Q: Which formula correctly calculates the percentage change in an economic variable?

$$ \frac{\text{Value in the second period} - \text{Value in the first period}}{\text{Value in the first period}} \times 100 $$

Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

A government decides to increase funding for space exploration. According to economic theory, what is the opportunity cost of this decision?

Accepted Answer

The highest-valued alternative that must be given up, such as funding for cancer research.

Question 3

Which of the following statements is an example of a positive economic analysis?

Accepted Answer

"Raising the minimum wage will increase the income of some workers."

Question 4

Suppose a firm can produce a product using either more labor and less machinery, or more machinery and less labor. What economic concept does this scenario illustrate?

Accepted Answer

Trade-off in production methods due to scarcity of resources.

Question 5

Which of the following is a key assumption in most economic models?

Accepted Answer

People respond to economic incentives.

Question 6

A student is deciding whether to spend an extra hour studying or watching TV. According to marginal analysis, what should the student consider?

Accepted Answer

The marginal benefit and marginal cost of studying for one more hour.

Question 7

Which of the following best defines a mixed economy?

Accepted Answer

An economy in which most decisions result from the interaction of buyers and sellers in markets, but the government plays a significant role.

Question 8

What is the main source of productive efficiency in a market economy?

Accepted Answer

Competition among firms.

Question 9

Which formula correctly calculates the percentage change in an economic variable?

Accepted Answer

$$ \frac{	ext{Value in the second period} - 	ext{Value in the first period}}{	ext{Value in the first period}} 	imes 100 $$

Question 10

A market is defined as:

Accepted Answer

A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade.

Question 11

Which of the following is an example of allocative efficiency?

Accepted Answer

A bakery produces bread up to the point where the last loaf provides a marginal benefit to consumers equal to the marginal cost of producing it.

Question 12

If a government imposes a tariff on imported goods, what is a likely unintended consequence according to economic analysis?

Accepted Answer

The losses to consumers typically outweigh the gains to producers and government.

Question 13

Which of the following is a normative statement?

Accepted Answer

"The government should reduce unemployment."

Question 14

What is the area of a rectangle representing a firm's total revenue on a graph?

Accepted Answer

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

Question 15

Which of the following best describes voluntary exchange?

Accepted Answer

A situation in which both the buyer and the seller of a product are made better off by the transaction.

Question 16

A line on a graph has a slope calculated as:

Accepted Answer

$$ \frac{	ext{Change in value on the y-axis}}{	ext{Change in value on the x-axis}} $$

Question 17

Which of the following is NOT a reason why market outcomes may not be fully efficient?

Accepted Answer

All market participants always have perfect information.

Question 18

Which of the following is an example of a trade-off?

Accepted Answer

A student spends more time studying and less time working at a job.

Question 19

What is the main difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual households and firms, while macroeconomics studies the economy as a whole.

Microeconomics Chapter 1: Economics—Foundations and Models

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