Q: Suppose a country can produce either 100 units of wheat or 200 units of corn with its resources. If it chooses to produce 60 units of wheat, what is the opportunity cost in terms of corn?

$$\text{Opportunity cost} = \frac{200}{100} \times 60 = 120$$ units of corn

Q: If the area of a triangle is calculated as $$\frac{1}{2} \times \text{base} \times \text{height}$$, what is the area of a triangle with a base of 30 and a height of 10?

$$\frac{1}{2} \times 30 \times 10 = 150$$

Question 1

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

Accepted Answer

The value of the next best alternative that is forgone to obtain something.

Question 2

A production possibilities frontier (PPF) is bowed outward from the origin. What does this shape indicate about opportunity costs?

Accepted Answer

Opportunity costs increase as more of one good is produced.

Question 3

Suppose a country can produce either 100 units of wheat or 200 units of corn with its resources. If it chooses to produce 60 units of wheat, what is the opportunity cost in terms of corn?

Accepted Answer

$$	ext{Opportunity cost} = \frac{200}{100} 	imes 60 = 120$$ units of corn

Question 4

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

Accepted Answer

Raising taxes will reduce consumer spending.

Question 5

In a market economy, how are resources primarily allocated?

Accepted Answer

By the interaction of households and firms in markets.

Question 6

If the slope of a line on a graph is calculated as $$\frac{\Delta y}{\Delta x}$$, what is the slope between the points (55, 14) and (65, 12)?

Accepted Answer

$$\frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2$$

Question 7

Which of the following best describes allocative efficiency?

Accepted Answer

When marginal benefit equals marginal cost for the last unit produced.

Question 8

A government decides to redistribute income to achieve greater equity. What is a likely trade-off of this policy?

Accepted Answer

Reduced economic efficiency.

Question 9

If the area of a triangle is calculated as $$\frac{1}{2} 	imes 	ext{base} 	imes 	ext{height}$$, what is the area of a triangle with a base of 30 and a height of 10?

Accepted Answer

$$\frac{1}{2} 	imes 30 	imes 10 = 150$$

Question 10

Which of the following is NOT an assumption economists typically make when analyzing markets?

Accepted Answer

People always act in the interest of society as a whole.

Question 11

A country is currently producing on its PPF. What does this imply about its resource use?

Accepted Answer

All resources are being used efficiently.

Question 12

If U.S. real GDP decreased from $$19,092$$ billion to $$18,426$$ billion, what is the percentage change? Use the formula $$\frac{	ext{Value in the second period} - 	ext{Value in the first period}}{	ext{Value in the first period}} 	imes 100.$$

Accepted Answer

$$\frac{18,426 - 19,092}{19,092} 	imes 100 = -3.5\%$$

Question 13

Which of the following is an example of marginal analysis?

Accepted Answer

Comparing the additional benefit and additional cost of producing one more unit of a good.

Question 14

Which type of economy relies primarily on government decisions to allocate resources?

Accepted Answer

Centrally planned economy

Question 15

If the equation of a line is $$y = mx + b$$, and the slope $$m = -0.2$$ and $$b = 20$$, what is $$y$$ when $$x = 50$$?

Accepted Answer

$$y = -0.2 	imes 50 + 20 = 10$$

Question 16

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

Accepted Answer

Microeconomics studies individual decision making and specific markets, while macroeconomics studies the economy as a whole.

Question 17

If the price of hamburgers increases, what is likely to happen to the demand curve for pizza, assuming pizza and hamburgers are substitutes?

Accepted Answer

The demand curve for pizza will shift to the right.

Question 18

Which of the following statements about efficiency and equity is correct?

Accepted Answer

There is often a trade-off between efficiency and equity.

Question 19

If a non-linear cost curve becomes steeper as output increases, what does this indicate about marginal cost?

Accepted Answer

Marginal cost is increasing.

Question 20

Which of the following is a normative statement?

Accepted Answer

The government should reduce income inequality.

Foundations of Microeconomics: Key Concepts and Graphical Analysis

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