Q: If the area of a rectangle is used to calculate a firm's total revenue, which formula should be used?

$$\text{Area of rectangle} = \text{Base} \times \text{Height}$$

Question 1

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

Accepted Answer

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

Question 2

A market is defined as:

Accepted Answer

Any arrangement that brings together buyers and sellers of a good or service.

Question 3

Suppose a firm is deciding whether to produce an additional unit of output. The firm should produce the extra unit if:

Accepted Answer

The marginal benefit equals the marginal cost.

Question 4

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

Accepted Answer

Raising taxes on gasoline will reduce gasoline consumption.

Question 5

If the demand curve for apples is given by $$P = 100 - 0.5Q$$, what is the price when the quantity demanded is 80 units?

Accepted Answer

$$P = 40$$

Question 6

Which of the following equations represents a negative linear relationship between $$x$$ and $$y ($$assume $$a \u003e 0$$)?

Accepted Answer

$$y = 72 - 6x$$

Question 7

In the context of economic models, a hypothesis is:

Accepted Answer

A statement that may be either correct or incorrect about an economic variable.

Question 8

Which of the following best illustrates the concept of scarcity?

Accepted Answer

Consumers must make choices because resources are limited.

Question 9

If the area of a rectangle is used to calculate a firm's total revenue, which formula should be used?

Accepted Answer

$$	ext{Area of rectangle} = 	ext{Base} 	imes 	ext{Height}$$

Question 10

Suppose the supply curve for apples is upward sloping. This relationship between price and quantity supplied is:

Accepted Answer

Positive, meaning as price increases, quantity supplied increases.

Question 11

Which of the following is NOT a question that every economy must answer?

Accepted Answer

How will the government set prices for all goods and services?

Question 12

A marginal analysis involves:

Accepted Answer

Comparing marginal benefits and marginal costs.

Question 13

If a country faces the problem of allocating limited resources among competing uses, this is an example of:

Accepted Answer

Scarcity.

Question 14

Which of the following best describes a normative economic statement?

Accepted Answer

It is based on value judgments about what ought to be.

Question 15

If the marginal cost (MC) curve is upward sloping, this means:

Accepted Answer

MC is increasing as output increases.

Question 16

Suppose the demand curve for a product shifts to the right. Which of the following could explain this shift?

Accepted Answer

An increase in the price of a substitute good.

Question 17

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

Accepted Answer

Microeconomics studies individual markets and decision-makers, while macroeconomics studies the economy as a whole.

Question 18

If the slope of a cost curve is $$50$$ per hour, what is the equation for total cost $$C as a $$function of hours $$h$$, assuming a fixed cost of $$150$$?

Accepted Answer

$$C = 50h + 150$$

Question 19

Which of the following is an example of a causal relationship in economics?

Accepted Answer

An increase in the price of gasoline causes a decrease in the quantity demanded.

Question 20

If the percentage change in GDP from 2010 to 2011 is calculated as $$\frac{11,458 - 11,150}{11,150} 	imes 100\%$$, what is the result (rounded to two decimal places)?

Accepted Answer

$$2.76\%$$

Foundations of Microeconomics: Principles, Models, and Graphical Analysis

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