Question 1

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

Accepted Answer

The value of the next best alternative forgone when making a decision.

Question 2

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

Accepted Answer

$$ 2 $$ units of corn

Question 3

Which of the following is NOT one of the basic questions of economics?

Accepted Answer

How much profit should firms make?

Question 4

If the price of coffee increases and the demand for tea increases, coffee and tea are most likely:

Accepted Answer

Substitute goods

Question 5

Which of the following would cause a shift in the supply curve for smartphones to the right?

Accepted Answer

A technological advancement in smartphone production

Question 6

What is the difference between a change in quantity demanded and a change in demand?

Accepted Answer

A change in quantity demanded is caused by a change in price, while a change in demand is caused by non-price factors.

Question 7

If the equilibrium price of apples is $$2 per pound and the government sets a price ceiling at 1.50 $$per pound, what is the likely result?

Accepted Answer

A shortage of apples

Question 8

Which equation represents the law of demand?

Accepted Answer

$$ Q_d = a - bP $$

Question 9

A decrease in the price of gasoline leads to an increase in the demand for SUVs. This is an example of:

Accepted Answer

Complementary goods

Question 10

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

Accepted Answer

Macroeconomics studies the economy as a whole, while microeconomics studies individual markets and agents.

Question 11

If the supply of oranges decreases due to a hurricane, what happens to the equilibrium price and quantity?

Accepted Answer

Price increases, quantity decreases

Question 12

Given the following demand and supply equations: $$ Q_d = 50 - 2P $$ and $$ Q_s = 10 + 3P $$, what is the equilibrium price?

Accepted Answer

$$ P = 8 $$

Question 13

Which of the following would NOT cause a shift in the demand curve for pizza?

Accepted Answer

A change in the price of pizza

Question 14

If both supply and demand for a product increase simultaneously, what happens to equilibrium quantity and price?

Accepted Answer

Equilibrium quantity increases, price is indeterminate

Question 15

Which of the following best describes a production possibilities curve (PPC)?

Accepted Answer

A graph showing the maximum combinations of two goods that can be produced with available resources and technology.

Question 16

If a country is operating inside its production possibilities curve, what does this indicate?

Accepted Answer

Inefficient use of resources

Question 17

Suppose the price of a normal good increases. What is the expected effect on quantity demanded?

Accepted Answer

Quantity demanded decreases

Question 18

Which of the following is a reason for a supply curve to shift to the left?

Accepted Answer

A decrease in technology

Question 19

If the government imposes a price floor above the equilibrium price, what is the likely market outcome?

Accepted Answer

A surplus

Question 20

Given the following table of prices and quantities demanded, plot the demand curve and identify its slope:

| Price ($) | Quantity Demanded |
|----------|------------------|
| 10       | 20               |
| 8        | 30               |
| 6        | 40               |
| 4        | 50               |

What is the slope of the demand curve?

Accepted Answer

$$ -2.5 $$

Macroeconomics Exam 1 Study Guide: Core Concepts and Applications

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