Question 1

Suppose a country can produce only two goods: wheat and cars. If the opportunity cost of producing one car is 4 tons of wheat, what is the opportunity cost of producing one ton of wheat?

Accepted Answer

$$\frac{1}{4}$$

Question 2

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

Accepted Answer

The value of the next best alternative foregone when a choice is made.

Question 3

A point inside the Production Possibilities Frontier (PPF) represents:

Accepted Answer

A feasible but inefficient allocation of resources.

Question 4

If the price of a substitute good increases, what is the likely effect on the demand curve for the original good?

Accepted Answer

The demand curve shifts up and right.

Question 5

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

Accepted Answer

A decrease in the ability to produce the good.

Question 6

A government imposes a price ceiling below the equilibrium price in a competitive market. What is the most likely outcome?

Accepted Answer

A shortage of the good.

Question 7

Which of the following best explains why correlation does not always imply causation?

Accepted Answer

Because a third, unobserved variable may be influencing both variables.

Question 8

Suppose the labor demand curve for a firm is given by $$w = 20 - 0.1L. If $$the wage increases from $$w = 12 to$$ $$w = 13$$, how does the quantity of labor demanded change?

Accepted Answer

It decreases by 10 units.

Question 9

Which of the following would shift the labor supply curve up and right?

Accepted Answer

A decrease in home demand.

Question 10

If the government increases the legal minimum wage, what is the immediate effect in the labor market?

Accepted Answer

A movement along the labor demand curve, downward.

Question 11

Which of the following is included in the calculation of GDP using the expenditure approach?

Accepted Answer

Government spending on goods and services.

Question 12

Given the production function $$Y = F(K, L, A)$$, which of the following will NOT increase output $$Y$$?

Accepted Answer

A decrease in technology $$A.$$

Question 13

If the Consumer Price Index (CPI) increases by 5% in a year, what is the inflation rate for that year?

Accepted Answer

$$5\%$$

Question 14

Which of the following is true about the current account (CA)?

Accepted Answer

A negative CA means the country is going into debt to foreigners.

Question 15

A bank's balance sheet shows assets of $$100$$ million, liabilities of $$90$$ million, and equity of $$10$$ million. If the required reserve ratio is $$10\%$$, what is the minimum amount of reserves the bank must hold?

Accepted Answer

$$9$$ million

Question 16

Which of the following is a likely short-run effect of a technological improvement in an industry?

Accepted Answer

Some workers may lose their jobs.

Question 17

If the price of a complement good decreases, what happens to the demand for the original good?

Accepted Answer

Demand increases (shifts up and right).

Question 18

Which of the following best defines 'deadweight loss' in a market?

Accepted Answer

The reduction in total surplus due to market inefficiency.

Question 19

Suppose the government imposes a tax on a good. What is a likely effect?

Accepted Answer

The equilibrium price paid by buyers increases.

Question 20

Which of the following is a component of the labor force?

Accepted Answer

Unemployed individuals actively seeking work.

Microeconomics Study Guide: Opportunity Cost, PPF, Markets, Labor, and Surplus

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