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

Suppose a student spends $$\8$$,000$$ per year on tuition and books for four years, and could have earned $$\$$25,000$$ per year working instead. What is the total opportunity cost of obtaining the degree?

Accepted Answer

$$\132$$,000$

Question 3

If the price of a slice of pizza is $$\2$ and the price of a beer is $$\$$4$$, and a consumer has $$\16$ to spend, which equation represents the consumer's budget line?

Accepted Answer

$$16 = 4Q_b + 2Q_p$$

Question 4

On a budget line graph, what do points inside the budget line represent?

Accepted Answer

Attainable combinations of goods.

Question 5

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

Accepted Answer

Money

Question 6

If a country shifts resources from producing investment goods to producing more consumption goods, what is the opportunity cost?

Accepted Answer

The reduction in the production of investment goods.

Question 7

A production possibilities boundary (PPB) that is concave to the origin illustrates which economic principle?

Accepted Answer

Increasing opportunity cost.

Question 8

Which of the following would cause an outward shift of the production possibilities boundary (PPB)?

Accepted Answer

An advance in technology.

Question 9

In a mixed economy, which of the following is true?

Accepted Answer

Some economic decisions are determined by the market and some by the government.

Question 10

Karl Marx argued that free-market economies could not be relied upon to generate which of the following?

Accepted Answer

A 'just' distribution of output.

Question 11

If a technological advance increases productivity only in food production, how will the PPB shift?

Accepted Answer

Outward only in food, not in clothing.

Question 12

Which of the following is an example of a consumption good?

Accepted Answer

A loaf of bread

Question 13

What does the slope of the budget line represent?

Accepted Answer

The opportunity cost of one good in terms of the other.

Question 14

Which of the following is a key government-provided institution in market economies?

Accepted Answer

Private property

Question 15

If a consumer wants to buy 2 beers ($$Q_b = 2) $$and the price of beer is $$\4$, how many slices of pizza (Q_p$) can they buy with $$\$$16 if $$pizza costs $$\2$ per slice?

Accepted Answer

$$Q_p = 4$$

Question 16

Which of the following is NOT a type of economic system described in the study materials?

Accepted Answer

Market socialism

Question 17

What is the main reason opportunity cost increases along a typical PPB?

Accepted Answer

Resources are not equally useful in producing all goods.

Question 18

Which of the following is a function of government in a modern mixed economy?

Accepted Answer

Providing public goods

Question 19

If a point lies outside the production possibilities boundary (PPB), what does this indicate?

Accepted Answer

Unattainable combination of goods

Question 20

Which of the following best describes specialization of labor?

Accepted Answer

Workers focus on a specific task to increase efficiency.

Introduction to Microeconomics: Scarcity, Choice, and Economic Systems

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