Question 1

Which of the following points on a Production Possibilities Frontier (PPF) represents an inefficient use of resources?

Accepted Answer

A point below the PPF curve

Question 2

If a country moves from producing 2 million cars and 4 million fries to 20 million cars and 12 million fries, what is the opportunity cost of producing 18 million more cars?

Accepted Answer

4 million fries

Question 3

Which of the following best describes the law of demand?

Accepted Answer

As price decreases, people buy more

Question 4

Suppose a country can produce either 10 units of Good A or 20 units of Good B. What is the opportunity cost of producing one unit of Good A?

Accepted Answer

$$ 2 $$ units of Good B

Question 5

Which of the following would cause a shift of the demand curve to the right?

Accepted Answer

An increase in consumer tastes for the good

Question 6

If the supply of a product increases due to improved technology, what happens to the supply curve?

Accepted Answer

It shifts to the right

Question 7

Which of the following statements about comparative advantage is correct?

Accepted Answer

A country has comparative advantage if it can produce a good at a lower opportunity cost than another country

Question 8

At market equilibrium, which of the following is true?

Accepted Answer

Quantity demanded equals quantity supplied

Question 9

If the price of Pepsi increases, what is likely to happen to the demand for Coke?

Accepted Answer

Demand for Coke will increase

Question 10

Which of the following is NOT a factor that shifts the supply curve?

Accepted Answer

Consumer tastes

Question 11

Suppose the PPF for a country is bowed outward. What does this indicate about opportunity costs?

Accepted Answer

Opportunity cost increases as more of a good is produced

Question 12

If a country is operating at a point above its PPF, what does this imply?

Accepted Answer

The country is producing at an unattainable level with current resources

Question 13

Which of the following would cause a leftward shift in the supply curve for smartphones?

Accepted Answer

A decrease in technology

Question 14

If the price of a good is set below equilibrium, what is likely to occur?

Accepted Answer

A shortage

Question 15

Which of the following is an example of a complement in demand?

Accepted Answer

Left shoe and right shoe

Question 16

If the opportunity cost of producing fries increases, what happens to the PPF?

Accepted Answer

It becomes steeper

Question 17

Which of the following is true about absolute advantage?

Accepted Answer

It is based on who can produce more of a good with the same resources

Question 18

If the demand for a product increases while supply remains constant, what happens to equilibrium price and quantity?

Accepted Answer

Price increases, quantity increases

Question 19

Which of the following is a result of a rightward shift in the supply curve?

Accepted Answer

Equilibrium price decreases

Question 20

If a country can produce 100 units of wheat or 50 units of corn, what is the opportunity cost of producing one unit of corn?

Accepted Answer

$$ 2 $$ units of wheat

Microeconomics Study Guide: Core Concepts and Applications

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