Question 1

Which of the following best describes the difference between positive and normative analysis in economics?

Accepted Answer

Positive analysis is objective and fact-based, while normative analysis involves value judgments about what should be.

Question 2

Suppose a country can produce either 100 units of wheat or 200 units of corn with all its resources. What is the opportunity cost of producing 1 unit of wheat?

Accepted Answer

$$2$$ units of corn

Question 3

Which of the following statements about the Production Possibilities Frontier (PPF) is correct?

Accepted Answer

Points outside the PPF are unattainable with current resources and technology.

Question 4

Country A can produce 10 cars or 20 computers in a day. Country B can produce 8 cars or 16 computers in a day. Which country has the absolute advantage in car production, and which has the comparative advantage in computer production?

Accepted Answer

Country A has the absolute advantage in cars; Country A has the comparative advantage in computers.

Question 5

If the price of coffee increases, what is most likely to happen to the demand for tea, assuming tea is a substitute for coffee?

Accepted Answer

The demand for tea will increase.

Question 6

Which of the following would cause a movement along the supply curve for smartphones, rather than a shift of the supply curve?

Accepted Answer

A decrease in the price of smartphones.

Question 7

A market is in equilibrium when:

Accepted Answer

Quantity supplied equals quantity demanded.

Question 8

If both the demand and supply for electric cars increase simultaneously, what can be said about the equilibrium quantity and price?

Accepted Answer

Equilibrium quantity will increase, but the effect on equilibrium price is indeterminate.

Question 9

Which of the following best illustrates the concept of opportunity cost?

Accepted Answer

A company uses its resources to produce more of one product, resulting in less production of another product.

Question 10

In the circular flow diagram, which of the following best describes the flow of goods and services?

Accepted Answer

From firms to households in the product market.

Question 11

Which of the following is an example of a normative statement?

Accepted Answer

The government should increase spending on education.

Question 12

If a good is considered inferior, what happens to its demand when consumer incomes rise?

Accepted Answer

Demand decreases.

Question 13

Which of the following is NOT a key economic idea discussed in Chapter 1?

Accepted Answer

Markets always lead to equality.

Question 14

Suppose the market for oranges is in equilibrium. If a disease destroys half the orange crop, what is the most likely immediate effect on the market?

Accepted Answer

The supply curve shifts left, price rises, and quantity falls.

Question 15

Which of the following best describes a perfectly competitive market?

Accepted Answer

A market with many buyers and sellers, where no individual can influence the price.

Question 16

If the price of a complement good increases, what happens to the demand for the original good?

Accepted Answer

Demand decreases.

Question 17

Which of the following is an example of complete specialization due to comparative advantage?

Accepted Answer

Each country produces only the good for which it has a comparative advantage and trades for the other.

Question 18

Which of the following would shift the demand curve for new cars to the right?

Accepted Answer

A successful advertising campaign for new cars.

Question 19

If a market system is characterized by voluntary exchange and private property, which type of economy is it?

Accepted Answer

Market economy

Question 20

Suppose the supply schedule for a product is given by $$Q_s = 2P - 4$$ and the demand schedule is $$Q_d = 20 - P. $$What is the equilibrium price?

Accepted Answer

$$P = 8$$

Exam 1 Review Guide: Foundations of Economics, Trade, and Markets

Guida di studio - Domande di pratica

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