Q: Which formula correctly calculates the percentage change in a variable?

$$ \frac{\text{Value in second period} - \text{Value in first period}}{\text{Value in first period}} \times 100 $$

Question 1

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

Accepted Answer

The value of the next best alternative forgone when making a choice.

Question 2

Suppose a country can produce either 10 units of milk or 5 units of cheese with its available resources. What is the opportunity cost of producing 1 unit of cheese?

Accepted Answer

$$ \frac{10}{5} = 2 $$ units of milk

Question 3

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

Accepted Answer

The PPF shows the combinations of two goods that can be produced if resources and technology do NOT change.

Question 4

If a market is efficient, which of the following must be true?

Accepted Answer

It is impossible to make someone better off without making someone else worse off.

Question 5

Which formula correctly calculates the percentage change in a variable?

Accepted Answer

$$ \frac{	ext{Value in second period} - 	ext{Value in first period}}{	ext{Value in first period}} 	imes 100 $$

Question 6

Which of the following is an example of allocative efficiency?

Accepted Answer

Producing the mix of goods and services most desired by society.

Question 7

What is the slope of a line given by the equation $$ y = mx + b $$?

Accepted Answer

$$ m $$

Question 8

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

Accepted Answer

Demand for the original good will increase.

Question 9

Which of the following would cause a shift in the demand curve for pizza?

Accepted Answer

An increase in consumer income.

Question 10

Which of the following is NOT a variable that shifts market supply?

Accepted Answer

Consumer tastes

Question 11

Suppose the supply curve for a good shifts to the right while the demand curve remains unchanged. What happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases.

Question 12

Which of the following best describes a market equilibrium?

Accepted Answer

A situation in which quantity supplied equals quantity demanded.

Question 13

If a technological innovation allows firms to produce more output with the same inputs, what is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the right.

Question 14

Which of the following is an example of a positive economic statement?

Accepted Answer

"Increasing the minimum wage will lead to higher unemployment among teenagers."

Question 15

What is the area of a triangle with a base of 8 units and a height of 5 units?

Accepted Answer

$$ \frac{1}{2} 	imes 8 	imes 5 = 20 $$ units squared

Question 16

Which of the following is true about normal goods?

Accepted Answer

Demand for normal goods increases as income rises.

Question 17

If the price of an input used in the production of a good decreases, what is the likely effect on supply?

Accepted Answer

Supply increases.

Question 18

Which of the following best explains the substitution effect?

Accepted Answer

Consumers buy less of a good when its price increases, substituting other goods.

Question 19

Which of the following is a characteristic of a perfectly competitive market?

Accepted Answer

There are many buyers and sellers.

Question 20

If both the demand and supply curves shift to the right, what happens to equilibrium quantity?

Accepted Answer

Equilibrium quantity increases.

Microeconomics Foundations: Study Notes on Economic Models, Choices, and Market Equilibrium

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