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

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

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

Apple chooses to assemble iPhones in China rather than the United States. According to economic reasoning, this decision is most likely based on:

Accepted Answer

A desire to maximize profits by weighing costs and benefits.

Question 3

Which of the following is an example of a trade-off faced by society?

Accepted Answer

Increasing funding for space exploration means less funding for cancer research.

Question 4

The opportunity cost of attending college is best defined as:

Accepted Answer

The highest-valued alternative that must be given up to attend college.

Question 5

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

Accepted Answer

Deciding whether to study one more hour or watch TV instead.

Question 6

A market economy is characterized by:

Accepted Answer

Decisions made by households and firms interacting in markets.

Question 7

Which formula correctly calculates the percentage change in an economic variable?

Accepted Answer

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

Question 8

Which of the following best illustrates productive efficiency?

Accepted Answer

A firm produces cars at the lowest possible cost.

Question 9

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

$$-0.2$$

Question 10

Which of the following is an example of allocative efficiency?

Accepted Answer

Every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.

Question 11

A government imposes a tax on high incomes to fund welfare programs. This is an example of a trade-off between:

Accepted Answer

Efficiency and equity.

Question 12

Which of the following is a normative statement?

Accepted Answer

The government should increase the minimum wage to reduce poverty.

Question 13

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

Accepted Answer

Ignore all assumptions and simplifications.

Question 14

If the area of a rectangle represents total revenue, and a firm sells 125,000 bottles of Pepsi at $2.00 each, what is the total revenue?

Accepted Answer

$$250,000$$

Question 15

Which of the following best describes voluntary exchange?

Accepted Answer

Both the buyer and the seller are made better off by the transaction.

Question 16

Which of the following is an example of a positive relationship between two economic variables?

Accepted Answer

As disposable personal income increases, consumption spending also increases.

Question 17

Which of the following is a microeconomic issue?

Accepted Answer

How firms decide what prices to charge for their products.

Question 18

A non-linear cost curve for iPhone production is steeper between points C and D than between A and B. What does this indicate?

Accepted Answer

The marginal cost of production increases as more iPhones are produced.

Question 19

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.

Question 20

If the area of a triangle on a demand curve has a base of 25,000 and a height of $0.50, what is the area?

Accepted Answer

$$6,250$$

Microeconomics: Foundations and Models – Chapter 1 Study Notes

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