Question 1

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

Accepted Answer

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

Question 2

Suppose a country can produce either 10 units of wheat or 20 units of electronics with all its resources. What is the opportunity cost of producing one unit of wheat?

Accepted Answer

$$2$$ units of electronics

Question 3

Which statement best illustrates the law of increasing opportunity cost?

Accepted Answer

As more of a good is produced, the opportunity cost of producing additional units increases.

Question 4

A point inside the production possibilities frontier (PPF) represents:

Accepted Answer

Underutilization of resources.

Question 5

If Canada has an absolute advantage in both wheat and electronics production compared to Japan, but Japan has a lower opportunity cost in electronics, which country should specialize in electronics according to comparative advantage?

Accepted Answer

Japan

Question 6

Which of the following is NOT a key economic question every society must answer?

Accepted Answer

How much profit will be made?

Question 7

Marginal analysis involves:

Accepted Answer

Comparing marginal benefits and marginal costs.

Question 8

Which of the following best describes a market economy?

Accepted Answer

An economy where decisions are decentralized and made by buyers and sellers.

Question 9

Entrepreneurs play a crucial role in the market system by:

Accepted Answer

Organizing resources and taking risks to create goods and services.

Question 10

If a consumer decides to buy a product because its price has decreased, this is an example of:

Accepted Answer

Responding to incentives.

Question 11

Suppose the PPF for a country is bowed outward. What does this shape indicate?

Accepted Answer

Opportunity costs increase as more of one good is produced.

Question 12

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

Accepted Answer

A student spends more time studying economics and less time working, giving up potential income.

Question 13

Which of the following statements about economic models is correct?

Accepted Answer

Economic models simplify reality to help understand and predict behavior.

Question 14

A country can produce 100 units of good A or 200 units of good B. What is the opportunity cost of producing one unit of good B?

Accepted Answer

$$0.5$$ units of good A

Question 15

Which of the following is true about comparative advantage?

Accepted Answer

It is the ability to produce a good at a lower opportunity cost than others.

Question 16

If a firm decides to produce more of a product because the marginal benefit exceeds the marginal cost, this decision is based on:

Accepted Answer

Marginal analysis.

Question 17

Which of the following best explains why specialization leads to gains from trade?

Accepted Answer

Specialization allows parties to produce goods where they have a comparative advantage, increasing overall efficiency.

Question 18

Which of the following is a role of property rights in the market system?

Accepted Answer

They support market efficiency by providing legal frameworks.

Question 19

Suppose a country can produce either 50 cars or 100 computers. If it chooses to produce 30 cars, how many computers can it produce if it is operating efficiently on its PPF?

Accepted Answer

$$60$$ computers

Question 20

Which of the following is an example of rational behavior in economics?

Accepted Answer

A consumer chooses a product based on available information to maximize their benefit.

Microeconomics Foundations: Scarcity, Choice, Opportunity Cost, and Market Systems

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