1) All of the following except one are examples of monopolies in Canada. Which is the exception?

Multiple Choice

• Montreal Subway system.
• Manitoba Hydro.
• Rogers Cablevision.
• CBC Television.

2) Which of the following statements isfalseif the government nationalizes an existing monopoly firm?

Multiple Choice

• A nationalized monopoly can be expected to always charge the socially optimum price.
• The government usually buys out the owners of the firm and operates it as a crown corporation.
• A nationalized monopoly may or may not be operated to make a profit.
• There is no guarantee that a nationalized monopoly will be more efficient because it is owned by the government.

3) Who challenged the fundament assumption of profit maximization?

Multiple Choice

• John Maynard Keynes.
• John Galbraith.
• Adam Smith.
• George Stigler.

4) All of the following, except one, could be a barrier to entry into an oligopoly industry. Which is the exception?

Multiple Choice

• Natural monopoly.
• The restricted ownership of crucial natural resources.
• The existence of economies of scale.
• Patents and copyrights.

5) What is the level of economic profits earned by a firm operating in the short-run under conditions of monopolistic competition?

Multiple Choice

• It is zero.
• It is likely to be positive, but could be negative.
• It is negative.
• It is positive.

6) All of the following, except one, are oligopoly industries. Which is the exception?

Multiple Choice

• The provision of long-distance telephone services.
• The manufacture of automobiles.
• The provision of accounting services.
• The manufacture of cigarettes.

7) What will be the long-run result of new firms entering a monopolistically-competitive industry?

Multiple Choice

• The representative firm will certainly incur losses.
• The representative firm will be able to maintain economic profits.
• The price charged by the representative firm will be equal to marginal cost.
• While the representative firm will not make economic profits, it will be able to make normal profits.

8) Graphically, what will be the effect of entry by new firms into a monopolistically-competitive industry?

Multiple Choice

• It will shift the market's supply curve to the left.
• It will shift the market's demand curve to the right.
• It will shift each firm's demand curve to the right.
• It will shift each existing firm's demand curve to the left.

9) Which term best describes the attempt by firms to distinguish their products from those of their competitors?

Multiple Choice

• Entry.
• Franchising.
• Product differentiation.
• Competition.
• Mutual interdependence.

10) According to Galbraith, why might modern corporations not attempt to maximize profits?

Multiple Choice

• They are afraid of the reaction of their consumers.
• They are afraid of the reaction of the government.
• They are afraid of the reaction of rival companies.
• Because the managers are more interested in maximizing their own incomes.

11) All of the following statements, except one, are correct about game theory analysis. Which is the exception?

Multiple Choice

• It is an attempt to explain firm behaviour.
• It has led some economists to conclude that the likelihood of cheating is a more effective barrier to collusion than government legislation.
• It is able to predict a likely outcome of two firms engaged in considering a specific action.
• It shows that it is rational for each firm to trust the other.
• It emphasizes the importance of mutual interdependence.

12) If trend lines representing Canada's real GDP per hour and the real hourly wage in Canada were plotted over a period of the last 50 years, what type of correlation would it show?

Multiple Choice

• A very close correlation for the whole period.
• A gradual convergence of the two trends starting from the position of the real hourly wage rate being significantly above real GDP per hour.
• A very close correlation for the first twenty five years followed by the real hourly wage rate raising significantly above real GDP per hour.
• A very close correlation for the first twenty five years followed by the real GDP per hour raising significantly above real hourly wage rate.

13)Which of the following is assumed in Ricardo's concept of economic rent?

Multiple Choice

• A perfectly inelastic supply curve.
• A perfectly elastic demand curve.
• A perfectly inelastic demand curve.
• A perfectly elastic supply curve.

14) All of the following, except one, are explanations of the wage differentials that exist in our economy. Which is the exception?

Multiple Choice

• Some jobs have unpleasant characteristics that do not exist with other jobs.
• The level of human capital is the same among individuals.
• Some jobs have non-pecuniary benefits that are absent in other jobs.
• Some jobs involve physical risks that do not exist with other jobs.
• Discrimination exists in the job market.