumes of ebooks sold (starting with Year 1) is A) 100; 44.2; 21.7. B) 100; 226.1; 460.9. C) 23 000; 52 000; 106 000. D) 100; 126.1; 360.1. E) 1; 0.442; 0.217. Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

17) The table below shows hypothetical data for volumes of e-books and hardcover books sold over a 3-year period in a particular city.

Year 1 Year 2 Year 3

E-books 23 000 52 000 106 000

Hardcover Books 72 000 59 000 31 000

TABLE 2-3 Refer to Table 2-3. Suppose we choose Year 1 as the base year and construct a series of index numbers with which to analyze sales data. The index numbers for volumes of hardcover books sold (starting with Year 1) is A) 431; 819; 100. B) 43.1; 81.9; 100. C) 100; 81.9; 43.1. D) 100; 0.819; 0.431. E) 0.431; 0.819; 100. Answer: C Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

18) The table below shows hypothetical data for volumes of e-books and hardcover books sold over a 3-year period in a particular city.

Year 1 Year 2 Year 3

E-books 23 000 52 000 106 000

Hardcover Books 72 000 59 000 31 000

TABLE 2-3 Refer to Table 2-3. Between Year 1 and Year 3, what is the percentage change in sales of e-books? A) 83 000% B) 460.9% C) 360.9% D) 21.7% E) 83% Answer: C Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

19) The table below shows hypothetical data for volumes of e-books and hardcover books sold over a 3-year period in a particular city.

Year 1 Year 2 Year 3

E-books 23 000 52 000 106 000

Hardcover Books 72 000 59 000 31 000

TABLE 2-3 Refer to Table 2-3. Between Year 1 and Year 3, what is the percentage change in sales of hardcover books? A) 0.569% B) 56.9% C) -56.9% D) -0.569% E) -569% Answer: C Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

20) The table below shows hypothetical prices for a particular anatomy textbook at a university bookstore over several years. Year 2015 2016 2017 2018 2019

Price $180 $185 $205 $215 $220

TABLE 2-4 Refer to Table 2-4. Assume that 2015 is used as the base year, with the index number = 100. The value of the index number in 2018 is calculated as follows: A) 215/180 = 1.194. B) 180/215 = 0.837. C) (215/180) × 100 = 119.4. D) (180/215) × 100 = 83.7. E) (215 - 180) = 35. Answer: C Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

21) The table below shows hypothetical prices for a particular anatomy textbook at a university bookstore over several years. Year 2015 2016 2017 2018 2019

Price $180 $185 $205 $215 $220

TABLE 2-4 Refer to Table 2-4. Assume that 2015 is used as the base year, with the index number = 100. The value of the index number in 2017 is A) 0.878. B) 1.0. C) 1.139. D) 87.8. E) 113.9. Answer: E Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

22) The table below shows hypothetical prices for a particular anatomy textbook at a university bookstore over several years. Year 2015 2016 2017 2018 2019

Price $180 $185 $205 $215 $220

TABLE 2-4 Refer to Table 2-4. Assume that 2019 is used as the base year, with the index number = 100. The value of the index number in 2015 is A) 0.818. B) 1.0. C) 1.222. D) 81.8. E) 122.2. Answer: D Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

23) The table below shows hypothetical prices for a particular anatomy textbook at a university bookstore over several years. Year 2015 2016 2017 2018 2019

Price $180 $185 $205 $215 $220

TABLE 2-4 Refer to Table 2-4. The increase in the price of the textbook from 2015 to 2019 is A) -40. B) 40. C) 18.2%. D) 22.2%. E) 40%. Answer: D Diff: 2 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

24) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-5 Refer to Table 2-5. What is the index number for gold output in Year 1? A) 0.91 B) 109.7 C) 1.097 D) 91.2 E) 99.7 Answer: D Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

25) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-5 Refer to Table 2-5. What is the index number for gold output in Year 8? A) 111.9 B) 111.9% C) 11.9 D) 11.9% E) 1.119 Answer: A Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

26) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-5 Refer to Table 2-5. What is the index number for nickel output in Year 6? A) 108.2 B) 105.3 C) 110.7 D) 95.0 E) 95.0% Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

27) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-5 Refer to Table 2-5. What is the index number for nickel output in Year 2? A) 98.4% B) 98.4 C) -72.0% D) 72.0% E) 0.984% Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

28) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-6 Refer to Table 2-6. What is the index number for gold output in Year 2? A) 97.7% B) 0.977 C) -3.4% D) 97.7 E) -34% Answer: D Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

29) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-6 Refer to Table 2-6. What is the index number for gold output in Year 8? A) 104.1% B) 104.1 C) 1.04 D) 60 E) 60% Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

30) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-6 Refer to Table 2-6. What is the index number for nickel output in Year 5? A) -200 B) -200% C) 96 D) 0.96% E) 96% Answer: C Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

31) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-6 Refer to Table 2-6. What is the index number for nickel output in Year 3? A) 92.4% B) -379 C) 379 D) 0.924% E) 92.4 Answer: E Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

32) The table below shows hypothetical data for the volume of gold and nickel output across several years.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Gold (troy ounces) 1 230 000 1 416 000 1 349 000 947 000 1 012 000 1 321 000 1 450 000 1 510 000

Index

100

Nickel (lbs) 4500 4551 4623 4791 4802 4867 5002 5117

Index

100

TABLE 2-6 Refer to Table 2-6. What is the percentage change in gold output from Year 1 to Year 7? A) 17.9% B) 84.8% C) 15.2% D) -15.2% E) 0.152% Answer: A Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

33) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the index number for the value of crude oil exports in 2017? A) 1.22 B) 122.4 C) 122.4% D) 0.817 E) 81.7 Answer: E Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

34) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the index number for the value of natural gas exports in 2017? A) 0.912 B) 92.0 C) 92.0% D) 1.09 E) 109.7 Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

35) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the index number for the value of crude oil exports in 2016? A) 1.64 B) 164.1 C) 60.9 D) 0.609 E) 60.9% Answer: C Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

36) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the index number for the value of natural gas exports in 2016? A) 0.109 B) 108.7% C) 108.7 D) 78.6 E) 0.786 Answer: D Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

37) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the percentage change in the value of exports of crude oil from 2013 to 2017? A) -18.3% B) -183.2% C) -100% D) 18.3% E) 183.2% Answer: A Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

38) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the percentage change in the value of exports of natural gas from 2013 to 2017? A) 0.8% B) 8% C) -0.8% D) -18% E) -8% Answer: E Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

39) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the percentage change in the value of exports of crude oil from 2016 to 2017? A) 0.34% B) 34% C) -0.34% D) -34% E) -18% Answer: B Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative

40) The table below shows the approximate value of Canada's crude oil and natural gas exports over a 5-year period. The amounts shown are billions of dollars.

2013 2014 2015 2016 2017

Crude Oil 81.9 91.5 55.8 49.9 66.9

Natural Gas 11.2 15.7 9.8 8.8 10.3

TABLE 2-7 Refer to Table 2-7. Assume that 2013 is the base year, with an index number = 100. What is the percentage change in the value of exports of natural gas from 2016 to 2017? A) 14.6% B) -14.6% C) -18.7% D) 17.0% E) -17.0% Answer: D Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Graphics: Table Category: Quantitative 41) According to the Bank of Canada's website, Canada's Consumer Price Index (CPI) in August 2015 was 127.3, August 2016 was 128.7, August 2017 was 130.5 and August 2018 was 134.2. Given this set of index numbers, what can we conclude about average prices in Canada between August 2015 and August 2018? A) Average prices increased over this time period by 6.9 percent per year. B) Average prices decreased over this time period by 6.9%. C) Average prices decreased each year. D) Average prices increased over this time period by 6.9%. E) Average prices increased each year. Answer: E Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Quantitative

42) According to the Bank of Canada's website, Canada's Consumer Price Index (CPI) in August 2015 was 127.3, August 2016 was 128.7, August 2017 was 130.5 and August 2018 was 134.2. Given this set of index numbers, what is the percentage change in the average level of prices between August 2015 and August 2018? A) 127.3% B) 134.2% C) 6.9% D) 5.4% E) 5.1% Answer: D Diff: 3 Type: MC Topic: 2.3a. index numbers Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Quantitative 43) An economist collects data comparing per-capita expenditures on health care across provinces and territories for the year 2018. The best way to illustrate this data is A) a time-series line graph. B) a cross-sectional bar-chart graph. C) a scatter diagram. D) a logarithmic scale diagram. E) a time-series bar chart diagram. Answer: B Diff: 2 Type: MC Topic: 2.3b. graphing economic data Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 44) An economist has data showing Canadian GDP for the years 1945-2018. The best way to illustrate these data is A) a time-series line graph. B) a cross-sectional bar-chart graph. C) a scatter diagram. D) a logarithmic scale diagram. E) a time-series pie chart. Answer: A Diff: 2 Type: MC Topic: 2.3b. graphing economic data Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative

45) An economist has data showing household income and energy consumption for 10 000 Canadian households. The best way to illustrate these data is A) a time-series line graph. B) a cross-sectional bar-chart graph. C) a scatter diagram. D) a logarithmic scale diagram. E) a time-series bar chart diagram. Answer: C Diff: 2 Type: MC Topic: 2.3b. graphing economic data Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 46) What is the best way to display the unemployment rate in each of the world's developed economies in 2018? A) a time series line graph B) a scatter diagram C) a scatter diagram with two variables D) a cross-sectional graph with time-series data E) a cross-sectional bar chart graph Answer: E Diff: 2 Type: MC Topic: 2.3b. graphing economic data Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 47) You have collected data over the summer on the hours of exposure to sunlight received by 100 tomato plants and the number of tomatoes that grow on each plant. What is the best way to display this data and the relationship between these two variables? A) time series line graph B) a cross-sectional bar chart graph C) scatter diagram D) time series bar chart E) cross-sectional line graph Answer: C Diff: 3 Type: MC Topic: 2.3b. graphing economic data Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative

48) An economist has data showing average apartment rental rates in different Canadian cities in 2019. The best way to illustrate these data is A) a line graph. B) a scatter diagram. C) a time-series line graph. D) a cross-sectional bar graph. E) a scatter plot. Answer: D Diff: 3 Type: MC Topic: 2.3b. graphing economic data Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 49) An economist has data showing Canadian disposable income and consumption spending for the years 1960-2018. The best way to illustrate these data is A) a pair of time-series line graphs. B) a separate scatter diagram for each variable. C) a cross-sectional graph with time series data. D) a cross-sectional bar chart graph. E) a logarithmic scale diagram. Answer: A Diff: 3 Type: MC Topic: 2.3b. graphing economic data Skill: Applied Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 50) Data collected repeatedly over successive periods of time are called A) cross-sectional data. B) time-analysis data. C) logarithmic data. D) topographic data. E) time-series data. Answer: E Diff: 1 Type: MC Topic: 2.3b. graphing economic data Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative

51) Data collected of several variables but for the same time period are called A) cross-sectional data. B) time-analysis data. C) logarithmic data. D) topographic data. E) time-series data. Answer: A Diff: 1 Type: MC Topic: 2.3b. graphing economic data Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 52) A scatter diagram A) is a graph of a theoretical relationship between two variables. B) relates cross-sectional data only. C) relates time series data only. D) plots a series of observations, showing the relationship between two variables. E) shows the dependence of one variable on another. Answer: D Diff: 1 Type: MC Topic: 2.3b. graphing economic data Skill: Recall Learning Obj.: 2-4 Identify several types of economic data, including index numbers, time‐series and cross‐sectional data, and scatter diagrams. Category: Qualitative 2.4 Graphing Economics Theories 1) When it is said that variable A depends on variable B, then A is A) a derivative of B. B) proportional to B. C) partially exclusive of B. D) a function of B. E) independent of B. Answer: D Diff: 1 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative

2) Consider the following equation: Y = 10 + 5X - X2. This equation is an expression of A) a functional relation between X and Y. B) two dependent variables in a functional relation. C) two independent variables in a functional relation. D) a functional relation in a schedule format. E) a functional relation in a verbal format. Answer: A Diff: 2 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 3) When considering how a family's level of consumption changes in response to changes in its income, A) income is the dependent variable and family consumption is the independent variable. B) consumption is the dependent variable and income is the independent variable. C) both of the variables are independent. D) both of the variables are dependent. E) there is no relationship between the variables. Answer: B Diff: 2 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 4) The mathematical expression of a relationship between two or more variables is usually known as A) a definition. B) an assumption. C) an observation. D) a function. E) a theory. Answer: D Diff: 1 Type: MC Topic: 2.4a. functional relations Skill: Recall Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative

5) The statement "Y is a function of X" means that the A) value of Y depends on that of X. B) value of X depends on that of Y. C) values of Y and X are the same. D) values of Y and X are independent. E) values of Y and X are related to some third variable. Answer: A Diff: 1 Type: MC Topic: 2.4a. functional relations Skill: Recall Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 6) When an increase in one variable is associated with an increase in a second variable, the two variables are A) proportionally related. B) inversely proportionally related. C) positively related. D) equivalent. E) negatively related. Answer: C Diff: 1 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 7) When an increase in one variable is associated with a decrease in a second variable, the two variables are A) proportionally related. B) inversely proportionally related. C) positively related. D) equivalent. E) negatively related. Answer: E Diff: 1 Type: MC Topic: 2.4a. functional relations Skill: Recall Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative

8) Negatively related variables change such that as the value of one variable A) decreases, the value of the other variable remains the same. B) increases, the value of the other variable increases. C) increases, the value of the other variable remains the same. D) decreases, the value of the other variable decreases. E) increases, the value of the other decreases. Answer: E Diff: 2 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 9) Positively related variables change such that as the value of one variable A) decreases, the value of the other variable increases. B) decreases, the value of the other variable decreases. C) decreases, the value of the other variable remains the same. D) increases, the value of the other variable decreases. E) increases, the value of the other variable remains the same. Answer: B Diff: 2 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 10) Suppose we observe that consumption of electricity decreases when the price of electricity rises. We can say that the two variables are related A) positively. B) linearly. C) negatively. D) non-linearly. E) exogenously. Answer: C Diff: 1 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative

11) Consider the functional relationship between two variables, X and Y. If Y is an increasing function of X, then A) Y increases when X increases. B) Y increases when X decreases. C) X decreases when Y increases. D) Y decreases when X increases. E) X remains constant as Y increases. Answer: A Diff: 2 Type: MC Topic: 2.4a. functional relations Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 12) The slope of a straight line is necessarily A) zero. B) constant. C) positive. D) negative. E) increasing as one moves up the line. Answer: B Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 13) On a coordinate graph with y on the vertical axis and x on the horizontal axis, suppose that two points on a straight line are (X = 4, Y = 5), and (X = 2, Y = 1). The slope of this line is A) -2. B) - . C) . D) . E) 2. Answer: E Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other.

Category: Quantitative 14) If the graph of a function is a horizontal line, the slope of this line is A) undefined. B) 0. C) 1. D) infinity. E) -1. Answer: B Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 15) On a coordinate graph with y on the vertical axis and x on the horizontal axis, what is the X intercept of the function X = 60 + 3Y? A) -20 B) 20 C) -60 D) 60 E) 0 Answer: D Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 16) On a coordinate graph with y on the vertical axis and x on the horizontal axis, what is the Y intercept of the function X = 60 + 3Y? A) -20 B) 0.1 C) 3.0 D) 20 E) 60 Answer: A Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

17) On a coordinate graph with y on the vertical axis and x on the horizontal axis, suppose point A represents coordinates (X = 5, Y = 6) and point B represents coordinates (X = 2, Y = 3). Then the slope of the straight line joining points A and B is A) -1. B) 2/3. C) 5/6. D) 1. E) 3/2. Answer: D Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 18) The slope of a curve is A) always positive. B) always negative. C) positive if the curve rises to the right. D) negative if the curve rises to the right. E) always constant. Answer: C Diff: 1 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 19) On a coordinate graph with y on the vertical axis and x on the horizontal axis, consider the line which is the graph of the function Y = 60 - 4X. The slope of this line is A) 4. B) 60. C) -2.5. D) -4.0. E) -40. Answer: D Diff: 1 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

20) In a co-ordinate graph, with Y on the vertical axis and X on the horizontal axis, the variable X is positive and the variable Y is negative in the ________ quadrant. A) top, right B) top, left C) bottom, left D) bottom, right E) any of the above Answer: D Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Recall Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 21) In a co-ordinate graph with Y on the vertical axis and X on the horizontal axis, the variable X is negative and the variable Y is negative in the ________quadrant. A) top, right B) top, left C) bottom, right D) bottom, left E) any of the above Answer: D Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Recall Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative 22) In a co-ordinate graph with Y on the vertical axis and X on the horizontal axis, the variable X is positive and the variable Y is positive in the ________quadrant. A) top, right B) top, left C) bottom, right D) bottom, left E) any of the above Answer: A Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Recall Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Qualitative

23) On a coordinate graph with y on the vertical axis and x on the horizontal axis, suppose point A represents co-ordinates (X = 10, Y = 12) and point B represents coordinates (X = 5, Y = 7). The slope of the straight line joining points A and B is A) -1. B) 1. C) 2/3. D) 3/2. E) 5/6. Answer: B Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 24) On a coordinate graph with y on the vertical axis and x on the horizontal axis, suppose point A represents coordinates (X = 2, Y = 12) and point B represents coordinates (X = 6, Y = 4). The slope of the straight line joining points A and B is A) 5. B) - . C) . D) -2. E) 2. Answer: D Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

25)

FIGURE 2-1 Refer to Figure 2-1. What is the slope of the line in part (i) of the figure? A) -10 B) 5 C) -5 D) -1 E) 1 Answer: A Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Quantitative

26)

FIGURE 2-1 Refer to Figure 2-1. What is the slope of the line in part (ii) of the figure? A) 12.5 B) -12.5 C) 1 D) 0.05 E) 0.08 Answer: D Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Quantitative

27) On a coordinate graph with y on the vertical axis and x on the horizontal axis, suppose point A represents co-ordinates (x = 2, y = 16) and point B represents coordinates (x = 10, y = 4). What is the slope of the straight line joining points A and B? A) 0.75 B) -0.75 C) 1.5 D) -1.5 E) -0.43 Answer: D Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 28) Suppose Ahmoud would spend $1200 per year on travel, even if his annual income were zero. As his income rises, he would spend 20% of each additional dollar of income on travel. Choose the correct mathematical equation that describes the functional relation between his travel spending (T) and his income (Y). A) Y = 1200 + 0.2T B) Y = 1200 - 0.2T C) T = 0.2 + 1200Y D) T = 1200 + 0.8Y E) T = 1200 + 0.2Y Answer: E Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

29) Suppose Jillian will spend $250 on books per year, even if her income is zero. As her income rises, she will spend 8% of each additional dollar of income on books. Choose the correct mathematical equation that describes the functional relation between her spending on books (B) and her income (Y). A) Y = 250 - 0.02 Y B) Y = 250 - 8Y C) B = 250 + 0.08 Y D) B = 250 + 0.02Y E) B = 250 + 0.2Y Answer: C Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 30) Suppose that over a 12-month period, Sonali's income (Y) rises from $27 000 to $35 000 per year and, as a result, her spending on travel (T) increases from $1500 to $2500 per year. Assume there is a linear relation between the two variables, Y and T. What is the marginal response in T to a change in Y? A) 8 B) 4 C) 0 D) 0.25 E) 0.125 Answer: E Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

31) Suppose there is a linear relationship between national income and total tax revenue. If national income is $100 million, then $25 million is collected as tax revenue . If national income is $200 million, then $40 million is collected in tax revenue. What is the marginal response in tax revenue to a change in national income? A) 15 million B) 0.15 million C) 15 D) 0.15 E) -15 Answer: D Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 32) Suppose there is a linear relationship between the ticket price (P) to a university basketball game and the number of tickets sold (Q). If the ticket price is $20, then 600 tickets are sold; if the ticket price is $8, then 3000 tickets are sold. What is the slope of the function if Q is plotted on the horizontal axis and P is plotted on the vertical axis? A) -0.005 B) -0.05 C) 0 D) 0.05 E) 0.005 Answer: A Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

33) Suppose there is a linear relationship between the number of hours per day that Michael spends on social media and his average grade. If Michael spends one hour per day on social media, his average grade is 90; if he spends 9 hours per day his average grade is 40. What is the slope of the function if hours on social media is plotted on the horizontal axis and grade is plotted on the vertical axis? A) -2.25 B) 2.25 C) -6.25 D) 6.25 E) 0 Answer: C Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

34)

FIGURE 2-2 Refer to Figure 2-2. The slope of curve A is A) positive and constant. B) negative and constant. C) positive and changing. D) negative and changing. E) undefined. Answer: B Diff: 1 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

35)

FIGURE 2-2 Refer to Figure 2-2. The slope of curve B is A) positive and constant. B) negative and constant. C) positive and changing. D) negative and changing. E) undefined. Answer: A Diff: 2 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

36)

FIGURE 2-2 Refer to Figure 2-2. The slope of curve C is A) positive and constant. B) negative and constant. C) positive and changing. D) negative and changing. E) impossible to describe. Answer: C Diff: 2 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

37)

FIGURE 2-2 Refer to Figure 2-2. The slope of curve D is A) positive and constant. B) negative and constant. C) positive and changing. D) negative and changing. E) undefined. Answer: D Diff: 2 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

38)

FIGURE 2-3 Refer to Figure 2-3. The slope of curve A is A) zero. B) negative and variable. C) positive and variable. D) positive from X1 to X2 and negative from X2 to X3. E) negative from X1 to X2 and positive from X2 to X3. Answer: D Diff: 2 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

39)

FIGURE 2-3 Refer to Figure 2-3. The slope of curve B is A) zero at X2. B) always negative but variable. C) always positive but variable. D) undefined at X2. E) positive from Y1 to Y2 and negative between Y2 and Y3. Answer: A Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

40)

FIGURE 2-3 Refer to Figure 2-3. At X2 on curve A, the A) maximum occurs at Y1. B) minimum occurs at Y4. C) slope of the curve is zero. D) slope is increasing. E) slope is decreasing. Answer: C Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

41)

FIGURE 2-3 Refer to Figure 2-3. On curve A, the maximum value of Y occurs at A) values of X greater than X3. B) X3. C) X2. D) X1. E) X = 0. Answer: C Diff: 1 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

42)

FIGURE 2-3 Refer to Figure 2-3. At X2 on curve B, the A) maximum occurs at Y1. B) minimum occurs at Y4. C) slope of the curve is zero. D) slope is increasing. E) slope is decreasing. Answer: C Diff: 2 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

43) At the minimum or the maximum of the graph of a non-linear function (with x on the horizontal axis and y on the vertical axis) the slope of the curve is A) 1. B) -1. C) 0. D) infinite. E) undefined. Answer: C Diff: 2 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative 44) At the minimum or the maximum of the graph of a non-linear function (with x on the horizontal axis and y on the vertical axis) the marginal response of y to a small change in x is A) 1. B) -1. C) 0. D) infinite. E) undefined. Answer: C Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Category: Quantitative

45)

FIGURE 2-4 Refer to Figure 2-4. This non-linear function shows that over the range shown, A) as more fertilizer is applied, the marginal response in yield is increasing B) as more fertilizer is applied, the marginal change in yield is diminishing. C) as the yield per acre increases, the amount of fertilizer required per acre is diminishing. D) as the yield per acre increases, the amount of fertilizer required per acre is increasing. E) as more fertilizer is applied, the total yield per acre is diminishing. Answer: B Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

46)

FIGURE 2-4 Refer to Figure 2-4. The functional relation shown between fertilizer applied and wheat yield can be described as a A) constant marginal response. B) increasing partial response. C) decreasing total response. D) diminishing marginal response. E) increasing marginal response. Answer: D Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

47)

FIGURE 2-4 Refer to Figure 2-4. The slope of the non-linear function changes as we move along the curve. The slope is A) positive and increasing, indicating an increasing marginal response. B) negative and decreasing, indicating a diminishing marginal response. C) positive and decreasing, indicating a diminishing marginal response. D) negative and increasing, indicating an increasing marginal response. E) constant at all points, indicating a constant marginal response. Answer: C Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

48)

FIGURE 2-4 Refer to Figure 2-4. If we want to know the marginal response of "yield per acre" due to a change in "fertilizer applied per acre of wheat" at point B, then we should determine the A) slope of a straight line tangent to point B. B) slope of a straight line joining points B and C. C) yield per acre at 30 units of fertilizer. D) the slope of a straight line from the origin to point B. E) quantity of fertilizer applied at point B. Answer: A Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Qualitative

49)

FIGURE 2-4 Refer to Figure 2-4. Suppose we draw a straight line tangent to point B of the non-linear function. The straight line has a slope of 0.075. What information is conveyed to us by this measurement? A) At point B, the marginal response to the application of 30 units of fertilizer per acre is 0.075 tonnes of wheat. B) At point B, if one additional unit of fertilizer is applied per acre, the marginal response is 0.075 tonnes of wheat per acre. C) Because point B is midway between point A and point C, the yield per acre is 0.075 tonnes of wheat when fertilizer applied is between 10 and 60 units per acre. D) At point B, when fertilizer is applied at a rate of 30 units per acre, the yield is 0.075 tonnes per acre. E) At point B, the marginal response to the application of 0.075 units of fertilizer is between 4 and 5 tonnes per acre. Answer: B Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Quantitative

50) Figure 2-5 shows monthly average (per unit) production costs for producing Good X.

FIGURE 2-5 Refer to Figure 2-5. What is the slope of this non-linear function when 200 units per month are being produced? A) 4 B) -4 C) 0.25 D) -5.2 E) -0.25 Answer: B Diff: 3 Type: MC Topic: 2.4c. graphing non-linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Quantitative

51) Figure 2-5 shows monthly average (per unit) production costs for producing Good X.

FIGURE 2-5 Refer to Figure 2-5. What is the slope of this non-linear function when 600 units per month are being produced? A) -2 B) 4 C) -4 D) 1 E) -1 Answer: E Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Quantitative

52) Figure 2-5 shows monthly average (per unit) production costs for producing Good X.

FIGURE 2-5 Refer to Figure 2-5. What is the slope of this non-linear function when 1200 units per month are being produced? A) 0.25 B) -0.25 C) 4 D) -4 E) -2 Answer: B Diff: 3 Type: MC Topic: 2.4b. graphing linear functions Skill: Applied Learning Obj.: 2-5 Recognize the slope of a line on a graph relating two variables as the "marginal response" of one variable to a change in the other. Graphics: Graph Category: Quantitative Economics - Canadian Edition, 16e (Ragan) Chapter 3 Demand, Supply, and Price

3.1 Demand 1) Which of the following best defines quantity demanded of a good? A) The amount an individual purchases at the good's current price. B) The amount an individual purchases at his or her current income. C) The amount, per time period, that is desired at the most recent price. D) The amount, per time period, an individual desires to purchase at any given price. E) The various amounts that all individuals desire at all relevant prices. Answer: D Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 2) The time period to which quantity demanded refers when constructing demand curves is A) a moment in time. B) a long period of time. C) one year. D) any specified time period. E) a period shorter than one year. Answer: D Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 3) The term "quantity demanded" refers to the A) total amount of a good that is actually purchased during a given period of time. B) entire relationship between desired purchases and possible prices. C) total amount of a good that purchasers wish to purchase at a given price during a given period of time. D) product of advertising, and is unrelated to price. E) total amount of a good that people wish to buy, regardless of price. Answer: C Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative

4) Four of the five statements below contain a stock and a flow. Which statement describes ONLY flow variables? A) Chris earns $1500 per month and has $4000 in his savings account at the bank. B) Nancy spends $400 per month on her credit card and has a balance owing of $2567. C) The Transit Authority of Mytown collects $22 000 in fares per day and has an operating budget of $2 million per year. D) Country X spends an average of $1 million per year for flood relief and has an emergency services fund of $20 million. E) The Canadian Federal government has a debt of approximately $750 billion and an annual deficit of over $25 billion dollars. Answer: C Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 5) Four of the five statements below contain a stock and a flow. Which statement describes ONLY stock variables? A) Chris earns $1500 per month and has $4000 in his savings account at the bank. B) Nancy has a balance owing on her credit card of $2567 and a debt on her line of credit of $14,050. C) The Transit Authority of Mytown collects $22 000 in fares per day and has an operating budget of $2 million per year. D) Country X spends an average of $1 million per year for flood relief and has an emergency services fund of $20 million. E) The Canadian Federal government has a debt of approximately $750 billion and an annual deficit of over $25 billion dollars. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 6) A variable that is a "stock" A) is measured per unit of time. B) has meaning only at a point in time. C) has only to do with products where inventory is kept. D) has the same units as a flow variable. E) is used only in accounting. Answer: B Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good.

Category: Qualitative 7) Ceteris paribus means A) other things being equal. B) and so forth. C) knowledge gained before the study of evidence is made. D) among other things. E) in a historical context. Answer: A Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 8) The "law of demand" hypothesizes that, other things being equal, A) the lower the price, the greater the demand. B) price and demand vary inversely. C) the higher the price, the lower the quantity demanded. D) the higher the income, the higher the quantity demanded. E) price and quantity demanded are positively related. Answer: C Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 9) In a market for a good or service, the quantities demanded and supplied are A) both stock variables. B) both flow variables. C) a flow variable and a stock variable, respectively. D) a stock variable and a flow variable, respectively. E) neither stock nor flow variables. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative

10) A demand curve is a representation of the relationship, ceteris paribus, between quantity demanded of a product and A) supply. B) wealth. C) its price. D) income. E) preferences. Answer: C Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 11) The "law of demand" describes A) an inverse relationship between the price of a good and the quantity of the good demanded per unit of time, other things being equal. B) a positive relationship between the price of a good and the quantity of the good demanded per unit of time, ceteris paribus. C) an inverse relationship between the price of a good and the demand for the good, per unit of time. D) a direct relationship between the price of a good and the demand for the good. E) any relationship between quantity demanded and demand for a good. Answer: A Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 12) Which statement best describes the "law of demand"? Other things being equal, the quantity of tennis rackets demanded will be greater if the A) incomes of tennis players are higher. B) price of tennis rackets is lower. C) price of badminton rackets is higher. D) number of tennis players is higher. E) demand for tennis rackets rises. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative

13) Which statement best describes a "demand schedule"? A) a functional statement of the demand relationship B) a graph showing the inverse relationship between quantity demanded and price C) a numerical table showing the quantities demanded at various prices D) a timetable showing the quantity demanded at different time periods E) an abstract concept underlying the graph of a demand curve Answer: C Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 14) An important assumption underlying a demand schedule is that A) quantity demanded and demand mean the same thing. B) everything else except the product's price is being held constant. C) the numbers are not important; the general relationship between the variables is. D) household tastes rarely change. E) income has little significance to household demand. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 15) Which statement best describes a demand curve? A) a functional statement of the demand relationship B) a numerical table showing the inverse relationship between quantity demanded and price, other things being equal C) a graph showing the relationship between quantity demanded and the price of a commodity, other things being equal D) a timetable showing the quantity demanded at different time periods E) an abstract concept underlying the graph of a demand curve Answer: C Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative

16) A demand curve represents graphically A) a functional statement of the income-quantity relationship. B) the timeless relationship between quantity demanded and price. C) the quantity demanded per unit of time at various prices. D) the available quantities at all possible prices for the product. E) quantity demanded. Answer: C Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 17) To say that the demand curve for movies is negatively sloped means that A) less quantity will be demanded at lower prices. B) less quantity will be demanded as preferences change. C) less quantity will be demanded at higher prices. D) more quantity will be demanded as consumers' income increases. E) less quantity will be demanded at the same price. Answer: C Diff: 1 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-1 List the factors that determine the quantity demanded of a good. Category: Qualitative 18) A change in demand is said to take place when there is a A) movement along the demand curve. B) shift of the demand curve. C) shift of the supply curve. D) price change. E) quantity change. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

19) What is a "normal" good? A) a good that everyone normally consumes B) a good that normal people consume C) a good for which demand varies directly with household income D) a good for which demand varies inversely with household income E) a good for which demand does not vary with household income Answer: C Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 20) What is an inferior good? A) a good that everyone normally consumes B) a good that inferior people consume C) a good for which demand varies directly with household income D) a good for which demand varies inversely with household income E) a good for which demand does not vary with household income Answer: D Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 21) Consider butter and margarine, which are substitutes. When the price of butter falls, the demand curve for margarine is likely to A) shift to the right. B) shift to the left. C) remain stationary. D) remain stationary, although its price will fall. E) remain stationary, although its price will rise. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

22) Goods X and Y are defined to be substitutes in consumption if A) the supply of Y varies inversely with the price of X. B) the two goods are virtually the same. C) the supply of Y varies directly with the price of X. D) the demand for Y varies directly with the price of X. E) the demand for Y varies inversely with the price of X. Answer: D Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 23) If the price of tea falls and as a consequence the demand for sugar rises, then tea and sugar are A) substitute goods. B) complementary goods. C) luxury goods. D) neutral goods. E) independent goods. Answer: B Diff: 1 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 24) If goods X and Y are substitutes and the price of X falls, all other things being equal, the demand curve for Y will A) shift to the left. B) shift to the right. C) not shift at all. D) be indeterminate. Answer: A Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

25) If goods X and Y are complements and the price of X rises, ceteris paribus, the demand curve for Y will A) be indeterminate. B) shift to the right. C) shift to the left. D) not shift at all. Answer: C Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 26) If goods X and Y are complements and the price of X falls, all other things being equal, the demand curve for Y will A) shift to the left. B) shift to the right. C) not shift at all. D) be indeterminate. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 27) Which of the following pairs of goods are likely to be substitutes for a large group of consumers? A) eggs and toast B) coffee and cream C) green beans and peas D) wieners and buns E) pancakes and syrup Answer: C Diff: 1 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

28) Which of the following pairs of goods are likely to be complements for a large group of consumers? A) televisions and radios B) cars and trucks C) tea and coffee D) e-readers and e-books E) tents and tent-trailers Answer: D Diff: 1 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 29) If tastes change so that a particular style of winter boots is now considered more appealing, the likely result is A) a shift in the demand curve to the right. B) a shift in the demand curve to the left. C) a movement down the demand curve. D) a movement up the demand curve. E) no change in the demand curve. Answer: A Diff: 1 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 30) Cars and gasoline are likely to be A) complementary goods. B) substitute goods. C) independent goods. D) inferior goods. E) luxury goods. Answer: A Diff: 1 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

31) Consider cars and gasoline. Other things being equal, when the price of cars decreases, the demand for gasoline is likely to A) remain unchanged because cars and gasoline are produced independently of one another. B) decrease because the two goods are complements. C) remain unchanged. D) increase because the two goods are complements. E) remain unchanged because cars and gasoline are two distinct markets. Answer: D Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 32) Ceteris paribus, the position of the demand curve for apples will remain unchanged if there is a change in the A) income of apple eaters. B) price of apples. C) hourly wage rate of most workers. D) price of pears. E) knowledge regarding the health benefits of eating fresh fruit. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 33) A variable that is assumed to be constant along an individual's demand curve for good X is the A) price of good X. B) quantity of X demanded per unit of time. C) price of a substitute good, Y. D) amount of X the individual wishes to purchase. E) consumer's real purchasing power. Answer: C Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

34) "Demand" in a particular market refers to A) only the quantity demanded by households at current market prices. B) the quantity purchased at the current market price. C) the quantity that is desired but not satisfied by current supply. D) the entire relationship between quantity demanded and price. E) the relationship between demand and supply. Answer: D Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 35) A change in which of the following variables will result in NO change in the demand for a given commodity? A) average household income B) the distribution of income C) population D) tastes in favour of the commodity E) the price of the commodity Answer: E Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 36) When deriving the market demand curve for a commodity, the only variable(s) that can change is (are) the A) price of a related commodity. B) income of consumers. C) quantity of the commodity demanded. D) price of the commodity. E) both C and D. Answer: E Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

37) Which of the following would cause a movement along the demand curve for ski-lift tickets, other things being equal? A) a change in tastes in favour of skiing B) an increase in price as the supply curve for lift tickets shifts to the left C) a rise in the price of ski boots and skis D) a rise in average household income E) an increase in population Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 38) In which statement is the term "demand" used correctly? (1) An increase in the price of eggs will lead to a decrease in the demand for eggs. (2) An increase in the price of eggs will lead to a decrease in the demand for bacon. A) neither statement B) the first statement only C) the second statement only D) both statements E) more information is needed Answer: C Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 39) In which statement is the term "demand" used correctly? (1) An increase in the price of copper will lead to a decrease in the demand for copper. (2) An increase in the price of copper will lead to an increase in the demand for aluminum (a substitute for copper). A) neither statement B) the first statement only C) the second statement only D) both statements E) more information is needed Answer: C Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

40) In which statement is the term "demand" used correctly? (1) A decrease in the price of airline tickets led to an increase in quantity demanded for airline tickets. (2) A decrease in the price of airline tickets led to an increase in the demand for airline tickets. A) neither statement B) the first statement only C) the second statement only D) both statements E) more information is needed Answer: B Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 41) In which statement is the term "demand" used correctly? (1) An increase in the price of copper will lead to an increase in the demand for aluminum (a substitute for copper). (2) An increase in the price of aluminum will lead to a decrease in quantity demanded of aluminum. A) neither statement B) the first statement only C) the second statement only D) both statements E) more information is needed Answer: D Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 42) Suppose new medical research suggests that consuming 200 grams of tofu everyday helps to prevent heart disease. Widespread knowledge of this research, other things being equal, is likely to have what impact on the market for tofu? A) shift the whole demand curve to the right B) shift the whole demand curve to the left C) movement along the demand curve to the right D) movement along the demand curve to the left E) there would likely be no effect Answer: A Diff: 1 Type: MC Topic: 3.1. demand Skill: Applied

Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 43) Economists say there has been a change in demand when there is A) a movement along the demand curve. B) a shift of the demand curve. C) a shift of the supply curve. D) a price change. E) a quantity change. Answer: B Diff: 1 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 44) Which of the following events would result in a change in the quantity demanded for some commodity but NOT a change in the demand for that commodity? A) a change in average household income B) a change in the distribution of income C) a change in population D) a change in tastes in favour of the commodity E) a change in the price of the commodity Answer: E Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative 45) Quantity demanded is a flow variable, which means that it must be expressed A) as so much at a specific moment in time. B) in units of the good per day. C) in units of the good per week. D) in units of the good per year. E) in units of the good per period of time. Answer: E Diff: 2 Type: MC Topic: 3.1. demand Skill: Recall Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Qualitative

46)

FIGURE 3-1 Refer to Figure 3-1. If demand is given by the curve D, the ________ energy-efficient light bulbs is at a price of $9. A) demand for B) quantity purchased of C) demand schedule for D) quantity demanded of E) quantity sold of Answer: D Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Graphics: Graph Category: Qualitative

47)

FIGURE 3-1 Refer to Figure 3-1. The movement along the demand curve, D, from point v to point x, could be caused by A) a change in preferences away from ordinary light bulbs to energy-efficient light bulbs. B) a change in the price of energy-efficient light bulbs. C) an increase in household income, which allows consumers to purchase more light bulbs. D) a change in the price of ordinary light bulbs. E) an expectation that new, government regulations will require the use of energyefficient light bulbs only. Answer: B Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Graphics: Graph Category: Qualitative

48)

FIGURE 3-1 Refer to Figure 3-1. A shift of the demand curve for energy-efficient light bulbs from D to D2 could be caused by A) an increase in the price of ordinary light bulbs. B) a change in preferences away from ordinary bulbs to energy-efficient bulbs. C) an expectation that new government regulation will require the use of energy-efficient light bulbs only. D) a decrease in the price of energy-efficient light bulbs. E) a news bulletin stating that energy-efficient light bulbs emit a harmful gas. Answer: E Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Graphics: Graph Category: Qualitative

49)

FIGURE 3-1 Refer to Figure 3-1. A shift of the demand curve for energy-efficient light bulbs from D to D1 could be caused by A) a decrease in the price of ordinary light bulbs. B) a news bulletin stating that energy-efficient light bulbs emit a harmful gas. C) a decrease in the price of energy-efficient light bulbs. D) an expectation that government regulation will soon prohibit the use of ordinary light bulbs. E) a change in preferences toward ordinary light bulbs. Answer: D Diff: 2 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Graphics: Graph Category: Qualitative

50) Suppose that the demand curves for goods A, B, and C have the following functional forms:, where Q denotes quantity demanded and P denotes price: QA = 120 - 3.5 PA - 6PB QB = 100 - 2PB + 3PC QC = 1500 - 0.5PC. Based on these demand curves, which of the following pairs of goods are known to be complements? A) B and C B) A and C C) A and B D) A and C, and B and C E) none of the pairs are complements Answer: C Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Quantitative 51) Consider the following equations for the demand for good A, where Q A denotes quantity demanded, PA denotes price, and M denotes income: 1. QA = 120 + 3.5 PA + 14M 2. QA = 120 - 3.5 PA + 14M 3. QA = 120 - 3.5 PA - 14M Which of these equations represents a downward-sloping demand curve for a normal good? A) 1 only B) 2 only C) 3 only D) 1 and 2 E) none of the equations Answer: B Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Quantitative

52) Consider the following equations for the demand for good A, where QA denotes quantity demanded, PA denotes price, and M denotes income: 1. QA = 120 + 3.5 PA + 14M 2. QA = 120 - 3.5 PA + 14M 3. QA = 120 - 3.5 PA - 14M Which of these equations represents a downward-sloping demand curve for an inferior good? A) 1 only B) 2 only C) 3 only D) 1 and 2 E) none of the equations Answer: C Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Quantitative 53) Suppose that the demand curves for goods A, B, and C have the following functional forms:, where Q denotes quantity demanded and P denotes price: QA = 120 - 3.5PA - 6PB QB = 100 - 2PB + 3PC QC = 1500 - 0.5PC. Based on these demand curves, which of the following pairs of goods are known to be substitutes? A) A and C B) A and B C) B and C D) A and C, and B and C E) none of the pairs are substitutes Answer: C Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Quantitative

54) Suppose the demand curves for goods A, B, and C have the following functional forms, where Q denotes quantity demanded, P denotes price, and M denotes income: QA = 120 - 3.5PA - 6PB + 14M QB = 100 - 2PB + 3PC + 1.1M QC = 1500 - 0.5PC - 300M. Based on these demand curves, which of the following goods are known to be normal goods? A) A B) B C) C D) A and B only E) A, B and C Answer: D Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Quantitative 55) Suppose the demand curves for goods A, B, and C have the following functional forms, where Q denotes quantity demanded, P denotes price, and M denotes income: QA = 120 - 3.5PA - 6PB + 14M QB = 100 - 2PB + 3PC + 1.1M QC = 1500 - 0.5PC - 300M. Based on these demand curves, which of the following goods are known to be inferior goods? A) A B) B C) C D) A and B only E) A, B and C Answer: C Diff: 3 Type: MC Topic: 3.1. demand Skill: Applied Learning Obj.: 3-2 Distinguish between a shift of the demand curve and a movement along the demand curve. Category: Quantitative

3.2 Supply 1) The positive slope of a supply curve indicates that A) as price goes up, quantity supplied will decrease. B) consumers will want to buy less at higher prices. C) as price goes up, quantity supplied will increase. D) if the costs of production increase, the quantity supplied will increase. E) as price goes up, quantity supplied will remain constant. Answer: C Diff: 2 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 2) A supply curve is a representation of the relationship, ceteris paribus, between quantity supplied of a product and A) demand. B) quantity demanded. C) the number of sellers. D) preference of sellers. E) the product's own price. Answer: E Diff: 2 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 3) Which statement best describes a "supply schedule"? A) a functional statement of the supply relationship B) a graph showing the positive relationship between quantity supplied and price C) a timetable showing the quantity supplied at different time periods D) a numerical table showing the quantities supplied at various prices E) the graphical relationship between quantity supplied and price Answer: D Diff: 2 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative

4) Which of the following events would cause a change in the quantity supplied of some agricultural commodity but would not cause a change in the supply of that same commodity? A) a change in factor costs B) a technological change C) a change in the price of the commodity D) a change in the number of suppliers of the commodity E) a change in the price of substitute goods Answer: C Diff: 3 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 5) Suppose that many coal mines are shut for environmental reasons. This will cause A) no change in the supply curve, only a change in price. B) a movement up the supply curve. C) an increase in the supply of coal (a rightward shift of the supply curve). D) a decrease in the supply of coal (a leftward shift of the supply curve). E) a movement down the supply curve. Answer: D Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 6) The market supply curve for wooden shipping crates would shift to the right A) if a government subsidy for shipping crates is withdrawn. B) if the price of lumber falls. C) if a tax is applied to shipping crates. D) if suppliers leave the industry. E) if technological conditions for the production of crates deteriorates. Answer: B Diff: 2 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative

7) The term "quantity supplied" is the amount of a product that A) firms wish to sell at a given price during a given period of time. B) firms actually sell during a given period of time at a given price. C) households wish firms would sell during a given period of time at a given price. D) is exchanged between firms and consumers during a given period of time at a given price. E) is supplied at a fair market price. Answer: A Diff: 1 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 8) Suppose there is a decrease in the quantity supplied of copper at each price. This change would imply A) a shift to the left of the supply curve. B) a shift to the right of the supply curve. C) a movement up the supply curve. D) a movement down the supply curve. Answer: A Diff: 1 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 9) The term "supply" in a particular market refers to A) the particular quantity supplied at the moment. B) only one point on the supply curve. C) only one entry in a supply schedule. D) the entire relationship between quantity supplied and price. E) the quantity actually sold to consumers. Answer: D Diff: 1 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative

10) A fall in the price of raw milk (which is used in the production of ice cream) will A) decrease the supply of ice cream, causing the supply curve of ice cream to shift to the left. B) increase the supply of ice cream, causing the supply curve of ice cream to shift to the right. C) decrease the supply of ice cream, causing the supply curve to shift to the right. D) have no effect on the supply curve of ice cream but cause a downward movement along the supply curve of ice cream. E) increase the supply of ice cream, causing the supply curve to shift to the left. Answer: B Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 11) To say that the supply curve is positively sloped means that A) as price goes up, quantity supplied will decrease. B) households will want to buy less at higher prices. C) as price goes up, quantity supplied will increase. D) if the costs of production increase, the quantity supplied will have to increase also. E) as price goes up, quantity supplied will remain constant. Answer: C Diff: 1 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 12) A rightward shift in the supply curve indicates A) a decrease in the quantity supplied at each price. B) that an increase in income results in an increase in the quantity demanded at each price. C) that more is demanded at each price. D) an increase in the quantity supplied at each price. E) a shift in the demand curve also (because demand must equal supply). Answer: D Diff: 1 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative

13) A "decrease in supply" refers to which of the following? A) the likely result from a decrease in the price of a factor of production B) a downward movement along a supply curve C) a decrease in quantity supplied D) a leftward shift in the supply curve E) a drop in the quantity actually exchanged Answer: D Diff: 1 Type: MC Topic: 3.2. supply Skill: Recall Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 14) Suppose that a newer way to produce a good is discovered, which reduces production costs for the good. This will cause A) no change in the supply curve, only a change in price. B) a decrease in supply (a leftward shift of the supply curve). C) a movement up the supply curve. D) a movement down the supply curve. E) an increase in supply (a rightward shift of the supply curve). Answer: E Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 15) Suppose that some resource X is necessary to produce some good Y. If the price of X falls, A) the supply curve of resource X shifts to the left. B) the supply curve of good Y shifts to the right. C) the supply curve of good Y is unaffected. D) there is a movement along the supply curve of good Y. E) the demand curve for X shifts to the right. Answer: B Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative

16) An improvement in the technology used to produce solar panels will A) lead to a leftward shift in the supply curve. B) lead to a leftward shift of the demand curve. C) lead to a rightward shift of the demand curve. D) have no effect on the supply curve for solar panels. E) lead to a rightward shift in the supply curve. Answer: E Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 17) An increase in the number of firms wanting to provide accounting services will cause a ________ for accounting services. A) leftward shift in the supply curve B) rightward shift in the demand curve C) leftward shift in the demand curve D) rightward shift in the supply curve E) simultaneous shift of both the demand and supply curves Answer: D Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative 18) The supply for some good or service will decrease if A) technology improves. B) the prices of inputs fall. C) the prices of inputs increase. D) technology improves and the price of inputs falls. E) more suppliers enter the industry. Answer: C Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-3 List the factors that determine the quantity supplied of a good. Category: Qualitative

19) In which statement is the term "supply" used correctly? (1) An increase in the price of leather will lead to a decrease in the supply of leather. (2) An increase in the price of leather will lead to a decrease in the supply of leather boots. A) the second statement only B) neither statement C) the first statement only D) both statements E) not enough information to tell Answer: A Diff: 3 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Category: Qualitative 20) In which statement is the term "supply" used correctly? (1) An increase in the price of copper will lead to an increase in the quantity supplied of copper. (2) An increase in the price of copper will lead to an increase in the supply of copper. A) neither statement B) the first statement only C) the second statement only D) both statements E) more information is needed Answer: B Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Category: Qualitative 21) In which statement is the term "supply" used correctly? (1) An increase in the number of suppliers of copper will lead to an increase in the supply of copper. (2) An increase in the number of suppliers of copper will likely lead to a decrease in the quantity supplied of copper. A) neither statement B) the first statement only C) the second statement only D) both statements E) more information is needed Answer: B Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement

along the supply curve. Category: Qualitative 22) In which statement is the term "supply" used correctly? (1) A hurricane that destroys orange groves in Florida will lead to a decrease in the quantity supplied of oranges. (2) A new technology that prevents a fungus in Florida orange trees will lead to an increase in the supply of oranges. A) the first statement B) the second statement C) both statements D) neither statement E) more information is needed Answer: C Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Category: Qualitative 23) A fall in the price of potatoes, which are used in the production of french fries, will A) lead to a decrease in the supply of french fries, causing the supply curve of french fries to shift to the left. B) have no effect on the supply of french fries. C) have no effect on the supply of french fries but cause a movement along the supply curve of french fries. D) lead to a decrease in the demand for french fries. E) lead to an increase in the supply of french fries, causing the supply curve of french fries to shift to the right. Answer: E Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Category: Qualitative 24) A leftward shift in the supply curve indicates A) a decrease in the quantity supplied at each price. B) that an increase in income results in an increase in the quantity demanded at each price. C) that more is demanded at each price. D) an increase in the quantity supplied at each price. E) that more suppliers have entered the industry. Answer: A Diff: 2 Type: MC Topic: 3.2. supply

Skill: Recall Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Category: Qualitative 25)

FIGURE 3-2 Refer to Figure 3-2. If the supply curve is given by S, the ________ energy-efficient light bulbs is when the price is $9. A) quantity supplied of B) quantity purchased of C) quantity sold of D) supply schedule for E) supply of Answer: A Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Graphics: Graph Category: Qualitative

26)

FIGURE 3-2 Refer to Figure 3-2. The movement along the supply curve, S, from point a to point c, could be caused by A) a decrease in the price of energy-efficient light bulbs. B) a decrease in the price of glass, a major input in the production of energy-efficient light bulbs. C) an increase in the number of suppliers of energy-efficient light bulbs. D) an increase in the price of energy-efficient light bulbs. E) a decrease in the price of ordinary light bulbs. Answer: D Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Graphics: Graph Category: Qualitative

27)

FIGURE 3-2 Refer to Figure 3-2. A shift of the supply curve from S to S1 could be caused by A) an increase in the price of energy-efficient light bulbs. B) a decrease in the price of energy-efficient light bulbs. C) an expectation that new government regulations will ban the use of energy-efficient light bulbs. D) a change in consumers' preferences away from ordinary light bulbs toward energyefficient light bulbs. E) a decrease in the price of glass, a major input in the production of energy-efficient light bulbs. Answer: E Diff: 2 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Graphics: Graph Category: Qualitative

28)

FIGURE 3-2 Refer to Figure 3-2. A shift of the supply curve for energy-efficient light bulbs from S to S2 could be caused by A) an increase in the price of energy-efficient light bulbs. B) a decrease in the price of energy-efficient light bulbs. C) an increase in the number of suppliers. D) the elimination of existing government subsidies to suppliers of energy-efficient light bulbs. E) a change in consumers' preferences away from ordinary light bulbs. Answer: D Diff: 3 Type: MC Topic: 3.2. supply Skill: Applied Learning Obj.: 3-4 Distinguish between a shift of the supply curve and a movement along the supply curve. Graphics: Graph Category: Qualitative

3.3 The Determination of Price 1) Choose the best description of an "equilibrium price." A) the price in the middle of supply and demand B) the price at which the quantity demanded is equal to the quantity supplied C) the price that consumers are willing to pay D) the price that producers want to charge E) the price at which demand for the commodity is equal to supply Answer: B Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 2) An equilibrium price can be described as A) the price at which excess demand equals excess supply. B) an aggregate price. C) the final price. D) one at which there is neither excess demand nor excess supply. E) a regulated price. Answer: D Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Recall Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 3) "Excess demand" can also be described as A) excess supply. B) the area to the left of the equilibrium price on a supply and demand diagram. C) quantity demanded exceeding quantity supplied. D) quantity supplied exceeding quantity demanded. E) the area to the right of the equilibrium price on a supply and demand diagram. Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Recall Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

4) A surplus exists in the market when A) the quantity demanded exceeds the quantity supplied. B) supply and demand are equal. C) the quantity demanded is less than the quantity supplied. D) the equilibrium price is too low. E) the supply curve has shifted to the left. Answer: C Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 5) At the market-clearing price for a commodity, A) prices will remain unchanged, even if there is excess demand. B) there may be excess demand for a product but not excess supply. C) shifts in the supply or demand curves will not cause price changes. D) the quantity supplied of the commodity equals quantity demanded. E) there will never again be any pressure for prices to change, independent of what happens to demand or supply. Answer: D Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Recall Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

6) The supply and demand schedules for dozens of roses are given below:

Price $10 $20 $30 $40 $50

Quantity Supplied Quantity Demanded per period per period 200 500 300 450 400 400 500 350 600 300

TABLE 3-1 Refer to Table 3-1. The equilibrium price for a dozen roses is A) $10. B) $20. C) $30. D) $40. E) $50. Answer: C Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

7) The supply and demand schedules for dozens of roses are given below:

Price $10 $20 $30 $40 $50

Quantity Supplied Quantity Demanded per period per period 200 500 300 450 400 400 500 350 600 300

TABLE 3-1 Refer to Table 3-1. How many dozens of roses would actually be purchased if the price in this market were $10? A) 200 B) 300 C) 350 D) 400 E) 500 Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

8) The supply and demand schedules for dozens of roses are given below:

Price $10 $20 $30 $40 $50

Quantity Supplied Quantity Demanded per period per period 200 500 300 450 400 400 500 350 600 300

TABLE 3-1 Refer to Table 3-1. At a price of ________ there would be an excess ________ of 300 dozen roses. A) $10; supply B) $30; supply C) $10; demand D) $50; demand E) $30; demand Answer: C Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

9) The supply and demand schedules for dozens of roses are given below:

Price $10 $20 $30 $40 $50

Quantity Supplied Quantity Demanded per period per period 200 500 300 450 400 400 500 350 600 300

TABLE 3-1 Refer to Table 3-1. At a price of ________ there would be an excess ________ of 300 dozen roses. A) $30; supply B) $50; demand C) $10; demand D) $50; supply E) both C and D are correct Answer: E Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

10) The supply and demand schedules for dozens of roses are given below:

Price $10 $20 $30 $40 $50

Quantity Supplied Quantity Demanded per period per period 200 500 300 450 400 400 500 350 600 300

TABLE 3-1 Refer to Table 3-1. How many dozen of roses would actually be purchased if the price in this market were $40? A) 150 B) 350 C) 200 D) 500 E) 850 Answer: B Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

11) The supply and demand schedules for the umbrella market are given below: Price $10 $15 $20 $25 $30

Quantity Supplied 400 500 600 700 800

Quantity Demanded 700 650 600 550 500

TABLE 3-2 Refer to Table 3-2. The equilibrium price for umbrellas is A) $10. B) $15. C) $20. D) $25. E) $30. Answer: C Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

12) The supply and demand schedules for the umbrella market are given below: Price $10 $15 $20 $25 $30

Quantity Supplied 400 500 600 700 800

Quantity Demanded 700 650 600 550 500

TABLE 3-2 Refer to Table 3-2. What number of umbrellas would actually be purchased if the price in this market were $10? A) 400 B) 500 C) 550 D) 650 E) 700 Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

13) The supply and demand schedules for the umbrella market are given below: Price $10 $15 $20 $25 $30

Quantity Supplied 400 500 600 700 800

Quantity Demanded 700 650 600 550 500

TABLE 3-2 Refer to Table 3-2. At a price of ________ there would be an excess ________ of umbrellas. A) $10; supply B) $20; supply C) $10; demand D) $30; demand E) $20; demand Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

14) The supply and demand schedules for the umbrella market are given below: Price $10 $15 $20 $25 $30

Quantity Supplied 400 500 600 700 800

Quantity Demanded 700 650 600 550 500

TABLE 3-2 Refer to Table 3-2. At a price of ________ there would be an excess ________ of umbrellas. A) $10; supply B) $15; supply C) $20; supply D) $25; supply E) $30; demand Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

15) The supply and demand schedules for the umbrella market are given below: Price $10 $15 $20 $25 $30

Quantity Supplied 400 500 600 700 800

Quantity Demanded 700 650 600 550 500

TABLE 3-2 Refer to Table 3-2. At a price of ________ there would be an excess ________of 150 umbrellas. A) $10; demand B) $15; demand C) $20; supply D) $25; demand E) $30; supply Answer: B Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

16) The demand and supply schedules for a hypothetical Canadian market for barley are given below: Price ($ per tonne) 100 125 150 175 200 225

Quantity Demanded Quantity Supplied (million tonnes) (million tonnes) 370 300 360 325 350 350 340 375 330 400 320 425

TABLE 3-3 Refer to Table 3-3. The equilibrium price of barley is A) $125. B) $150. C) $175. D) $200. E) $225. Answer: B Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

17) The demand and supply schedules for a hypothetical Canadian market for barley are given below: Price ($ per tonne) 100 125 150 175 200 225

Quantity Demanded Quantity Supplied (million tonnes) (million tonnes) 370 300 360 325 350 350 340 375 330 400 320 425

TABLE 3-3 Refer to Table 3-3. If the price in this market was $100 per tonne, then the amount of barley actually purchased would be ________ million tonnes. A) 70 B) -70 C) 670 D) 300 E) 370 Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

18) The demand and supply schedules for a hypothetical Canadian market for barley are given below: Price ($ per tonne) 100 125 150 175 200 225

Quantity Demanded Quantity Supplied (million tonnes) (million tonnes) 370 300 360 325 350 350 340 375 330 400 320 425

TABLE 3-3 Refer to Table 3-3. If the price in this market was $200 per tonne, then the amount of barley actually purchased would be ________ million tonnes. A) 70 B) -70 C) 330 D) 400 E) 730 Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

19) The demand and supply schedules for a hypothetical Canadian market for barley are given below: Price ($ per tonne) 100 125 150 175 200 225

Quantity Demanded Quantity Supplied (million tonnes) (million tonnes) 370 300 360 325 350 350 340 375 330 400 320 425

TABLE 3-3 Refer to Table 3-3. At a price of $125 per tonne there would be an excess ________ million tonnes of barley. A) supply of 325 B) demand of 360 C) supply of 35 D) demand of 35 E) supply of 125 Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

20) The demand and supply schedules for a hypothetical Canadian market for barley are given below: Price ($ per tonne) 100 125 150 175 200 225

Quantity Demanded Quantity Supplied (million tonnes) (million tonnes) 370 300 360 325 350 350 340 375 330 400 320 425

TABLE 3-3 Refer to Table 3-3. At a price of $200 per tonne there would be an excess ________ million tonnes of barley. A) supply of 200 B) demand of 330 C) supply of 400 D) demand of 70 E) supply of 70 Answer: E Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

21) The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.

TABLE 3-4 Refer to Table 3-4. The equilibrium price and quantity for overnight parcel delivery in Year 1 is ________ and ________ million parcels. A) $30; 80 B) $14; 120 C) $22; 115 D) $10; 115 E) $22; 130 Answer: B Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

22) The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.

TABLE 3-4 Refer to Table 3-4. The equilibrium price and quantity for overnight parcel delivery in Year 2 is ________ and ________ million parcels. A) $10; 100 B) $18; 110 C) $18; 125 D) $22; 115 E) $14; 120 Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

23) The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.

TABLE 3-4 Refer to Table 3-4. Which of the following statements describes a likely event in the market for overnight parcel delivery? From Year 1 to Year 2, A) there was a rise in the price of jet fuel. B) there was a decrease in consumers' income. C) there was an improvement in technology for tracking overnight parcels. D) the price of regular parcel delivery decreased. E) the number of suppliers of overnight parcel delivery service increased. Answer: A Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

24) The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.

TABLE 3-4 Refer to Table 3-4. If the price of overnight parcel delivery in Year 2 is $10, how many parcels will actually be delivered? A) 100 B) 115 C) 130 D) 145 E) 45 Answer: A Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

25) The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.

TABLE 3-4 Refer to Table 3-4. Suppose the price of overnight parcel delivery in Year 1 is $22. Which of the following statements is correct? In Year 1, A) there is an excess demand of 15 million deliveries. B) there is an excess demand of 30 million deliveries. C) 115 million parcels will be delivered. D) there is an excess supply of 15 million deliveries. E) there is an excess supply of 30 million deliveries. Answer: E Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

26) The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.

TABLE 3-4 Refer to Table 3-4. Which of the following events could explain the change in the market for overnight parcel delivery between Year 1 And Year 2? A) There was a decrease in the price of jet fuel. B) The price of regular parcel delivery decreased. C) Consumer preferences changed toward a desire for overnight delivery. D) The number of suppliers of overnight parcel delivery service increased. E) The government introduced a subsidy for overnight parcel delivery. Answer: C Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

27) The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.

TABLE 3-4 Refer to Table 3-4. Which of the following statements best describes the change in equilibrium price and quantity in this market between Year 1 and Year 2? A) The demand curve has shifted to the left, the supply curve has shifted to the right; as a result equilibrium price is lower and equilibrium quantity is higher. B) The demand curve has shifted to the left, the supply curve has shifted to the left; as a result equilibrium price is higher and equilibrium quantity is lower. C) The demand curve has shifted to the right, the supply curve has shifted to the left; as a result equilibrium price is higher and equilibrium quantity is lower. D) The demand curve has shifted to the left, the supply curve has shifted to the right; as a result equilibrium price is higher and equilibrium quantity is lower. E) There is no change in equilibrium price or quantity from Year 1 to Year 2. Answer: C Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Quantitative

28)

FIGURE 3-3 Refer to Figure 3-3. At a price of P2 there would be excess demand equal to A) 0. B) Q1Q5. C) Q2Q4. D) Q1Q3. E) Q3 Q5. Answer: A Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

29)

FIGURE 3-3 Refer to Figure 3-3. At a price of P1 there would be excess supply equal to A) 0. B) Q1Q5. C) Q2Q4. D) Q1Q2. E) Q4Q5. Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

30)

FIGURE 3-3 Refer to Figure 3-3. At a price of P1 there would be excess demand equal to A) Q1Q5. B) Q2Q4. C) Q1Q2. D) Q4Q5. E) There is no excess demand at P1. Answer: E Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Quantitative

31)

FIGURE 3-3 Refer to Figure 3-3. At a price of P3 there is excess ________ in the market for X and pressure for the price to ________. A) supply; fall B) supply; rise C) demand; fall D) demand; rise Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

32)

FIGURE 3-3 Refer to Figure 3-3. At a price of P1 there is excess ________ in the market for X and pressure for the price to ________. A) supply; fall B) supply; rise C) demand; fall D) demand; rise Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

33)

FIGURE 3-4 Refer to Figure 3-4. The market for 1-bedroom apartments in Collegetown will be in equilibrium at a price and quantity combination of A) $1000; 300 apartments. B) $1400; 450 apartments. C) $1000; 350 apartments. D) $600; 250 apartments. E) $800; 300 apartments. Answer: E Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Quantitative

34)

FIGURE 3-4 Refer to Figure 3-4. If the price of 1-bedroom apartments in Collegetown were $600, there would be a ________ of ________ apartments. A) surplus; 100 B) shortage; 50 C) shortage; 100 D) surplus; 50 E) surplus; 150 Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Quantitative

35)

FIGURE 3-4 Refer to Figure 3-4. If the price of 1-bedroom apartments in Collegetown were $1400, there would be a ________ of ________ apartments. A) surplus; 150 B) shortage; 300 C) shortage; 150 D) surplus; 300 E) surplus; 100 Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Quantitative

36)

FIGURE 3-5 Refer to Figure 3-5. The price at which there would be a shortage in this market is A) P1. B) P2. C) P3. D) both P1 and P3. E) both P2 and P3. Answer: C Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

37)

FIGURE 3-5 Refer to Figure 3-5. A price at which there would be a surplus in this market is A) P1. B) P2. C) P3. D) both P1 and P2. E) both P1 and P3. Answer: A Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

38)

FIGURE 3-5 Refer to Figure 3-5. Ceteris paribus, if supply were to increase, this would lead to A) an increase in both equilibrium price and quantity. B) a decrease in both equilibrium price and quantity. C) an increase in equilibrium price and a decrease in equilibrium quantity. D) a decrease in equilibrium price and an increase in equilibrium quantity. E) no change in equilibrium price or quantity. Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

39)

FIGURE 3-5 Refer to Figure 3-5. Ceteris paribus, if demand were to decrease, this would lead to A) an increase in equilibrium price and an increase in equilibrium quantity. B) a decrease in equilibrium price and a decrease in equilibrium quantity. C) an increase in equilibrium price and a decrease in equilibrium quantity. D) a decrease in equilibrium price and an increase in equilibrium quantity. E) no change in equilibrium price or quantity. Answer: B Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

40)

FIGURE 3-5 Refer to Figure 3-5. If supply and demand were to increase simultaneously, this would lead to A) an increase in both equilibrium price and quantity. B) a decrease in both equilibrium price and quantity. C) an increase in equilibrium quantity and an indeterminate change in price. D) an increase in equilibrium price and an indeterminate change in equilibrium quantity. E) no change in equilibrium price or quantity. Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

41)

FIGURE 3-5 Refer to Figure 3-5. If supply were to increase and demand were to decrease simultaneously, this would lead to A) a decrease in equilibrium price and an indeterminate change in quantity. B) a decrease in equilibrium quantity and an indeterminate change in price. C) an increase in equilibrium quantity and a decrease in equilibrium price. D) an increase in equilibrium quantity and an increase in equilibrium price. E) no change in equilibrium price or quantity. Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative 42) The term "comparative statics" describes the A) analysis of the path from one equilibrium to another. B) comparison of one equilibrium point with another. C) comparison of a demand curve with a supply curve. D) analysis of the process of price and quantity adjustments that leads to an equilibrium. E) analysis of excess demand and excess supply. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Recall Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

43) Suppose we observe an increase in the price of good A and an increase in the quantity of good A exchanged. Which of the following is a likely explanation? A) The "law of demand" is violated. B) The "law of supply" is violated. C) The supply of good A has increased. D) There is an excess supply of good A. E) The demand for good A has increased. Answer: E Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 44) Suppose that supply for some good increases and that simultaneously the demand for the same good decreases. The result would be A) a decrease in P and an indeterminate change in Q. B) a decrease in Q and an indeterminate change in P. C) an increase in Q and a decrease in P. D) an increase in Q and an increase in P. E) no change in either P or Q. Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 45) The quantity exchanged in the market will be below the equilibrium quantity A) only if there is excess supply. B) only if there is excess demand. C) if there is either excess supply or demand. D) in no imaginable situation. E) only if price is below the equilibrium price. Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

46) Given a positively sloped supply curve, a rise in the demand for that commodity causes A) a shortage of other goods. B) a fall in sales of that commodity. C) an increase in both the equilibrium price and the equilibrium quantity exchanged. D) a decrease in the equilibrium price and an increase in the equilibrium quantity exchanged. E) a decrease in both the equilibrium price and the equilibrium quantity exchanged. Answer: C Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 47) Which of the following could lead to a rise in the quantity demanded of lemons? A) a leftward shift in the supply curve of lemons B) a rightward shift in the supply curve of lemons C) a decline in the number of people drinking lemonade D) a decrease in the price of artificial lemon flavouring E) a cold spell which makes people want less lemonade Answer: B Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 48) Weekend train travel costs less than weekday train travel. If the supply of train service remains the same between weekdays and weekends, then the most likely explanation for this difference in price is that the weekend A) demand curve is to the left of the weekday demand curve. B) demand curve is to the right of the weekday demand curve. C) demand curve is random. D) supply curve is to the right of the weekday supply curve. E) supply curve is to the left of the weekday supply curve. Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

49) Suppose we observe that movie theatre prices are less during the daytime than in the evening. If the supply of movies does not change between daytime and evening, then the most likely explanation for this difference in price is A) the evening demand curve is to the left of the daytime demand curve. B) the evening demand curve is to the right of the daytime demand curve. C) the evening supply curve is to the left of the daytime supply curve. D) the evening supply curve is to the right of the daytime supply curve. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 50) Tickets for music concerts that are sold on the Internet are often sold out within minutes and many unsatisfied customers are unable to get tickets (in the legitimate market). One explanation for this is that A) concert goers are not rational. B) prices for purchasing digital music have increased. C) the market price for concert tickets may be set above its equilibrium price. D) the market price for concert tickets may be set below its equilibrium price. E) the market price for concert tickets is at its equilibrium level. Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 51) Suppose that in Montreal in December, 2018, 10 000 ski helmets were sold at a price of $60 each. And in Montreal in December, 2019, 20 000 ski helmets were sold at a price of $80 each. One possible explanation for the change is that, ceteris paribus, from 2018 to 2019 the ________ curve for ski helmets shifted to the ________. A) supply; left B) supply; right C) demand; left D) demand; right E) supply or demand; right Answer: D Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply.

Category: Qualitative 52) Consider a local market for 4-litre containers of windshield-wiper fluid. In January 2019, 100 000 containers were sold at a price of $3 each. In March 2019, 120 000 containers are sold at a price of $8 each. Does this change in equilibrium price and quantity violate the "law of demand"? A) Not necessarily, because the supply curve could have shifted to the right, leading to an increase in equilibrium price and quantity. B) Not necessarily, because the demand curve could have shifted to the right, leading to an increase in equilibrium price and quantity. C) Not necessarily, because the demand curve could have shifted to the left, leading to an increase in equilibrium price and quantity. D) Not necessarily, because the supply curve could have shifted to the left, leading to an increase in equilibrium price and quantity. E) No, because the "law of demand" is not valid. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 53) Consider a negatively sloped demand curve for natural gas. If the supply of natural gas increases, the new equilibrium will have A) a lower price and a greater quantity. B) a lower price and a smaller quantity. C) a higher price and a smaller quantity. D) a higher price and a larger quantity. E) the same price and larger quantity. Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

54) Which of the following statements is correct for a market with an upward-sloping supply curve and a downward-sloping demand curve? A) If the supply curve shifts left and demand remains constant, equilibrium quantity will rise. B) If the supply curve shifts right and the demand curve remains constant, equilibrium price will rise. C) If the demand curve shifts left and the supply curve shifts right, equilibrium price will rise. D) If the demand curve shifts right and the supply curve shifts left, equilibrium price will rise. E) If the demand curve shifts left and the supply curve shifts left, equilibrium quantity will rise. Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

55)

FIGURE 3-6 Refer to Figure 3-6. If the initial demand and supply curves are D1 and S1, equilibrium price and quantity are represented by point A) A. B) B. C) C. D) D. E) Not shown in the figure. Answer: A Diff: 1 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

56)

FIGURE 3-6 Refer to Figure 3-6. If the demand curve shifts from D1 to D2, while supply remains at S1, one could say that A) the quantity demanded has decreased to Q1 and price has fallen to P2. B) there has been an increase in demand for X. C) the price of a good which is a substitute for X must have fallen. D) the price increase has caused an increase in quantity demanded. E) there is now an excess demand at the new price of P1. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

57)

FIGURE 3-6 Refer to Figure 3-6. If the initial demand and supply curves are D1 and S1, and demand shifts to D2, then A) a permanent shortage of X will result. B) a surplus of Q1Q3 will occur. C) a shortage will occur at any price above P3. D) if price remained at P2, a shortage of Q1Q3 would exist. E) all of the above Answer: D Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

58)

FIGURE 3-6 Refer to Figure 3-6. A shift in the supply curve from S2 to S1 might be caused by A) a rise in the costs of producing good X. B) a decrease in the price of X. C) a decrease in demand for X. D) an improvement in the technology of producing good X. E) additional suppliers entering the industry. Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Graph Category: Qualitative

59) With a given upward-sloping supply curve for restaurant meals (a normal good), a rise in household income will cause the A) equilibrium price and equilibrium quantity to both increase. B) equilibrium price to increase and equilibrium quantity to decrease. C) equilibrium price and equilibrium quantity to both decrease. D) equilibrium price to decrease and equilibrium quantity to increase. E) equilibrium price to increase and equilibrium quantity to remain constant. Answer: A Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 60) If the legal beer-drinking age is raised from 18 to 21, the changes to the equilibrium price and quantity of beer are likely to be that A) price rises and quantity rises. B) price falls and quantity rises. C) price rises and quantity falls. D) price falls and quantity falls. E) no change in price or quantity occurs. Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 61) Steel is an important input to the production of cars. Tires and cars are used together by consumers. What will occur in the market for tires when there is an increase in the price of steel? A) Price rises; quantity rises. B) Price falls; quantity rises. C) Price rises; quantity falls. D) Price falls; quantity falls. E) No change in price or quantity occurs. Answer: D Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

62) Aeronautical engineers are a factor of production for airplanes. What will happen in the world market for airplanes when there is a worldwide shortage of aeronautical engineers? A) Price will increase; quantity exchanged will decrease. B) Price will increase; quantity exchanged will increase. C) Price will decrease; quantity exchanged will decrease. D) Price will decrease; quantity exchanged will increase. E) There will be no change in price or quantity exchanged. Answer: A Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Graphics: Table Category: Qualitative 63) Assume that apples and oranges are substitute goods. Given the initial supply and demand curves for apples, a reduction in the price of oranges will tend to A) increase the price of apples. B) increase the demand for apples. C) increase the demand for oranges. D) decrease the demand for oranges. E) decrease the price of apples. Answer: E Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 64) Given a positively sloped supply curve, when market demand increases, A) the new equilibrium will have a lower price and a greater quantity. B) the new equilibrium will have a lower price and a smaller quantity. C) the new equilibrium will have a higher price and a smaller quantity. D) the new equilibrium will have a higher price and a larger quantity. E) the new equilibrium will have the same price and larger quantity. Answer: D Diff: 2 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative

65) Consider the global market for some mineral, X. In January, 2017, the equilibrium price and quantity were P = $27 per unit and Q = 140 million units. In January, 2019, the equilibrium price and quantity were P = $45 per unit and Q = 175 million units. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been a decrease in supply of mineral X. B) There has been an increase in demand for mineral X. C) There has been an increase in supply of mineral X. D) There has been a decrease in demand for mineral X. E) There has been a simultaneous decrease in demand for, and increase in supply of, mineral X. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 66) Consider the global market for some mineral, X. In January, 2017, the equilibrium price and quantity were P = $27 per unit and Q = 140 million units. In January, 2019, the equilibrium price and quantity were P = $27 per unit and Q = 175 million units. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been a simultaneous increase in demand for, and increase in supply of, mineral X. B) There has been an increase in demand for mineral X. C) There has been an increase in quantity demanded for mineral X. D) There has been an increase in supply of mineral X. E) There has been an increase in quantity supplied of mineral X. Answer: A Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative

67) Consider the global market for some mineral, X. In January, 2017, the equilibrium price and quantity were P = $27 per unit and Q = 140 million units. In January, 2019, the equilibrium price and quantity were P = $35 per unit and Q = 110 million units. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been an increase in demand for mineral X. B) There has been a decrease in supply of mineral X. C) There has been a decrease in global demand for mineral X. D) There has been a simultaneous increase in demand and increase in supply for mineral X. E) there has been a simultaneous increase in supply and decrease in demand for mineral X. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 68) Consider the global market for barley, an agricultural commodity. Suppose that in August, 2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In August, 2019, the equilibrium price and quantity were P = $168 per tonne and Q = 350 million tonnes. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been an increase in demand for barley. B) There has been a decrease in supply of barley. C) There has been a decrease in demand for barley. D) There has been a simultaneous decrease in demand and increase in supply of barley. E) There has been a simultaneous increase in demand and decrease in supply of barley. Answer: E Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative

69) Consider the global market for barley, an agricultural commodity. Suppose that in August, 2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In August, 2019, the equilibrium price and quantity were P = $150 per tonne and Q = 410 million tonnes. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been a decrease in supply of barley. B) There has been an increase in demand for barley. C) There has been a simultaneous increase in demand and increase in supply of barley. D) There has been a simultaneous increase in demand and decrease in supply of barley. E) There has been a decrease in demand for barley. Answer: C Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 70) Consider the global market for barley, an agricultural commodity. Suppose that in August, 2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In August, 2019, the equilibrium price and quantity were P = $159 per tonne and Q = 372 million tonnes. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been an increase in demand for barley. B) There has been an increase in supply of barley. C) There has been a simultaneous decrease in demand and increase in supply of barley. D) There has been a decrease in supply of barley. Answer: A Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative

71) Consider the global market for barley, an agricultural commodity. Suppose that in August, 2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In August, 2019, the equilibrium price and quantity were P = $168 per tonne and Q = 290 million tonnes. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been an increase in demand for barley. B) There has been an increase in supply of barley. C) There has been a simultaneous increase in demand and increase in supply of barley. D) There has been a decrease in supply of barley. Answer: D Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 72) Consider the global market for barley, an agricultural commodity. Suppose that in August, 2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In August, 2019, the equilibrium price and quantity were P = $140 per tonne and Q = 325 million tonnes. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been an increase in supply of barley. B) There has been a decrease in supply of barley. C) There has been a simultaneous increase in demand and increase in supply of barley. D) There has been a decrease in demand for barley. E) There has been an increase in demand for barley. Answer: D Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative

73) Consider the global market for barley, an agricultural commodity. Suppose that in August, 2018, the equilibrium price and quantity were P = $150 per tonne and Q = 350 million tonnes. In August, 2019, the equilibrium price and quantity were P = $142 per tonne and Q = 335 million tonnes. Which of the following is the best possible explanation for this change in market equilibrium? A) There has been an increase in supply of barley. B) There has been a decrease in supply of barley. C) There has been a simultaneous increase in demand and increase in supply of barley. D) There has been a decrease in demand for barley. E) There has been an increase in demand for barley. Answer: D Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 74) If a demand curve and a supply curve can be stated functionally as Q D = 100 - 5p; and QS = 90 + 5p, respectively, then the equilibrium quantity and price would be A) Q = 95; p = 1. B) Q = 1; p = 95. C) Q = 190; p = 1. D) Q = 95; p = 10. E) Q = 190; p = 10. Answer: A Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 75) If a demand curve and a supply curve can be stated functionally as QD = 500 - 0.1p and QS = 440 + 0.4p respectively, then the equilibrium quantity and price would be A) Q = 150; p = 150. B) Q = 50; p = 176. C) Q = 150; p = 485. D) Q = 488; p = 120. E) Q = 940; p = 0.4. Answer: D Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied

Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 76) Suppose that the demand and supply curves in the market for apples have the following functional forms: QD = 250 - 4p and QS = 10 + p. The equilibrium quantity and price would then be A) Q = 48, p = 58. B) Q = 58, p = 48. C) Q = 68, p = 98. D) Q = 68, p = 108. E) Q = 92, p = 48. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 77) Suppose that the demand and supply curves in the market for apples have the following functional form: QD = 250 - 4p and QS = 10 + p. If the prevailing price on the market is 50, then A) the market is clearing. B) the market exhibits an excess supply of 10 units. C) the market exhibits an excess supply of 240 units. D) the market exhibits an excess demand of 10 units. E) the market exhibits an excess demand of 240 units. Answer: B Diff: 3 Type: MC Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 78) Suppose the demand and supply curves in the market for apples have the following functional form: QD = 250 - 4p and QS = 10 + p. If the prevailing market price is 40, then A) the market is clearing. B) the market exhibits an excess supply of 50 units. C) the market exhibits an excess supply of 40 units. D) the market exhibits an excess demand of 50 units. E) the market exhibits an excess demand of 40 units. Answer: E Diff: 3 Type: MC

Topic: 3.3a. equilibrium price and quantity Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 79) The price of one good divided by the price of another good is called a(n) A) marginal price. B) money price. C) absolute price. D) relative price. E) ceteris paribus price. Answer: D Diff: 1 Type: MC Topic: 3.3b. relative prices Skill: Recall Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 80) The relative price of a good A) is always measured in current dollars. B) is a measure of the relative share of the consumer's income devoted to its purchase. C) is its price in terms of money. D) is equal to the average price of the good over the last 5 years. E) reflects its price in terms of units of other goods. Answer: E Diff: 2 Type: MC Topic: 3.3b. relative prices Skill: Recall Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Qualitative 81) Suppose the price of wheat has fallen from $3 to $2 per bushel and that the price of newsprint has fallen from $200 to $100 per tonne. The relative price of wheat in terms of newsprint A) has fallen. B) has risen. C) remained constant. D) cannot be determined from the above data. E) is completely unrelated. Answer: B Diff: 3 Type: MC Topic: 3.3b. relative prices Skill: Applied

Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative

82) Suppose the price of good X increases from $3.00 to $4.00 while the price of good Y increases from $150 to $200. The relative price of X (in terms of Y) A) has fallen. B) has risen. C) remained constant. D) cannot be determined from the above data. E) is completely unrelated to the price of good Y. Answer: C Diff: 3 Type: MC Topic: 3.3b. relative prices Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative 83) Suppose an index of average prices of imported goods in Canada indicates an increase in price of 2.3% over a 12-month period. Over the same period the Consumer Price Index indicates an increase in the general price level of 2.3%. What is the change in the price of imports relative to the change in the overall price level? A) an increase of 2.3% B) an increase of 4.6% C) a decrease of 2.3% D) a decrease of 4.6% E) no change Answer: E Diff: 2 Type: MC Topic: 3.3b. relative prices Skill: Applied Learning Obj.: 3-5 Explain the forces that drive market price to equilibrium, and how equilibrium price and quantity are affected by changes in demand and supply. Category: Quantitative Economics - Canadian Edition, 16e (Ragan) Chapter 4 Elasticity 4.1 Price Elasticity of Demand 1) The price elasticity of demand measures the responsiveness of A) the price to changes in quantity demanded. B) equilibrium changes. C) demand to supply changes. D) quantity demanded to changes in the price. E) supply to demand changes. Answer: D Diff: 1 Type: MC Topic: 4.1a. price elasticity of demand Skill: Recall

Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative 2) When the percentage change in quantity demanded is greater than the percentage change in price that brought it about, demand is said to be A) zero elastic. B) unelastic. C) inelastic. D) unit elastic. E) elastic. Answer: E Diff: 2 Type: MC Topic: 4.1a. price elasticity of demand Skill: Recall Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative 3) When the percentage change in quantity demanded is less than the percentage change in price that brought it about, demand is said to be A) zero elastic. B) unelastic. C) inelastic. D) unit elastic. E) elastic. Answer: C Diff: 2 Type: MC Topic: 4.1a. price elasticity of demand Skill: Recall Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative

4) The formula for the price elasticity of demand for a commodity can be written as which of the following? A) B) C) D) E) Answer: C Diff: 1 Type: MC Topic: 4.1a. price elasticity of demand Skill: Recall Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative 5) Consider the demand curves for two products with the same starting price. Now suppose there is an identical price change for each product. If the resulting percentage change in quantity demanded is greater for one (D1) than the other (D2), we can conclude A) that D1 is inelastic and D2 is elastic. B) that D1 is elastic and D2 is inelastic. C) that D2 is more elastic than D1. D) that D1 is more elastic than D2. E) nothing about their relative elasticities. Answer: D Diff: 2 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative 6) If demand is unit elastic at all prices, then the demand curve is A) a straight line. B) a parabola. C) a rectangular hyperbola. D) upward sloping. E) perfectly horizontal. Answer: C Diff: 2 Type: MC Topic: 4.1a. price elasticity of demand Skill: Recall Learning Obj.: 4-1 Explain and calculate price elasticity of demand.

Category: Quantitative 7) A demand curve that is the shape of a rectangular hyperbola A) is elastic over the whole curve. B) is inelastic over the whole curve. C) is unit elastic over the whole curve. D) has the same elasticity as a straight-line demand curve. E) has an elasticity of 100% over the whole curve. Answer: C Diff: 1 Type: MC Topic: 4.1a. price elasticity of demand Skill: Recall Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative 8) If household income increases by 50% and desired household expenditure on vacation travel increases by 15%, the price elasticity of demand for vacation travel is A) elastic. B) inelastic. C) unity. D) positive. E) not determinable from the information given. Answer: E Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative 9) If the value of the price elasticity of demand is 0.6, demand is said to be A) elastic. B) partially elastic. C) inelastic. D) partially inelastic. E) somewhat inelastic. Answer: C Diff: 1 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative

10) If the price elasticity of demand is 0.5, then a 10% increase in price results in a A) 50% reduction in quantity demanded. B) 5% increase in quantity demanded. C) 5% decrease in total revenues. D) 5% decrease in quantity demanded. E) 0.5% decrease in quantity demanded. Answer: D Diff: 2 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative 11) If the price elasticity of demand is 1.2, then a 10% increase in price results in a A) 1.2% decrease in quantity demanded. B) 12% decrease in quantity demanded. C) 12% decrease in total revenue. D) 1.2% increase in quantity demanded. E) 12% increase in quantity demanded. Answer: B Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative 12) If the price elasticity of demand is 0.75, then a 50% decrease in price results in a A) 75% decrease in quantity demanded. B) 37.5% decrease in quantity demanded. C) 0.75% increase in quantity demanded. D) 75% increase in quantity demanded. E) 37.5% increase in quantity demanded. Answer: E Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative

13) If the price elasticity of demand is 3.0, then a 10% decrease in price results in a A) 30% increase in quantity demanded. B) 3.0% increase in quantity demanded. C) 30% decrease in quantity demanded. D) 3.0% decrease in quantity demanded. E) no change in quantity demanded. Answer: A Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative 14) When calculating the price elasticity of demand for some product, we ignore the ________ of the change, and focus only on the ________ of the measure. A) source: percentage change B) source; absolute value C) absolute value; percentage change D) direction; absolute value E) direction; percentage change Answer: D Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Recall Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative 15) Consider two linear, downward-sloping demand curves, A and B, that intersect each other at point X with positive price and quantity. Demand curve A is steeper than demand curve B. We can conclude that A) curve A is less elastic than curve B at any point. B) curve B is less elastic than curve A at any point. C) curve A is less elastic than curve B at point X. D) curve A is less elastic than curve B at any price above point X. E) curve B is less elastic than curve A at any price above point X. Answer: C Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Qualitative

16) If the price elasticity of demand for some good is 2.7, a 10% increase in the price results in A) a 2.7% decrease in the quantity demanded. B) a 2.7% increase in the quantity demanded. C) a 27% increase in the quantity demanded. D) a 27% decrease in the quantity demanded. E) There is not enough information to answer this question. Answer: D Diff: 2 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative 17) Suppose the price elasticity of demand for some good is 1.4. A 10% increase in the price of the good results in A) a 1.4% decrease in the quantity demanded. B) a 1.4% increase in the quantity demanded. C) a 14% increase in the quantity demanded. D) a 14% decrease in the quantity demanded. E) There is not enough information to answer this question. Answer: D Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative 18) Suppose that the quantity of a good demanded rises from 90 units to 110 units when the price falls from $1.20 to 80 cents per unit. The price elasticity of demand for this product is A) 0.5. B) 1.0. C) 1.5. D) 2.0. E) 4.0. Answer: A Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative

19) Suppose the quantity of lemonade demanded falls from 103 000 litres per week to 97 000 litres per week as a result of a 10% increase in its price. The price elasticity of demand for lemonade is therefore A) 0.6. B) 6.0. C) 1.97. D) 1.03. E) impossible to compute unless we know the before and after prices. Answer: A Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative 20) Suppose the quantity demanded of skipping ropes rises from 1250 to 1750 units when the price falls from $1.25 to $0.75 per unit. The price elasticity of demand for this product is A) 1/3. B) 2/3. C) 1. D) 3/2. E) 2. Answer: B Diff: 3 Type: MC Topic: 4.1a. price elasticity of demand Skill: Applied Learning Obj.: 4-1 Explain and calculate price elasticity of demand. Category: Quantitative