Q: What is the formula for calculating percentage change?

Percentage change = $$\frac{\text{New Value} - \text{Old Value}}{\text{Old Value}} \times 100$$

Q: What is the area of a rectangle representing total revenue if a firm sells 125,000 bottles at $2.00 per bottle?

Total revenue = $$125,000 \times 2.00 = 250,000$$

Question 1

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

Accepted Answer

The highest-valued alternative that must be given up to engage in an activity.

Question 2

A firm is deciding whether to produce its goods using more machines or more workers. This decision is most closely related to which fundamental economic question?

Accepted Answer

How will the goods and services be produced?

Question 3

If the price of pizza decreases from $$14 to 12 $$and the quantity demanded increases from 55 to 65 per week, what is the slope of the demand curve?

Accepted Answer

The slope is $$\frac{-2}{10}.$$

Question 4

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

Accepted Answer

Choosing to fund cancer research instead of space exploration.

Question 5

What is the formula for calculating percentage change?

Accepted Answer

Percentage change = $$\frac{	ext{New Value} - 	ext{Old Value}}{	ext{Old Value}} 	imes 100$$

Question 6

Which of the following best illustrates allocative efficiency?

Accepted Answer

Production is in accordance with consumer preferences, and every good or service is produced up to the point where the last unit provides a marginal benefit equal to the marginal cost.

Question 7

A government imposes a tariff on imported goods. According to economic theory, what is the likely outcome?

Accepted Answer

The losses to losers typically outweigh the gains to winners.

Question 8

Which of the following is NOT a key assumption in economic models?

Accepted Answer

People always act irrationally.

Question 9

What is the area of a rectangle representing total revenue if a firm sells 125,000 bottles at $2.00 per bottle?

Accepted Answer

Total revenue = $$125,000 	imes 2.00 = 250,000$$

Question 10

Which of the following is an example of positive analysis?

Accepted Answer

Studying the effect of a minimum wage increase on unemployment rates.

Question 11

If the price of hamburgers increases from $$1.50 to 2.00$$, what happens to the demand curve for pizza, holding all else constant?

Accepted Answer

The demand curve for pizza shifts to the right.

Question 12

Which of the following best describes a mixed economy?

Accepted Answer

An economy where buyers and sellers interact in markets, but the government plays a significant role in resource allocation.

Question 13

What is the formula for the area of a triangle, as used in economic graphs?

Accepted Answer

Area = $$\frac{1}{2} 	imes 	ext{base} 	imes 	ext{height}$$

Question 14

Which of the following is a problem when using graphs to determine cause and effect?

Accepted Answer

Graphs can be misleading due to omitted variables or reverse causality.

Question 15

If a curve representing total cost of production is nonlinear, how can you measure the slope at a specific point?

Accepted Answer

By measuring the slope of a tangent line at that point.

Question 16

Which of the following is a real-world example of people responding to economic incentives?

Accepted Answer

Convicted felons are less likely to reoffend when DNA samples are required.

Question 17

Which of the following is NOT a skill gained from studying economics?

Accepted Answer

Describing how to fix problems in a house.

Question 18

What is the main difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual markets and choices, while macroeconomics studies the economy as a whole.

Question 19

If a firm wants to maximize productive efficiency, what should it focus on?

Accepted Answer

Producing every good or service at the lowest possible cost.

Question 20

Which of the following is an example of voluntary exchange?

Accepted Answer

A buyer and seller both benefit from a transaction.

Microeconomics Foundations and Models: Chapter 1 Study Guide

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