Question 1

Economic rent is created when:

Accepted Answer

A) opportunity cost earns normal returns. 
B) opportunity cost earns above normal returns. 
C) opportunity cost earns below normal returns. 
D) producers make normal profit. 
A) opportunity cost earns normal returns. 
B) opportunity cost earns above normal returns. 
C) opportunity cost earns below normal returns. 
D) producers make normal profit.

Question 2

Residents of Vancouver often complain when the temperature drops below zero while residents of Winnipeg frequently endure temperatures of - 40. How can economics explain this?

Accepted Answer

A) houses in Winnipeg are colder because the marginal cost of heating is lower 
B) residents of Winnipeg are heartier than Vancouverites 
C) the moist air in Vancouver increases heating costs 
D) houses in Vancouver are colder because the marginal cost of heating is higher 
A) houses in Winnipeg are colder because the marginal cost of heating is lower 
B) residents of Winnipeg are heartier than Vancouverites 
C) the moist air in Vancouver increases heating costs 
D) houses in Vancouver are colder because the marginal cost of heating is higher

Question 3

When compared to houses in warmer climates, houses in colder climates typically have

Accepted Answer

A) lower total heating costs and higher marginal costs 
B) higher total and marginal heating costs 
C) lower total and marginal heating costs 
D) higher total heating costs and lower marginal costs 
A) lower total heating costs and higher marginal costs 
B) higher total and marginal heating costs 
C) lower total and marginal heating costs 
D) higher total heating costs and lower marginal costs

Question 4

New farmers who buy a quota will:

Accepted Answer

A) earn a zero rate of return on the quota. 
B) produce more than farmers without a quota. 
C) earn above normal profits. 
D) be better off than farmers that do not have a quota. 
A) earn a zero rate of return on the quota. 
B) produce more than farmers without a quota. 
C) earn above normal profits. 
D) be better off than farmers that do not have a quota.

Question 5

When a price ceiling such as a rent control is substituted for market allocation:

Accepted Answer

A) it is not possible to tell if the goods get allocated optimally. 
B) the goods get allocated to consumers who most desire them. 
C) the goods get allocated to the poor. 
D) the goods get allocated to consumers who least desire them. 
A) it is not possible to tell if the goods get allocated optimally. 
B) the goods get allocated to consumers who most desire them. 
C) the goods get allocated to the poor. 
D) the goods get allocated to consumers who least desire them.

Question 6

If the demand curve in an increasing cost market shifts up and to the right, then:

Accepted Answer

A) both the short run and long run prices decrease. 
B) both the short run and long run prices increase. 
C) the short run price increases and the long run price stays the same. 
D) both the short run and long run prices stay the same. 
A) both the short run and long run prices decrease. 
B) both the short run and long run prices increase. 
C) the short run price increases and the long run price stays the same. 
D) both the short run and long run prices stay the same.

Question 7

If the demand curve in an increasing cost market shifts up and to the right, then:

Accepted Answer

A) the long run price goes up and the long run quantity goes up. 
B) the short run price goes up and the short run quantity stays the same. 
C) the long run price stays the same and the long run quantity goes up. 
D) the short run price stays the same and the short run quantity goes up. 
A) the long run price goes up and the long run quantity goes up. 
B) the short run price goes up and the short run quantity stays the same. 
C) the long run price stays the same and the long run quantity goes up. 
D) the short run price stays the same and the short run quantity goes up.

Question 8

Suppose the demand for cigarettes is Q=15- 0.5P and the supply of cigarettes is Q = P - 3, where P is the price per pack of cigarettes. Suppose the government imposes a cigarette tax of $3 per pack.
a)What is the price paid by producers?
b)What is the price faced by consumers?
c)What is the government revenue from the tax?
d)What is the total dollar amount of tax revenue that is ultimately paid by consumers (i.e. consumers. tax burden)?

Accepted Answer

a)P=11; b)

Question 9

Rent control:

Accepted Answer

A) involve only a transfer of wealth from landlords to tenants. 
B) leads to higher prices for apartments at the margin if we include implicit costs. 
C) does not affect the long run supply of the housing stock. 
D) increases social welfare. 
A) involve only a transfer of wealth from landlords to tenants. 
B) leads to higher prices for apartments at the margin if we include implicit costs. 
C) does not affect the long run supply of the housing stock. 
D) increases social welfare.

Question 10

The demand for cigarettes is given by: QD = 140,000 - 25,000P.
where Q is the quantity of cigarettes demanded (in packs)and P is the price of a pack of cigarettes. The supply of cigarettes is given by: Q = 20,000 + 75,000P where QS is the quantity of cigarettes supplied (in packs). Suppose that a tax of $0.40 per pack was imposed on cigarettes.
i)How much would consumers' surplus be reduced? How much would producers' surplus be reduced?
i)What is the deadweight loss associated with the tax? Explain using words and diagrams what is meant by the term "deadweight loss".

Accepted Answer

i)CS will be reduced

Question 11

The market demand for cars is P = 1000 - Q and the supply is P = 100 + 2Q. An effective quota is:

Accepted Answer

A) 400 units. 
B) 350 units. 
C) 250 units. 
D) 450 units. 
A) 400 units. 
B) 350 units. 
C) 250 units. 
D) 450 units.

Question 12

an economist might suggest that one way to reduce crime is to

Accepted Answer

A) increase police spending 
B) decrease the net marginal benefit of crime 
C) higher more judges 
D) build more prisons 
A) increase police spending 
B) decrease the net marginal benefit of crime 
C) higher more judges 
D) build more prisons

Question 13

Suppose that the demand for labour is given by P = 30 - Q and the supply of labour is given by P =
2Q. Which of the following is true if a minimum wage of 24 is imposed on the labour market?

Accepted Answer

A) the dead weight loss will be 24. 
B) unemployment will be 2. 
C) the number of people laid off will be 6. 
D) the minimum wage is not binding. 
A) the dead weight loss will be 24. 
B) unemployment will be 2. 
C) the number of people laid off will be 6. 
D) the minimum wage is not binding.

Question 14

An effective quota system causes which of the following?

Accepted Answer

A) an increase in the price and quantity in the market 
B) an increase in the price and decrease in the quantity in the market 
C) a decrease in the price and quantity in the market 
D) a decrease in the price and an increase in the quantity in the market 
A) an increase in the price and quantity in the market 
B) an increase in the price and decrease in the quantity in the market 
C) a decrease in the price and quantity in the market 
D) a decrease in the price and an increase in the quantity in the market

Question 15

Suppose the market demand for cigarettes is: D=10- P, and the supply of cigarettes is: S=- 2+P, where P is the price per pack of cigarettes. If the government imposes a cigarette tax of $1 per pack, the consumers' tax burden is:

Accepted Answer

A) $0.75. 
B) $1.75. 
C) $0. 
D) $0.5. 
A) $0.75. 
B) $1.75. 
C) $0. 
D) $0.5.

Question 16

If a competitive market is in equilibrium and then the price of an input increases and at the same time the price of a complement for the good decreases then we can predict which of the following?

Accepted Answer

A) Q decreases 
B) P decreases 
C) Q increases 
D) P increases 
A) Q decreases 
B) P decreases 
C) Q increases 
D) P increases

Question 17

Houses in cold winter climates will have cooler inside temperatures in the summer because:

Accepted Answer

A) the outside temperature is cooler. 
B) these people have to save money for heating costs in the winter. 
C) they have more windows in general. 
D) they are better insulated and this keeps out the heat. 
A) the outside temperature is cooler. 
B) these people have to save money for heating costs in the winter. 
C) they have more windows in general. 
D) they are better insulated and this keeps out the heat.

Question 18

The real cost of allocating goods when a non- price mechanism is substituted for the market is:

Accepted Answer

A) higher. 
B) quite large. 
C) lower. 
D) the same. 
A) higher. 
B) quite large. 
C) lower. 
D) the same.

Question 19

If the price of a substitute increases, the demand curve for a good:

Accepted Answer

A) does not move because the goods are independent. 
B) does not move because the price and quantity adjust along the demand curve. 
C) shifts down and to the left. 
D) shifts up and to the right. 
A) does not move because the goods are independent. 
B) does not move because the price and quantity adjust along the demand curve. 
C) shifts down and to the left. 
D) shifts up and to the right.

Question 20

A tariff does which of the following?

Accepted Answer

A) lowers the world price to the importing country 
B) raises the world price to the exporting country 
C) lowers the world price to the exporting country 
D) raises the world price to the importing country 
A) lowers the world price to the importing country 
B) raises the world price to the exporting country 
C) lowers the world price to the exporting country 
D) raises the world price to the importing country

Economic rent is created when:

Residents of Vancouver often complain when the temperature drops below zero while residents of Winnipeg frequently endure temperatures of - 40. How can economics explain this?

When compared to houses in warmer climates, houses in colder climates typically have

New farmers who buy a quota will:

When a price ceiling such as a rent control is substituted for market allocation:

If the demand curve in an increasing cost market shifts up and to the right, then:

If the demand curve in an increasing cost market shifts up and to the right, then:

Rent control:

The market demand for cars is P = 1000 - Q and the supply is P = 100 + 2Q. An effective quota is:

an economist might suggest that one way to reduce crime is to

Suppose that the demand for labour is given by P = 30 - Q and the supply of labour is given by P = 2Q. Which of the following is true if a minimum wage of 24 is imposed on the labour market?

An effective quota system causes which of the following?

Suppose the market demand for cigarettes is: D=10- P, and the supply of cigarettes is: S=- 2+P, where P is the price per pack of cigarettes. If the government imposes a cigarette tax of $1 per pack, the consumers' tax burden is:

If a competitive market is in equilibrium and then the price of an input increases and at the same time the price of a complement for the good decreases then we can predict which of the following?

Houses in cold winter climates will have cooler inside temperatures in the summer because:

The real cost of allocating goods when a non- price mechanism is substituted for the market is:

If the price of a substitute increases, the demand curve for a good:

A tariff does which of the following?

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters

Exam 9: Applications of the Competitive Model

Economic rent is created when:

Residents of Vancouver often complain when the temperature drops below zero while residents of Winnipeg frequently endure temperatures of - 40. How can economics explain this?

When compared to houses in warmer climates, houses in colder climates typically have

New farmers who buy a quota will:

When a price ceiling such as a rent control is substituted for market allocation:

If the demand curve in an increasing cost market shifts up and to the right, then:

If the demand curve in an increasing cost market shifts up and to the right, then:

Rent control:

The market demand for cars is P = 1000 - Q and the supply is P = 100 + 2Q. An effective quota is:

an economist might suggest that one way to reduce crime is to

Suppose that the demand for labour is given by P = 30 - Q and the supply of labour is given by P = 2Q. Which of the following is true if a minimum wage of 24 is imposed on the labour market?

An effective quota system causes which of the following?

Suppose the market demand for cigarettes is: D=10- P, and the supply of cigarettes is: S=- 2+P, where P is the price per pack of cigarettes. If the government imposes a cigarette tax of $1 per pack, the consumers' tax burden is:

If a competitive market is in equilibrium and then the price of an input increases and at the same time the price of a complement for the good decreases then we can predict which of the following?

Houses in cold winter climates will have cooler inside temperatures in the summer because:

The real cost of allocating goods when a non- price mechanism is substituted for the market is:

If the price of a substitute increases, the demand curve for a good:

A tariff does which of the following?

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters