Question 1

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

Accepted Answer

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

Question 2

Suppose a country can produce either 10 units of wheat or 20 units of corn with its resources. What is the opportunity cost of producing 1 unit of wheat?

Accepted Answer

$$2$$ units of corn

Question 3

Which statement is a positive economic statement?

Accepted Answer

"The unemployment rate is 4%."

Question 4

If the marginal benefit ($$MB) of $$driving is less than the marginal cost ($$MC$$), what should a rational individual do?

Accepted Answer

Drive less.

Question 5

Which of the following is NOT a factor of production?

Accepted Answer

Money

Question 6

A country’s production possibilities frontier (PPF) bows outward. What does this indicate?

Accepted Answer

Opportunity cost increases as more of one good is produced.

Question 7

Liz can produce 30 salads or 30 smoothies. Joe can produce 20 salads or 6 smoothies. Who has the comparative advantage in producing salads?

Accepted Answer

Joe

Question 8

Which of the following would cause a rightward shift in the demand curve for normal goods?

Accepted Answer

An increase in consumer income.

Question 9

If the price of a substitute for energy bars falls, what happens to the demand for energy bars?

Accepted Answer

Demand for energy bars decreases.

Question 10

Which of the following best explains the law of demand?

Accepted Answer

As the price of a good falls, the quantity demanded increases.

Question 11

Suppose the marginal cost ($$MC) of $$producing pizza is $$2$$ and the marginal benefit ($$MB) is$$ $$3. $$What should the producer do?

Accepted Answer

Produce more pizza.

Question 12

Which of the following is an example of allocative efficiency?

Accepted Answer

Producing where $$MB = MC.$$

Question 13

If a firm expects the price of its product to rise in the future, what is the likely effect on current supply?

Accepted Answer

Current supply decreases.

Question 14

Which of the following is a normative statement?

Accepted Answer

"The government should lower unemployment."

Question 15

What is the main source of economic growth according to the study materials?

Accepted Answer

Expansion of the PPF through technological change and capital accumulation.

Question 16

Which of the following best describes the substitution effect?

Accepted Answer

When the price of a good rises, people buy less of it and more of its substitutes.

Question 17

A scatter diagram in economics is primarily used to:

Accepted Answer

Compare two variables to examine their relationship.

Question 18

If the marginal cost ($$MC) of $$producing an additional unit increases as output increases, this is an example of:

Accepted Answer

Increasing marginal cost.

Question 19

Which of the following institutions is essential for economic coordination?

Accepted Answer

Markets

Question 20

Suppose the government introduces a new technology that doubles the productivity of labor. What is the likely effect on the PPF?

Accepted Answer

The PPF shifts outward.

Foundations of Macroeconomics: Core Concepts, Models, and Applications

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