Q: Which formula correctly represents opportunity cost?

$$\text{Opportunity Cost} = \text{Value of Best Alternative Forgone}$$

Question 1

Which of the following best describes the economic problem as outlined in microeconomics?

Accepted Answer

The allocation of scarce resources among competing ends.

Question 2

Refer to the first graph (Unemployment Rate in Canada to Dec 2022). What major economic event is most likely responsible for the sharp spike in unemployment rate observed around 2020?

Accepted Answer

The COVID-19 pandemic and related lockdowns.

Question 3

Which of the following is an example of opportunity cost?

Accepted Answer

The value of the next best alternative forgone when choosing to attend university.

Question 4

If a firm decides to produce an additional unit of output, which cost should it consider?

Accepted Answer

Marginal cost

Question 5

Which formula correctly represents opportunity cost?

Accepted Answer

$$	ext{Opportunity Cost} = 	ext{Value of Best Alternative Forgone}$$

Question 6

Refer to the second graph (Labour Force in Canada to Dec 2022). What does the sharp drop in the labour force around 2020 most likely indicate?

Accepted Answer

A large number of people leaving the workforce due to the COVID-19 pandemic.

Question 7

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

Accepted Answer

Unlimited wants

Question 8

A consumer decides to buy a coffee instead of a sandwich. According to microeconomic theory, what is the opportunity cost of this decision?

Accepted Answer

The satisfaction or utility that would have been gained from the sandwich.

Question 9

Which of the following best describes a sunk cost?

Accepted Answer

A cost that cannot be recovered once incurred.

Question 10

According to economic models, what assumption is typically made about individual behavior?

Accepted Answer

Individuals act in their own self-interest to maximize utility or profit.

Question 11

Refer to the third graph (Bank of Canada’s key interest rate vs. inflation rate). What is the likely reason for the sharp increase in the policy rate after 2021?

Accepted Answer

To combat rising inflation rates.

Question 12

Which of the following is a plausible effect of rising protectionism on the Canadian economy?

Accepted Answer

Reduced international trade and potential for higher prices.

Question 13

A firm faces the following costs: fixed cost $$100, variable cost 50$$, and has already spent $30 on advertising that cannot be recovered. What is the sunk cost?

Accepted Answer

$$30$$

Question 14

Which of the following best describes the role of government in microeconomics?

Accepted Answer

Providing infrastructure and public goods.

Question 15

If the marginal benefit of attending an economics class is less than the marginal cost, what should a rational student do?

Accepted Answer

Skip the class to maximize utility.

Question 16

Which equation represents the relationship between marginal benefit and marginal cost for optimal decision-making?

Accepted Answer

$$	ext{Marginal Benefit} = 	ext{Marginal Cost}$$

Question 17

Which of the following is NOT a pressing concern in economics as listed in the study materials?

Accepted Answer

Unlimited resources

Question 18

A business owner must decide whether to invest in new machinery. What economic principle should guide their decision?

Accepted Answer

The marginal cost and marginal benefit of the new machinery.

Question 19

Which of the following is an example of a real-world opportunity cost?

Accepted Answer

The enjoyment missed from not attending a concert when choosing to study instead.

Question 20

Which of the following best describes the purpose of economic models?

Accepted Answer

To simplify and represent important elements of behavior for prediction and analysis.

Principles of Microeconomics: Introduction and Fundamental Concepts

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