Question 1

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

Accepted Answer

Scarcity means that resources are limited and cannot satisfy all human wants.

Question 2

Suppose a country can produce either 100 units of wheat or 200 units of corn using all its resources. If the country decides to produce 50 units of wheat, what is the opportunity cost in terms of corn?

Accepted Answer

$$100$$ units of corn

Question 3

Which of the following statements is an example of a normative economic statement?

Accepted Answer

The federal reserve should raise interest rates.

Question 4

A production possibilities curve (PPC) is bowed outward from the origin. What does this shape indicate?

Accepted Answer

Increasing opportunity cost as more of one good is produced.

Question 5

If a country has an absolute advantage in producing both cars and computers, but a comparative advantage only in computers, what should it specialize in according to economic theory?

Accepted Answer

Computers

Question 6

Which of the following is NOT considered a basic category of resource in economics?

Accepted Answer

Money

Question 7

The law of demand states that, ceteris paribus, as the price of a good increases:

Accepted Answer

The quantity demanded decreases.

Question 8

Which of the following would cause a movement along the demand curve for pizza?

Accepted Answer

A decrease in the price of pizza.

Question 9

Suppose the marginal benefit (MB) of consuming an additional slice of pizza is $$5$$, and the marginal cost (MC) is $$3. $$According to rational decision-making, what should the consumer do?

Accepted Answer

Consume the additional slice of pizza.

Question 10

Which of the following best illustrates the concept of specialization?

Accepted Answer

A worker focuses on assembling car engines while others handle painting and tires.

Question 11

If the price of Coke increases and Pepsi is a substitute, what is likely to happen to the demand for Pepsi?

Accepted Answer

Demand for Pepsi will increase.

Question 12

Which of the following is an example of a positive economic statement?

Accepted Answer

If the price of gas rises, people will buy less gas.

Question 13

A supply curve generally slopes upward because:

Accepted Answer

Higher prices provide an incentive for producers to supply more.

Question 14

Which of the following best describes the ceteris paribus assumption?

Accepted Answer

Holding all other factors constant except the one being studied.

Question 15

If a country can produce more of a good than another country using the same amount of resources, it has:

Accepted Answer

Absolute advantage

Question 16

Which of the following would NOT shift the demand curve for apples?

Accepted Answer

A change in the price of apples.

Question 17

Suppose the supply schedule for a good is given by $$Q_s = 2P - 10. If $$the price $$P is$$ $$10$$, what is the quantity supplied?

Accepted Answer

$$Q_s = 10$$

Question 18

Which of the following is most likely to increase the market size for smartphones?

Accepted Answer

An increase in the number of consumers.

Question 19

If the marginal cost (MC) of producing an additional unit is $$8$$ and the marginal benefit (MB) is $$6$$, what should a rational producer do?

Accepted Answer

Not produce the additional unit.

Question 20

Which of the following is a result of nations specializing according to their comparative advantage and then trading?

Accepted Answer

Both nations can gain from trade and improve their standard of living.

Microeconomics Fundamentals: Scarcity, Choice, and Market Mechanisms

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