Q: Suppose a student spends 3 hours studying for an exam instead of working at a job that pays $15 per hour. What is the opportunity cost of studying for the exam?

The $$45 the student could have earned working (15$$ \times 3$).

Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity occurs when unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

Which of the following is NOT one of the three key economic questions every society must answer?

Accepted Answer

How much profit should each firm make?

Question 3

Suppose a student spends 3 hours studying for an exam instead of working at a job that pays $15 per hour. What is the opportunity cost of studying for the exam?

Accepted Answer

The $$45 the student could have earned working (15$$ 	imes 3$).

Question 4

Which statement best explains the concept of trade-offs?

Accepted Answer

Trade-offs mean that increasing the production of one good will result in the decrease in production of another due to limited resources.

Question 5

A rational individual will choose an action only if:

Accepted Answer

The marginal benefit of the action is greater than or equal to the marginal cost.

Question 6

If the marginal benefit (MB) of producing one more unit of a good is $$10 and the marginal cost (MC) is 8$$, what should a rational producer do?

Accepted Answer

Produce the additional unit because $$MB \u003e MC.$$

Question 7

Which of the following is an example of an explicit cost?

Accepted Answer

The money paid for raw materials used in production.

Question 8

Which of the following best describes an incentive in economics?

Accepted Answer

An incentive is anything that motivates or encourages one to do something.

Question 9

Suppose a factory can produce either 100 units of product A or 200 units of product B with its available resources. What is the opportunity cost of producing 100 units of product A?

Accepted Answer

200 units of product B.

Question 10

Which of the following is NOT a characteristic of rational decision-making in economics?

Accepted Answer

Rational individuals always make decisions that maximize their happiness.

Question 11

A business owner is deciding whether to expand production. The marginal benefit (MB) of expansion is $$500, while the marginal cost (MC) is 600. $$What should the owner do?

Accepted Answer

Do not expand production because $$MB \u003c MC.$$

Question 12

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

Accepted Answer

The cost incurred by producing one additional unit of a good.

Question 13

If a country decides to produce more cars, but as a result produces fewer computers, this is an example of:

Accepted Answer

A trade-off due to scarcity.

Question 14

Which of the following is the best definition of opportunity cost?

Accepted Answer

The single highest valued alternative that must be given up to engage in an activity.

Question 15

A student chooses to attend college full-time rather than work a full-time job. The opportunity cost of attending college is:

Accepted Answer

The income the student could have earned working full-time.

Question 16

Which of the following is an example of a marginal benefit?

Accepted Answer

The additional revenue received from selling one more unit of a product.

Question 17

Which of the following statements about incentives is correct?

Accepted Answer

Incentives can be anything that motivates or encourages a person to act.

Question 18

Suppose a firm is deciding whether to produce an additional unit of output. The marginal benefit (MB) is $$20 and the marginal cost (MC) is 25. $$What is the correct decision?

Accepted Answer

Do not produce the additional unit because $$MB \u003c MC.$$

Question 19

Which of the following is NOT an example of a trade-off?

Accepted Answer

Using all available resources to produce unlimited quantities of all goods.

Question 20

Which of the following best describes the role of consumers in determining what goods and services are produced in an economy?

Accepted Answer

Consumers indirectly influence production by deciding how to use their scarce resources.

Foundations of Microeconomics: Scarcity, Opportunity Cost, and Economic Decision-Making

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