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 refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

Apple designs its iPhones in the United States but assembles them in China. Which economic concept does this scenario best illustrate?

Accepted Answer

The concept of trade-offs due to scarcity of resources.

Question 3

Which of the following is NOT one of the three key economic ideas?

Accepted Answer

All decisions are made by the government.

Question 4

A student is deciding whether to study for an extra hour or watch TV. According to economic theory, what should the student compare?

Accepted Answer

The marginal benefit and marginal cost of studying for an extra hour.

Question 5

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 6

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

Accepted Answer

"Higher tariffs will reduce imports."

Question 7

In a market economy, which of the following best explains why productive efficiency is achieved?

Accepted Answer

Because competition among firms leads to production at the lowest possible cost.

Question 8

Suppose the price of hamburgers increases from $$1.50 to 2.00$$, and as a result, the quantity of pizzas demanded increases from 55 to 65 per week. What is the slope of the line connecting these two points?

Accepted Answer

Question 9

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

Accepted Answer

Microeconomics studies individual households and firms, while macroeconomics studies aggregate phenomena like inflation and unemployment.

Question 10

Which of the following is an example of opportunity cost?

Accepted Answer

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

Question 11

A government imposes a tariff on imported steel. According to economic theory, what is a likely unintended consequence?

Accepted Answer

Consumers may face higher prices for steel products.

Question 12

Which of the following is a normative statement?

Accepted Answer

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

Question 13

Which of the following is a reason why market outcomes may not be fully efficient?

Accepted Answer

Governments may interfere with market outcomes.

Question 14

If a firm wants to maximize its profits, which behavioral assumption is the economist making?

Accepted Answer

Firms act to maximize their profits.

Question 15

Which of the following is the formula for the area of a rectangle, as used to calculate total revenue?

Accepted Answer

$$ 	ext{Area} = 	ext{Base} 	imes 	ext{Height} $$

Question 16

Which of the following is true about voluntary exchange in market economies?

Accepted Answer

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

Question 17

If the marginal benefit of producing one more unit of a good is less than the marginal cost, what should a rational firm do?

Accepted Answer

Decrease production.

Question 18

Which of the following is a trade-off faced by governments when designing tax policy?

Accepted Answer

Between efficiency and equity.

Question 19

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

Accepted Answer

Ignore the results of statistical analysis.

Question 20

If the area of a triangle is used to represent a change in total revenue, which formula should be used?

Accepted Answer

$$ 	ext{Area} = \frac{1}{2} 	imes 	ext{Base} 	imes 	ext{Height} $$

Foundations of Economics: Key Concepts, Models, and Methods

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