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Multiple Choice Quiz
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1
Suboptimal, or inefficient performance, also known as market failure, is caused by all of the following except:
A)externalities.
B)asymmetric information.
C)high prices.
D)public goods.
2
When we say that a good has non-rivalrous characteristics, we mean that:
A)there are no good substitutes for this particular good.
B)the good can be consumed by many people simultaneously.
C)there is no competition in its production.
D)people can’t be prevented from using the good if they don’t pay for it.
3
The optimal provision of a public good occurs when:
A)the marginal cost of production equals the total value to society.
B)the marginal cost of production equals the marginal benefit to the last consumer.
C)the government has completely spent its budget.
D)the average production cost equals average benefits.
4
Asymmetric information occurs when:
A)firms don’t advertise.
B)technology is not sufficient to advance the efficiency of production.
C)firms are charging more than consumers are willing to pay.
D)one party in an economic relationship has more information than the other.
5
When life insurance companies cannot be sure that they are only insuring high-risk people who are likely to die young, the problem is known as:
A)adverse selection.
B)moral hazard.
C)negative externality.
D)free rider.
6
When banks offer loans to individuals, they cannot be sure that the loans will not be used to fund a gambling trip to Las Vegas. This problem is known as:
A)adverse selection.
B)moral hazard.
C)negative externality.
D)free rider.
7
One advantage of federalism is:
A)all regions will have the same government.
B)taxes and spending will be equalized across regions.
C)all regions will have the same policies.
D)different regions can adopt different policies.
8
According to the textbook, the only two provinces that do not qualify for equalization payments are:
A)Ontario and Quebec
B)British Columbia and Quebec
C)Alberta and Ontario
D)Quebec and Alberta
9
Which of the following is a transfer from the federal government to the provincial governments?
A)Canada Social Transfer
B)Canada Pension Plan
C)Canada Health and Social Transfer
D)both a and c
10
The Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) are funded from:
A)general income tax revenue.
B)employee and employer contributions.
C)the GST.
D)a special tax on Alberta oil revenues.
11
Which of the following are federal support programs for the retired?
A)Old Age Security and Guaranteed Income Supplement
B)Old Age Security and Registered Retirement Savings Plans
C)Guaranteed Income Supplements and Registered Retirement Income Funds
D)Canada Pension Plan and the Lotto 6/49.
12
Which of the following federal support programs are cyclical in nature?
A)Employment Insurance and the Canada Pension Plan
B)the Canada Pension Plan and Social Assistance
C)Employment Insurance and Social Assistance
D)Old Age Security and Workers’ Compensation
13
The Workers’ Compensation program:
A)is the payment system for federal government employees.
B)supports workers injured on the job.
C)is a support program in addition to the minimum wage.
D)applies only in provinces that do not have minimum wages.
14
Which of the following is not forbidden by the Competition Act (1986)?
A)anti-competitive cartels
B)predatory pricing
C)bid rigging
D)monopolies
15
The subsidization of Crown Corporations may lead to:
A)lower prices for consumers.
B)greater efficiencies in the use of new technologies.
C)more competition with foreign-owned firms.
D)excess levels of employment.





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