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. What is the opportunity cost of producing one unit of wheat?

Accepted Answer

$$ 2 $$ units of corn

Question 3

Which statement is a positive economic statement?

Accepted Answer

"Raising the minimum wage will increase unemployment among teenagers."

Question 4

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

Accepted Answer

Demand for the original good will increase.

Question 5

A production possibilities frontier (PPF) that is bowed outward illustrates which economic concept?

Accepted Answer

Increasing opportunity cost.

Question 6

Which of the following would cause a movement along the demand curve for coffee?

Accepted Answer

A decrease in the price of coffee.

Question 7

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

Accepted Answer

Equilibrium quantity increases, but the effect on price is indeterminate.

Question 8

Suppose the price elasticity of demand for a product is $$ -1.5 . If $$the price increases by 10%, what is the expected percentage change in quantity demanded?

Accepted Answer

$$ -15\% $$

Question 9

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

Accepted Answer

Money

Question 10

A country can produce 40 cars or 80 trucks. Another country can produce 30 cars or 60 trucks. Which country has the absolute advantage in producing cars?

Accepted Answer

The first country

Question 11

If a good has an income elasticity of demand of $$ 2.0 $$, what type of good is it?

Accepted Answer

Luxury good

Question 12

Which of the following would shift the supply curve for wheat to the right?

Accepted Answer

An improvement in farming technology.

Question 13

If the cross-price elasticity of demand between two goods is $$ -0.8 $$, what does this indicate?

Accepted Answer

The goods are complements.

Question 14

Which of the following best describes economic efficiency?

Accepted Answer

Allocating resources so that no one can be made better off without making someone else worse off.

Question 15

A market is in equilibrium when:

Accepted Answer

Quantity demanded equals quantity supplied.

Question 16

If the government enforces strong property rights, what is the most likely effect on economic growth?

Accepted Answer

Economic growth will increase due to greater investment incentives.

Question 17

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

Accepted Answer

"The government should reduce taxes to stimulate growth."

Question 18

If a firm faces a perfectly elastic demand curve, what happens to its total revenue if it increases its price?

Accepted Answer

Total revenue decreases to zero.

Question 19

Which of the following is NOT a determinant of price elasticity of demand?

Accepted Answer

The cost of production

Question 20

Suppose the demand for a product is given by $$ Q_d = 100 - 2P $$ and the supply is $$ Q_s = 20 + 3P . $$What is the equilibrium price?

Accepted Answer

$$ P = 16 $$

Foundations of Microeconomics: Core Concepts and Principles

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