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 you spend $$4 on pizza and can afford 2 slices. If the price drops to 2 $$per slice, you can now afford 4 slices with the same $8. What economic concept does this scenario illustrate?

Accepted Answer

Income effect

Question 3

Which of the following is an example of a microeconomic issue?

Accepted Answer

A family deciding whether to buy a new car or save money.

Question 4

If a country can produce more of a good using the same amount of resources compared to another country, it is said to have:

Accepted Answer

Absolute advantage

Question 5

Which of the following would cause a shift in the demand curve for coffee?

Accepted Answer

An increase in consumer income.

Question 6

The law of demand states that, ceteris paribus:

Accepted Answer

As the price of a good increases, the quantity demanded decreases.

Question 7

Which of the following is NOT an assumption of the production possibilities frontier (PPF)?

Accepted Answer

Resources can be increased at any time.

Question 8

If the opportunity cost of producing wheat is lower in Country A than in Country B, then Country A has:

Accepted Answer

Comparative advantage in wheat production.

Question 9

Which of the following factors would likely increase the supply of a good?

Accepted Answer

A positive technological change.

Question 10

Suppose the price of Pepsi increases. According to the concept of related goods, what is likely to happen to the demand for Coke?

Accepted Answer

Demand for Coke will increase.

Question 11

Which of the following best illustrates the substitution effect?

Accepted Answer

Consumers switch to a cheaper alternative when the price of their preferred good rises.

Question 12

A movement along the demand curve is caused by:

Accepted Answer

A change in the price of the good.

Question 13

Which of the following is a function of private property rights in economics?

Accepted Answer

They allow individuals or firms to own, control, use, and transfer resources.

Question 14

If the government sets a price ceiling below the equilibrium price, what is the likely result?

Accepted Answer

A shortage of the good.

Question 15

Which equation represents the opportunity cost of producing one unit of good X in terms of good Y?

Accepted Answer

$$OC_{X} = \frac{	ext{Units of Y forgone}}{	ext{Units of X gained}}$$

Question 16

Which of the following would cause a decrease in supply?

Accepted Answer

A negative technological change.

Question 17

In a centrally planned economy, who decides how economic resources will be allocated?

Accepted Answer

The government.

Question 18

Which of the following is NOT a factor that shifts market demand?

Accepted Answer

Price of the good itself.

Question 19

If a producer expects future prices to rise, what is the likely effect on current supply?

Accepted Answer

Current supply will decrease.

Question 20

Which of the following best describes the law of supply?

Accepted Answer

As the price of a good increases, the quantity supplied increases.

Microeconomics: Core Concepts, Principles, and Applications

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