18. If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1
ID: 1091970 • Letter: 1
Question
18. If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then
A. the U.S. dollar appreciated against the Canadian dollar
B. the Canadian dollar weakened against the Canadian dollar
C. the U.S. dollar strengthened against the Canadian dollar
D. the Canadian dollar appreciated against the U.S. dollar
19. In 2008, 1 Swiss franc cost .56 British pounds and in 2010 it cost .51 British pounds in 2010. How much would 1 British pound purchase in Swiss francs in 2008 and 2010?
A. 2008: 1.79 francs, 2010: 1.96 francs
B. 2008: 1.78 francs, 2010: 1.98 francs
C. 2008: 1.71 francs, 2010: 2.00 francs
D. 2008: 1.73 francs, 2010: 1.97 francs
24. Market failure describes a situation in which the market itself ______________________ in a way that balances social costs and benefits.
A. remains outside the transaction
B. incurs the costs outside the production process
C. fails to allocate resources efficiently
D. avoids externalities
26. The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below.
Price
Quantity Demanded
Quantity Supplied without Paying Social Costs
Quantity Supplied after Paying Social Costs
100
0
120
75
80
10
100
50
55
30
90
30
40
55
85
25
30
80
80
20
20
100
65
15
The equilibrium price and quantity when social costs are taken into account are
A. Price = $55, Quantity = 30
B. Price = $40, Quantity = 55
C. Price = $30, Quantity = 20
D. Price = $30, Quantity = 80
27. _______________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process.
A. Social costs
B. Private costs
C. Market costs
D. External costs
Price
Quantity Demanded
Quantity Supplied without Paying Social Costs
Quantity Supplied after Paying Social Costs
100
0
120
75
80
10
100
50
55
30
90
30
40
55
85
25
30
80
80
20
20
100
65
15
Explanation / Answer
18. D. the Canadian dollar appreciated against the U.S. dollar
19. A. 2008: 1.79 francs, 2010: 1.96 francs
24. C. fails to allocate resources efficiently
26. A. Price = $55, Quantity = 30
27. C. Market costs
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