Q: Suppose the price of pizza decreases from $$14 to 12$$, and the quantity demanded increases from 55 to 65 per week. What is the slope of the demand curve between these two points?

$$\text{Slope} = \frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2$$

Question 1

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

Accepted Answer

Scarcity means that resources are limited and cannot satisfy all human wants.

Question 2

A government decides to increase spending on healthcare, which results in less funding for education. This situation is an example of:

Accepted Answer

A trade-off, because increasing one activity means decreasing another due to limited resources.

Question 3

Which of the following statements is an example of positive analysis?

Accepted Answer

Raising the minimum wage will increase unemployment among teenagers.

Question 4

Suppose a firm is deciding whether to produce one more unit of a good. The marginal benefit (MB) of producing the unit is $$10, and the marginal cost (MC) is 8. $$According to marginal analysis, what should the firm do?

Accepted Answer

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

Question 5

Which of the following best defines opportunity cost?

Accepted Answer

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

Question 6

A market economy is characterized by:

Accepted Answer

Decisions made by households and firms interacting in markets.

Question 7

Which of the following is a key source of productive efficiency in a market economy?

Accepted Answer

Competition among firms.

Question 8

If the area of a rectangle on a graph represents a firm's total revenue, and the base is the quantity sold ($$Q) $$and the height is the price ($$P$$), which formula correctly calculates total revenue?

Accepted Answer

$$TR = Q 	imes P$$

Question 9

A centrally planned economy differs from a market economy in that:

Accepted Answer

The government decides how resources are allocated.

Question 10

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

Accepted Answer

The government should provide free healthcare to all citizens.

Question 11

Suppose the price of pizza decreases from $$14 to 12$$, and the quantity demanded increases from 55 to 65 per week. What is the slope of the demand curve between these two points?

Accepted Answer

$$	ext{Slope} = \frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2$$

Question 12

Which of the following best describes allocative efficiency?

Accepted Answer

Production is in accordance with consumer preferences, where $$MB = MC$$ for the last unit produced.

Question 13

A new government policy unintentionally causes colleges to increase tuition. This is an example of:

Accepted Answer

An unintended consequence due to changing economic incentives.

Question 14

Which of the following is NOT a step in building an economic model?

Accepted Answer

Ignoring all available data to avoid bias.

Question 15

If real GDP increased from $$19,610$$ billion in 2021 to $$20,018$$ billion in 2022, what is the percentage change in real GDP?

Accepted Answer

$$\frac{20,018 - 19,610}{19,610} 	imes 100 = 2.1\%$$

Question 16

Which of the following is a microeconomic issue?

Accepted Answer

How a firm decides what price to charge for its products.

Question 17

Voluntary exchange in markets leads to which of the following outcomes?

Accepted Answer

Both buyers and sellers are made better off by the transaction.

Question 18

Which of the following is an example of capital in economics?

Accepted Answer

A factory used to produce cars.

Question 19

If the area of a triangle on a graph is used to represent a certain economic value, and the base is $$25,000$$ and the height is $$0.50$$, what is the area?

Accepted Answer

$$\frac{1}{2} 	imes 25,000 	imes 0.50 = 6,250$$

Question 20

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual households and firms, while macroeconomics studies the economy as a whole.

Foundations of Economics: Key Concepts, Models, and Methods

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