Q: Suppose a firm's total revenue from selling 125,000 bottles at $2.00 each is represented by the area of a rectangle. What is the 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 value of the best alternative forgone when making a choice.

Question 2

A government decides to tax high incomes to fund programs for the poor. Which trade-off does this policy illustrate?

Accepted Answer

Efficiency versus equity.

Question 3

Which of the following is a positive economic statement?

Accepted Answer

Federal minimum wage is $7.25/hour.

Question 4

Suppose the total cost of producing 10 units is $$300 and the total cost of producing 20 units is 350. $$What is the marginal cost of increasing production from 10 to 20 units?

Accepted Answer

$$ \frac{350 - 300}{20 - 10} = 5 $$

Question 5

Which of the following best describes allocative efficiency?

Accepted Answer

Producing the combination of goods most desired by society.

Question 6

A firm is considering installing security measures that cost $$20,000 per year to prevent robberies, but the average cost of a robbery is 1$$,500. According to economic incentives, what is the most rational decision?

Accepted Answer

Do not install the security measures because the cost exceeds the benefit.

Question 7

Which of the following is NOT an assumption typically made in economic models?

Accepted Answer

People always act in the interest of society as a whole.

Question 8

If a country decides to produce more military equipment, which fundamental economic question is it addressing?

Accepted Answer

"What to produce?"

Question 9

Which of the following best illustrates the concept of ceteris paribus?

Accepted Answer

Assuming all other factors remain constant when analyzing the effect of a tax increase on gasoline.

Question 10

A market economy is characterized by:

Accepted Answer

Households and firms interacting in markets to allocate resources.

Question 11

Which of the following is an example of marginal analysis?

Accepted Answer

Comparing the benefit of studying one more hour to the cost of lost sleep.

Question 12

Suppose a firm's total revenue from selling 125,000 bottles at $2.00 each is represented by the area of a rectangle. What is the total revenue?

Accepted Answer

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

Question 13

Which of the following is a normative economic statement?

Accepted Answer

"Federal minimum wage is too low."

Question 14

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

$$ \frac{12 - 14}{65 - 55} = -0.2 $$

Question 15

Which of the following best describes productive efficiency?

Accepted Answer

Producing goods and services at the lowest possible cost.

Question 16

Which of the following is NOT a reason to study economics?

Accepted Answer

To avoid making any choices in life.

Question 17

In a mixed economy, most economic decisions are made by:

Accepted Answer

Buyers and sellers in markets, with significant government involvement.

Question 18

Which of the following is a key feature of voluntary exchange in market economies?

Accepted Answer

Both buyer and seller are made better off by the transaction.

Question 19

If real GDP increased from $$19,610 billion in 2021 to 20$$,018 billion in 2022, what is the percentage change in real GDP?

Accepted Answer

$$ \frac{20,018 - 19,610}{19,610} 	imes 100 = 2.08\% $$

Question 20

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies how households and firms make choices, while macroeconomics studies aggregates like inflation and unemployment.

Microeconomics Principles: Foundations and Models (Chapter 1 Study Notes)

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