Question 1

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

Accepted Answer

The highest valued alternative that is given up to engage in an activity.

Question 2

Suppose a country can produce either 100 units of wheat or 200 units of corn with its available resources. What is the opportunity cost of producing 1 unit of wheat?

Accepted Answer

$$\frac{2}{1}$$ units of corn

Question 3

Which of the following statements is a normative statement?

Accepted Answer

"The government should provide free healthcare to all citizens."

Question 4

If the price of a good increases and the quantity demanded decreases, this is an example of:

Accepted Answer

A movement along the demand curve

Question 5

A binding price ceiling is likely to result in which of the following market outcomes?

Accepted Answer

A shortage of the good

Question 6

Suppose the price elasticity of demand for a product is $$ED = -2. If $$the price increases by 10%, what is the expected percentage change in quantity demanded?

Accepted Answer

$$-20\%$$

Question 7

If the cross-price elasticity of demand between two goods is $$EC = 1.5$$, what does this imply about the relationship between the two goods?

Accepted Answer

They are substitutes.

Question 8

A firm faces the following scenario: If it increases production from 100 to 120 units, its total revenue rises from $$\1$$,000$$ to $$\$$1,080. $$What is the marginal revenue for the additional 20 units?

Accepted Answer

$$\4$ per unit

Question 9

Which of the following best illustrates the law of supply?

Accepted Answer

As the price of smartphones increases, manufacturers produce more smartphones.

Question 10

If a good has an income elasticity of demand $$EI = -0.8$$, which of the following is true?

Accepted Answer

It is an inferior good.

Question 11

A government imposes a tax on a good. If the demand for the good is perfectly inelastic and the supply is elastic, who bears the entire burden of the tax?

Accepted Answer

Consumers

Question 12

Which of the following is an example of a positive incentive?

Accepted Answer

A bonus for employees who exceed sales targets

Question 13

Suppose the price elasticity of supply for a product is $$ES = 0.5. $$How would you describe the supply of this product?

Accepted Answer

Relatively inelastic

Question 14

If a country can produce either 10 cars or 20 trucks with its resources, and another country can produce either 8 cars or 16 trucks, which country has a comparative advantage in producing cars?

Accepted Answer

Both countries have the same opportunity cost, so neither has a comparative advantage in cars.

Question 15

Which of the following best describes the concept of marginal thinking?

Accepted Answer

Evaluating whether the benefit of acquiring one more unit is greater than its cost.

Question 16

A price floor set above the equilibrium price will likely result in:

Accepted Answer

A surplus

Question 17

If the government imposes a binding price ceiling on gasoline during a natural disaster, what is the most likely immediate effect?

Accepted Answer

A shortage of gasoline will occur.

Question 18

Which of the following is an example of a change in demand rather than a change in quantity demanded?

Accepted Answer

A new study reveals health benefits of the good, increasing consumer preference.

Question 19

If the total surplus in a market is maximized, which of the following is true?

Accepted Answer

The market is efficient.

Question 20

Suppose a 10% increase in income leads to a 15% increase in the quantity demanded of a good. What is the income elasticity of demand, and how would you classify the good?

Accepted Answer

$$EI = 1.5$$, the good is a luxury.

Microeconomics Foundations: Key Concepts, Models, and Market Dynamics

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