Q: Which equation correctly represents total profit?

$$\text{Profit} = \text{Revenue} - \text{Cost}$$

Q: Which formula represents the calculation of revenue?

$$\text{Revenue} = \text{Price} \times \text{Quantity}$$

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

A student decides to attend a review session instead of working a shift at their part-time job. What is the opportunity cost of attending the review session?

Accepted Answer

The wage the student would have earned during the shift.

Question 3

Which equation correctly represents total profit?

Accepted Answer

$$	ext{Profit} = 	ext{Revenue} - 	ext{Cost}$$

Question 4

If the price of coffee increases, what is likely to happen to the demand for tea, assuming they are substitute goods?

Accepted Answer

Demand for tea will increase.

Question 5

Which of the following is an example of a complementary good?

Accepted Answer

Printers and ink cartridges.

Question 6

Suppose the price elasticity of demand for a product is $$-2. $$What does this indicate about the product?

Accepted Answer

Demand is elastic; quantity demanded changes significantly with price.

Question 7

A consumer has a gross income of $$\3$$,000$$, pays $$\$$500 in $$taxes, and spends $$\1$$,000$ on necessities. What is their discretionary income?

Accepted Answer

$$\1$$,500$

Question 8

Which of the following best describes the law of supply?

Accepted Answer

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

Question 9

Marginal analysis involves:

Accepted Answer

Examining the additional benefits and costs of a decision.

Question 10

Which of the following is NOT a factor that motivates economic choices?

Accepted Answer

Unlimited resources.

Question 11

If a market consists of many buyers and sellers trading identical products, which type of market structure is this?

Accepted Answer

Perfect competition.

Question 12

Which formula represents the calculation of revenue?

Accepted Answer

$$	ext{Revenue} = 	ext{Price} 	imes 	ext{Quantity}$$

Question 13

Which of the following best illustrates the concept of scarcity?

Accepted Answer

A student must choose between studying and working due to limited time.

Question 14

If the marginal benefit of an action is less than its marginal cost, what should a rational decision-maker do?

Accepted Answer

Not proceed with the action.

Question 15

Which of the following is an example of a positive incentive?

Accepted Answer

A bonus for meeting sales targets.

Question 16

Suppose the demand for a product increases while supply remains constant. What happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases.

Question 17

Which of the following is the best example of a substitute good?

Accepted Answer

Tea and coffee.

Question 18

The Production Possibilities Curve (PPC) illustrates:

Accepted Answer

The maximum combinations of two goods that can be produced with available resources.

Question 19

Which of the following is NOT a cost term in microeconomics?

Accepted Answer

Unlimited cost.

Question 20

If a consumer's disposable income increases, what is likely to happen to their discretionary income?

Accepted Answer

It will increase.

Microeconomics Principles and Key Concepts: Study Guide

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