Question 1

As the wage rate rises, a household will have a backward-bending supply of labour curve if

Accepted Answer

A) the income effect reinforces the substitution effect. 
B) the wage rate rises above the reservation wage. 
C) the substitution effect dominates the income effect. 
D) the income effect dominates the substitution effect. 
E) leisure is an inferior good. 
A) the income effect reinforces the substitution effect. 
B) the wage rate rises above the reservation wage. 
C) the substitution effect dominates the income effect. 
D) the income effect dominates the substitution effect. 
E) leisure is an inferior good.

Question 2

If the interest rate is 10 percent per year, the present value of $100 in two years is

Accepted Answer

A) $80.00. 
B) $82.64. 
C) $90.91. 
D) $120.00. 
E) $121.00. 
A) $80.00. 
B) $82.64. 
C) $90.91. 
D) $120.00. 
E) $121.00.

Question 3

From an examination of data on income and wealth, it can be concluded that

Accepted Answer

A) wealth distribution is more equal than income distribution. 
B) income distribution is more equal than wealth distribution. 
C) wealth distribution is equal to income distribution. 
D) income and wealth are the same. 
E) income and wealth are unrelated. 
A) wealth distribution is more equal than income distribution. 
B) income distribution is more equal than wealth distribution. 
C) wealth distribution is equal to income distribution. 
D) income and wealth are the same. 
E) income and wealth are unrelated.

Question 4

A proportional income tax

Accepted Answer

A) taxes lower income people a larger percentage than higher income people. 
B) taxes lower income people a smaller percentage than higher income people. 
C) receives less tax from higher income people, but taxes them at the same rate as lower income people. 
D) taxes everyone at the same rate. 
E) taxes everyone the same amount. 
A) taxes lower income people a larger percentage than higher income people. 
B) taxes lower income people a smaller percentage than higher income people. 
C) receives less tax from higher income people, but taxes them at the same rate as lower income people. 
D) taxes everyone at the same rate. 
E) taxes everyone the same amount.

Question 5

The demand for labour is a derived demand because it is derived from

Accepted Answer

A) the demand for the output the labour produces. 
B) the supply of labour. 
C) union pressure. 
D) natural law. 
E) years of accumulated capital and technological advances. 
A) the demand for the output the labour produces. 
B) the supply of labour. 
C) union pressure. 
D) natural law. 
E) years of accumulated capital and technological advances.

Question 6

All of the following statements are correct except

Accepted Answer

A) if the price of oil is expected to rise at a rate equal to the interest rate, demand increases and supply increases. 
B) the interest rate is the opportunity cost of holding an oil inventory. 
C) if the price of oil is expected to rise at a rate that exceeds the interest rate, demand increases and supply decreases. 
D) according to the Hotelling Principle, the price of a nonrenewable natural resource is expected to rise at a rate equal to the interest rate. 
E) the marginal cost of extraction of oil is the fundamental determinant of supply. 
A) if the price of oil is expected to rise at a rate equal to the interest rate, demand increases and supply increases. 
B) the interest rate is the opportunity cost of holding an oil inventory. 
C) if the price of oil is expected to rise at a rate that exceeds the interest rate, demand increases and supply decreases. 
D) according to the Hotelling Principle, the price of a nonrenewable natural resource is expected to rise at a rate equal to the interest rate. 
E) the marginal cost of extraction of oil is the fundamental determinant of supply.

Question 7

The three main avenues through which the government redistributes income are

Accepted Answer

A) subsidized services, sales taxes, and user fees. 
B) sales taxes, income maintenance programs, and income taxes. 
C) income maintenance programs, user fees, and welfare programs. 
D) subsidized services, income taxes, and income maintenance programs. 
E) welfare programs, income taxes, and income maintenance programs. 
A) subsidized services, sales taxes, and user fees. 
B) sales taxes, income maintenance programs, and income taxes. 
C) income maintenance programs, user fees, and welfare programs. 
D) subsidized services, income taxes, and income maintenance programs. 
E) welfare programs, income taxes, and income maintenance programs.

Question 8

The ________ of a future amount of money is the amount that, if invested today, will grow to be as large as that future amount when the interest it earns is taken into account.

Accepted Answer

A) current value 
B) future value 
C) present value 
D) market value 
E) profit value 
A) current value 
B) future value 
C) present value 
D) market value 
E) profit value

Question 9

What will be the value in one year of $25 invested today at an annual interest rate of 5 percent?

Accepted Answer

A) $25 
B) $26.25 
C) $27.50 
D) $30 
E) $23.81 
A) $25 
B) $26.25 
C) $27.50 
D) $30 
E) $23.81

Question 10

Which of the following does Statistics Canada use to provide measures of economic inequality?

Accepted Answer

A) market income only 
B) market income and after-tax income only 
C) after-tax income only 
D) total market and after-tax income only 
E) market income, total income, and after-tax income 
A) market income only 
B) market income and after-tax income only 
C) after-tax income only 
D) total market and after-tax income only 
E) market income, total income, and after-tax income

Question 11

Use the figure below to answer the following questions.
   
Figure 19.3.6
-Refer to Figure 19.3.6.If this is the market for a group of workers who are discriminated against by customers and point A represents the equilibrium without discrimination, which point represents the equilibrium for the workers who are discriminated against?

Accepted Answer

A) D 
B) B 
C) I 
D) C 
E) H 
A) D 
B) B 
C) I 
D) C 
E) H

Question 12

Between 1976 and 2011, the Canadian Gini ratio ________, which means income inequality in Canada ________.

Accepted Answer

A) increased; increased 
B) increased; decreased 
C) increased; did not change 
D) decreased; decreased 
E) decreased; did not change 
A) increased; increased 
B) increased; decreased 
C) increased; did not change 
D) decreased; decreased 
E) decreased; did not change

Question 13

Use the figure below to answer the following questions.
   
Figure 18.3.1
-Refer to Figure 18.3.1.This figure shows the value of marginal product of labour curve, the labour supply curve, and the marginal cost of labour curve.If this labour market is competitive, the wage rate is

Accepted Answer

A) $3 an hour. 
B) $5 an hour. 
C) $6 an hour. 
D) $7 an hour. 
E) greater than $7 an hour. 
A) $3 an hour. 
B) $5 an hour. 
C) $6 an hour. 
D) $7 an hour. 
E) greater than $7 an hour.

Question 14

Use the table below to answer the following questions.
Table 18.2.1
  
-Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $5 a unit, what is the value of marginal product of the 6th worker?

Accepted Answer

A) $20 
B) $0 
C) $25 
D) $40 
E) $185 
A) $20 
B) $0 
C) $25 
D) $40 
E) $185

Question 15

Other things remaining the same, if education costs rise substantially, we would expect to see

Accepted Answer

A) a decrease in the value of marginal product of high-skilled workers. 
B) a decrease in the demand for high-skilled workers. 
C) an increase in the supply of high-skilled workers. 
D) an increase in the number of high-skilled workers employed. 
E) an increase in the wages received by high-skilled workers. 
A) a decrease in the value of marginal product of high-skilled workers. 
B) a decrease in the demand for high-skilled workers. 
C) an increase in the supply of high-skilled workers. 
D) an increase in the number of high-skilled workers employed. 
E) an increase in the wages received by high-skilled workers.

Question 16

Information technologies are ________ for low-skilled labour and ________ for high-skilled labour.

Accepted Answer

A) substitutes; complements 
B) substitutes; substitutes 
C) complements; complements 
D) complements; substitutes 
E) normal goods; inferior goods 
A) substitutes; complements 
B) substitutes; substitutes 
C) complements; complements 
D) complements; substitutes 
E) normal goods; inferior goods

Question 17

If the desire for leisure increased, the wage rate would

Accepted Answer

A) rise and employment would fall. 
B) rise and employment would rise. 
C) fall and employment would fall. 
D) fall and employment would rise. 
E) fall and employment would rise or fall. 
A) rise and employment would fall. 
B) rise and employment would rise. 
C) fall and employment would fall. 
D) fall and employment would rise. 
E) fall and employment would rise or fall.

Question 18

The reservation wage of labour is

Accepted Answer

A) the wage below which the labourer will be willing to work. 
B) the wage above which the worker would be willing to retire. 
C) the wage rate at which the firm would find it profitable to hire labour. 
D) the wage rate that makes it necessary for the firm to shut down rather than pay this wage to labour. 
E) the wage rate above which the worker would be willing to supply labour to the market. 
A) the wage below which the labourer will be willing to work. 
B) the wage above which the worker would be willing to retire. 
C) the wage rate at which the firm would find it profitable to hire labour. 
D) the wage rate that makes it necessary for the firm to shut down rather than pay this wage to labour. 
E) the wage rate above which the worker would be willing to supply labour to the market.

Question 19

Use the information below to answer the following questions.
Fact 18.5.1
The Burning Belly Taco Stand is considering buying some new special ovens. Each oven will cost $1,000, and will last for 2 years before it wears out. The ovens will be used to make the Taco Stands famous "Burning Ring of Fire" tacos, and will generate a value of marginal product of $600 for the first oven, $570 for the second oven, and $530 for the third oven. (Assume all revenues are earned at the end of the year.)
-Consider Fact 18.5.1.If the rate of interest is 10 percent, how many ovens will the Burning Belly Taco Stand buy?

Accepted Answer

A) zero 
B) 1 
C) 2 
D) 3 
E) insufficient information to answer 
A) zero 
B) 1 
C) 2 
D) 3 
E) insufficient information to answer

Question 20

The Brown's Egg store in Lethbridge Alberta hires workers to paint eggs.The price of an egg is $2.50.The value of marginal product of this store's fifth worker is $25.The marginal product of the fifth worker is

Accepted Answer

A) 62.5 eggs. 
B) 25 eggs. 
C) 2 eggs. 
D) 10 eggs. 
E) 0.1 eggs. 
A) 62.5 eggs. 
B) 25 eggs. 
C) 2 eggs. 
D) 10 eggs. 
E) 0.1 eggs.

As the wage rate rises, a household will have a backward-bending supply of labour curve if

If the interest rate is 10 percent per year, the present value of $100 in two years is

From an examination of data on income and wealth, it can be concluded that

A proportional income tax

The demand for labour is a derived demand because it is derived from

All of the following statements are correct except

The three main avenues through which the government redistributes income are

The ________ of a future amount of money is the amount that, if invested today, will grow to be as large as that future amount when the interest it earns is taken into account.

What will be the value in one year of $25 invested today at an annual interest rate of 5 percent?

Which of the following does Statistics Canada use to provide measures of economic inequality?

Between 1976 and 2011, the Canadian Gini ratio , which means income inequality in Canada .

Use the figure below to answer the following questions. Figure 18.3.1 -Refer to Figure 18.3.1.This figure shows the value of marginal product of labour curve, the labour supply curve, and the marginal cost of labour curve.If this labour market is competitive, the wage rate is

Use the table below to answer the following questions. Table 18.2.1 -Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $5 a unit, what is the value of marginal product of the 6th worker?

Other things remaining the same, if education costs rise substantially, we would expect to see

Information technologies are for low-skilled labour and for high-skilled labour.

If the desire for leisure increased, the wage rate would

The reservation wage of labour is

The Brown's Egg store in Lethbridge Alberta hires workers to paint eggs.The price of an egg is $2.50.The value of marginal product of this store's fifth worker is $25.The marginal product of the fifth worker is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Filters

Exam 18: Markets for Factors of Production

As the wage rate rises, a household will have a backward-bending supply of labour curve if

If the interest rate is 10 percent per year, the present value of $100 in two years is

From an examination of data on income and wealth, it can be concluded that

A proportional income tax

The demand for labour is a derived demand because it is derived from

All of the following statements are correct except

The three main avenues through which the government redistributes income are

The ________ of a future amount of money is the amount that, if invested today, will grow to be as large as that future amount when the interest it earns is taken into account.

What will be the value in one year of $25 invested today at an annual interest rate of 5 percent?

Which of the following does Statistics Canada use to provide measures of economic inequality?

Between 1976 and 2011, the Canadian Gini ratio ________, which means income inequality in Canada ________.

Use the figure below to answer the following questions. Figure 18.3.1 -Refer to Figure 18.3.1.This figure shows the value of marginal product of labour curve, the labour supply curve, and the marginal cost of labour curve.If this labour market is competitive, the wage rate is

Use the table below to answer the following questions. Table 18.2.1 -Refer to Table 18.2.1.If the firm can sell all the output it wants for the price of $5 a unit, what is the value of marginal product of the 6th worker?

Other things remaining the same, if education costs rise substantially, we would expect to see

Information technologies are ________ for low-skilled labour and ________ for high-skilled labour.

If the desire for leisure increased, the wage rate would

The reservation wage of labour is

The Brown's Egg store in Lethbridge Alberta hires workers to paint eggs.The price of an egg is $2.50.The value of marginal product of this store's fifth worker is $25.The marginal product of the fifth worker is

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Filters

Between 1976 and 2011, the Canadian Gini ratio , which means income inequality in Canada .

Information technologies are for low-skilled labour and for high-skilled labour.