ECO100Y5 Final 2012W Bailey

8/12/2019 ECO100Y5 Final 2012W Bailey

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1.

The term ceteris paribus means,

a) with partial certainty.

b) let the buyer beware.

c) other things equal.

d) until death do us part.

2. The demand curve Dx =12 - 1 Px - 2 Py 3 Pz suggests that,

a) Good X is a normal good.

b)

Good Y is a complement

in

consumption for Good X.

c) Good Z is a complement inconsumption for Good

X.

d) Good X is an inferior good.

3. If price increases and quantity decreases. A reasonable explanation for that

is,

a) sellers expect the price will rise.

b)

buyers expect the price will rise.

c)

sellers expect the price will fall.

d)

buyers expect the price will fall.

4. The introduction of a price ceiling on textbooks will increase consumer surplus if,

a)

demand is inelastic.

b)

supply is inelastic.

c)

demand is elastic.

d) supply is elastic.

5.

The price elasticity of supply increases when a linear supply curve,

a) shifts right, with the slope unchanged.

b) gets steeper, without changing the vertical intercept.

c)

gets flatter, without changing the vertical intercept.

d) shifts left, with the slope unchanged.

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6.

Lower interest rates might cause a maximizing saver to increase savings if,

a) consumption is normal and the IE dominates the SE.

b) consumption is inferior and the IE dominates the SE.

c consumption is normal and the SE dominates the IE.

d consumption is inferior and the SE dominates the IE.

7. Lower interest rates might cause a maximizing borrower to increase borrowing if,

a) consumption is normal and the IE dominates the SE.

b) consumption is inferior and the IE dominates the SE.

c)

consumption is normal and the SE dominates the IE.

d consumption is inferior and the SE dominates the IE.

8.

Indifference curves for Perfect Complements are,

a) upward sloping.

b L-shaped.

c linear.

d concave.

9.

A maximizing consumer must ensure that -- _

a MUx +

Py

=

MUy +

Px

b MUx x

py

= MUy x Px

c MUx + MUy Py+ Px

d all

of

these are wrong

10. When marginal utility is negative, total utility is,

a) constant.

b increasing.

c decreasing.

d infinite.

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11. Which o the following is NOT a characteristic of Monopolistic Competition?

a average revenue equal average cost.

b revenue equals cost.

c

marginal revenue equals marginal cost.

d average revenue equal marginal cost.

12.

With Ordinary Price Discrimination are equal across groups of buyers.

a prices

b marginal revenues

c quantities

d efficiency losses

13.

A per-unit tax he minimum efficient scale and causes a competitive industry to

a reduces; contract.

b increases; contract.

c

does not change; expand.

d does not change; contract.

14.

A lump-sum tax the minimum efficient scale and causes a competitive

industry to _

a reduces; contract.

b increases; contract.

c

does not change; expand.

d does not change; contract.

15. When average product is 8 and marginal product is 4 then,

a

average product is rising.

b

marginal product is rising.

c

marginal product is falling.

d) average product is falling.

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16.TheGovernorof theBankof Canadais,

a) ArthurHosios.

b} JimFlaherty.

c) AviCohen.

d) MarkCarney.

17. Monetarypolicyismosteffectwheninvestmentdemand is andmoney

demand is

a) inelastic;elastic.

b) inelastic;inelastic.

c) elastic;elastic.

d} elastic;inelastic.

18. If thebankingsectormaintainsatargetreserveratio of 20percentthemoney

multiplierwillbeequalto,

a)

2

b} 5

c) 0.05

d) noneof these.

19. TheQuantityTheory

of

Moneystates _

a e=MC2

b

PY=vM

c)

MP=

vY

d) Y=C+I+G

20. ThePhillipsCurvepositsan inverserelationshipbetween,

a) moneyandinflation.

b) employmentand immigration.

c) employmentandoutput.

d) unemploymentandinflation.

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21. The demand for oranges in Canada is given by

D

=

1000

-

100P

and supply by

domestic producers is S =

200P

-

200

The world price for oranges is $2.

a) Provide a labelled diagram and supporting calculations to explain how will a tariff

of

$1

would affect consumer, producer and government surplus in the market for

oranges.

b)

Ada suggests that this tariff would be bad news for our Canadian apple growers

because apples are a substitute in consumption for oranges. Do you agree with

Ada's claim?

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22. Nancy is a utility maximizing worker with preferences for food and leisure

U

=

Z

is

paid a wage o 20 per hour and earns non labour income o 60 per day. An

alternative job offers a profit sharing plan that would increase her non labour income

to 120 per day but the wage is only $15 per hour.

a) Provide a labelled indifference curve diagram and supporting calculations to

showing Nancy's utility maximizing choices at her current job as Bundle "A" and

her choices at the alternative job as Bundle "B".

b) Alina suggests that Nancy would be better off quitting her current job and

accepting this new offer. Do you agree with Alina's assessment?

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23. Toyin pays 8 dollars per glass for Booster Juice (good X) and and 2 dollars for a

slice

of

banana bread (good Y). His preferences are = Yand he spends 400 dol-

lars a month on these goods.

f

he purchases a membership card, Toyin can

get

his

Booster Juices for only 50 cents. Banana bread will still cost 2 dollars.

a) Provide a labelled indifference curve diagram and supporting calculations to

illustrate the maximum amount that Toyin is willing to pay for this membership

card. Your diagram

should show Bundles A , B and

"e"

along with their asso-

ciated budget lines.

b) Jacqueline suggests that Toyin's behavior indicates that he must believe that

Booster Juice and banana bread are complements

in

consumption. Do you

agree with her assessment?

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24. Firms in a competitive industry incur production cost

o

C

= q

+

16

Market demand

is D 160 - 10P

a) Provide the usual pair o labelled diagrams showing The Firm and The Industry

to illustrate how this industry would respond to the introduction o a subsidy o $4

per-unit.

b) Oriana suggests that the price reduction associated with this subsidy would be

even bigger if this was a decreasing costs industry (DCI). Do you agree with

Oriana's claim?

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26. An economy with a fixed exchange rate has C = 8 + O.aVO G =

1

1=

1

T = 10 +

0.5Y

AS

= 5P and M = 0.1 Y. Tourism increases export spending from X = 12 - P

to X 20 - 4P.

a) Provide the usual stack of 3 diagrams and supporting calculations to show how

real GOP the price level, and the balance of trade would be affected by this

change.

b) Provide a diagram showing the foreign exchange market and explain how the

Central Bank would need to intervene to ensure that the exchange rate was not

affected by the change in tourism spending.

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ECO100Y5 Final 2012W Bailey