Question 1

Suppose the price of coffee increases. According to the law of demand, what will happen to the quantity demanded of coffee, assuming all other factors remain constant?

Accepted Answer

It will decrease.

Question 2

Gina paid $$35 for her ticket, 20 $$for parking, and $$10 for food at a soccer game. Had she worked her shift, Gina would have earned 140. $$What is the opportunity cost of attending the game?

Accepted Answer

$140

Question 3

If Dad takes 1 hour to cook dinner and 30 minutes to iron a shirt, while Mom takes 30 minutes to cook dinner and can iron 6 shirts in the same time, who has the absolute advantage in ironing shirts?

Accepted Answer

Mom

Question 4

Moving from possibility b to possibility c in the table below, what is the opportunity cost of producing one additional maple leaf?
Possibility b: 2 hockey sticks, 3 maple leaves
Possibility c: 0 hockey sticks, 9 maple leaves

Accepted Answer

$$\frac{1}{3}$$ hockey stick

Question 5

Why do people pay more for diamonds than for water, even though water is essential for life?

Accepted Answer

Marginal benefits from diamonds are high and marginal benefits from water are low.

Question 6

John gave Margaret a $$20,000 painting for her birthday. An art dealer offered 25$$,000 for the painting, but Margaret said no. What is the opportunity cost of her decision?

Accepted Answer

$25,000

Question 7

A movement from point D to point B on a demand curve for water is caused by:

Accepted Answer

A fall in the price of water.

Question 8

According to the production possibilities table, as more hockey sticks are produced, the opportunity cost of producing hockey sticks:

Accepted Answer

Increases.

Question 9

If all inputs in a business are equally productive at all activities, as the business increases its output, the marginal opportunity cost:

Accepted Answer

Is constant.

Question 10

Which of the following is a positive statement?

Accepted Answer

"The unemployment rate is 5%."

Question 11

If buyers expect the price of gasoline will be higher in the future, the price of gasoline today ______ and the quantity supplied today ______.

Accepted Answer

Rises; increases

Question 12

Which will cause a movement down along a demand curve?

Accepted Answer

A fall in the price of the product

Question 13

The demand for gasoline has increased. Which of the following could explain this?

Accepted Answer

Consumer incomes are higher and gasoline is a normal good.

Question 14

A good economic model:

Accepted Answer

Does all of the above.

Question 15

Producer surplus is the area:

Accepted Answer

Below the market price but above the marginal cost curve.

Question 16

Mutual gains from voluntary trade require differences in:

Accepted Answer

Comparative advantage.

Question 17

Suppose a new technology allows a factory to produce more output with the same inputs. What will happen to the supply curve?

Accepted Answer

It will shift to the right.

Question 18

Which of the following best describes opportunity cost?

Accepted Answer

The value of the next best alternative forgone.

Question 19

If the equilibrium price of product A rises, what can we infer about the market for product A?

Accepted Answer

Either demand increased or supply decreased.

Question 20

Which of the following will cause an increase in quantity demanded?

Accepted Answer

A fall in the price of the product.

Microeconomics Fundamentals: Study Guide Based on Sample Test Questions

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