A law restricting youths from coffee shops until they are 21. D) A decrease in consumers’ income.

04 Jun A law restricting youths from coffee shops until they are 21. D) A decrease in consumers’ income.

Question

1.Consider the market for single malt whisky – a normal good. You observe there has been a general increase in the incomes of Canadians. Additionally, you find the price of barely, a main ingredient in single malt whisky, has decreased. The result of these effects leads to a:

A)

An increase in quantity transacted and an ambiguous change in prices.

B)

A decrease in quantity transacted and an ambiguous change in prices.

C)

An increase in quantity transacted and an increase in prices.

D)

An increase in quantity transacted and a decrease in prices.

2.Now consider the market for skis and ski boots. You notice that price of ski boots has fallen as of recent. As a result, what do you predict will happen in the market for skis?

A)

An increase in quantity transacted and a decrease in prices.

B)

A decrease in quantity transacted and an increase in prices.

C)

An increase in quantity transacted and an increase in prices.

D)

A decrease in quantity transacted and a decrease in prices.

3.To better compete with the skiing world, snowboard manufacturers reduce their prices. What effect will this have on the market for skis?

A)

An increase in quantity transacted and a decrease in prices.

B)

A decrease in quantity transacted and an increase in prices.

C)

An increase in quantity transacted and an increase in prices.

D)

A decrease in quantity transacted and a decrease in prices.

4.During the summer months, the demand for gasoline intensifies as more people are taking vacations (i.e. driving more). At the same time, requirements for cleaner emissions force retailers to purchase a more expensive gasoline. Given these two occurrences, what is the predicted result in the market for gasoline?

A)

An increase in quantity transacted and an increase in prices.

B)

An ambiguous change in quantity transacted and an ambiguous change in prices.

C)

An ambiguous change in quantity transacted and an increase in prices.

D)

An increase in quantity transacted and a decrease in prices.

5.Fearing that current low gas prices will increase the popularity of gas guzzling vehicles, the federal government decides to tax the sale of all vehicles not meeting a certain L/100Km rating. Given this tax, what do you expect will happen to the market for such gas guzzling vehicles.

A)

An increase in quantity transacted and a decrease in prices.

B)

A decrease in quantity transacted and an increase in prices.

C)

An increase in quantity transacted and an increase in prices.

D)

A decrease in quantity transacted and a decrease in prices.

6.Which of the following would result in higher demand for Tim Horton’s coffee?

A)

A new fad doughnut diet.

B)

An increase in the price of doughnuts, a complement to coffee.

C)

A law restricting youths from coffee shops until they are 21.

D)

A decrease in consumers’ income.

7.Suppose the National Assembly, the governing body in Quebec, imposes a price ceiling of $10 per month for chequing account charges. If the average market-clearing price for monthly chequing account charges is $5, then:

A)

The price ceiling will keep prices artificially low.

B)

The price ceiling will increase the quality of the good.

C)

The price ceiling will not be binding in this instance.

D)

None of the above will occur.

8.Suppose Ontario schools offered cash bonuses to students who scored high on the province’s standardized exams. The cash bonuses are an example of which of the following basic economic principles?

A)

Resources are scarce.

B)

The real cost of something is what you must give up to get it.

C)

There are gains from trade.

D)

People usually take advantage of opportunities to make themselves better off.

9.In the circular-flow model, the interaction between households and firms implies that:

A)

We need money to buy things.

B)

Households and firms interact in the market for goods and services, but firms are the only participants in the factor markets.

C)

Firms supply goods and services to households which, in turn, supply factors of production to firms.

D)

The focus is on the “real” flows of goods, services, and factors of production, but the flows of money between households and firms are ignored for simplicity.

10.Ukrainian wheat farmers are very upset about the subsidies the Canadian government pays to Canadian wheat farmers. One reason for this could be that:

A)

Subsidized wheat from Canada leads to global cotton surpluses and lower prices for Ukrainian farmers.

B)

Subsidized wheat from Canada raises the world price of wheat.

C)

Subsidized wheat from Canada has led to a global shortage of wheat.

D)

Subsidized wheat from Canada has led to an increase in the demand for Ukrainian wheat.

11.Suppose you make $15 per hour working as an extra for Toronto Film Extras. Today you need to take 2 hours off to see your divorce lawyer, but your contract specifies that you still get paid for this time. The lawyer charges $100 for the consultation. The opportunity cost in dollar terms for your trip to the lawyer would be:

A)

$30.

B)

$115.

C)

$100.

D)

$130.