Question 1

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

Accepted Answer

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

Question 2

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

Accepted Answer

$$2$$ units of good Y

Question 3

Which of the following statements is an example of positive economics?

Accepted Answer

"Raising taxes will increase government revenue."

Question 4

According to the rationality assumption in economics, individuals:

Accepted Answer

Make choices intended to bring improvement based on available information.

Question 5

If the expected marginal benefit ($$EMB) of an $$activity is less than the expected marginal cost ($$EMC$$), what should a rational individual do?

Accepted Answer

Decrease the activity.

Question 6

Which of the following is NOT a characteristic of a mixed economic system?

Accepted Answer

Centralized government planning of all resources.

Question 7

A country has a comparative advantage in producing a good if:

Accepted Answer

It can produce the good at a lower opportunity cost than other countries.

Question 8

Refer to the Production Possibilities Curve (PPC) shown in the image. What does a point inside the curve (such as point C) represent?

Accepted Answer

An inefficient use of resources.

Question 9

Which of the following is a function of the price system in a market economy?

Accepted Answer

To coordinate the actions of buyers and sellers through changes in prices.

Question 10

In the circular flow diagram, which of the following best describes the flow of money from households to firms?

Accepted Answer

Households pay firms for goods and services in the product market.

Question 11

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

Accepted Answer

"The government ought to provide universal healthcare."

Question 12

If a government prints too much money, which of the following is the most likely result according to macroeconomic principles?

Accepted Answer

An increase in the price level (inflation).

Question 13

Which of the following best illustrates the concept of trade-offs?

Accepted Answer

A student spends more time studying economics and less time studying history.

Question 14

Which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 15

Suppose the marginal benefit ($$MB) of $$producing one more unit of a good is $$10$$, and the marginal cost ($$MC) is$$ $$8. $$According to marginal analysis, what should the firm do?

Accepted Answer

Produce more units.

Question 16

Which of the following is a likely result of specialization in production?

Accepted Answer

Increased efficiency and greater output.

Question 17

In a socialist economic system, which of the following is true?

Accepted Answer

The government sets prices and allocates profits.

Question 18

Which of the following best explains why scarcity exists?

Accepted Answer

Resources are limited, but wants are unlimited.

Question 19

If a point lies outside the production possibilities curve (such as point W in the diagram), what does this indicate?

Accepted Answer

The combination is currently unattainable with available resources.

Question 20

Which of the following is a real-world example of opportunity cost?

Accepted Answer

A company uses its factory to produce cars instead of trucks; the trucks not produced are the opportunity cost.

Foundations of Macroeconomics: Principles, Scarcity, and Economic Systems

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