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

Suppose a country can produce either 1,000 new houses or 100 new hospital beds. What is the opportunity cost of producing one new house?

Accepted Answer

$$\frac{1}{10}$$ hospital bed

Question 3

If the production possibilities frontier (PPF) is bowed outward, what does this indicate about opportunity cost?

Accepted Answer

Opportunity cost is increasing.

Question 4

Given the linear equation $$y = mx + b$$, what does the parameter $$m$$ represent?

Accepted Answer

The slope of the line.

Question 5

A student is analyzing the slope between two points $$(x_0$, y_0$)$$ and $$(x_1$, y_1$) on a $$curve. Which formula should they use?

Accepted Answer

$$\frac{y_1$ - y_0$}{x_1$ - x_0$}$$

Question 6

If the marginal cost of producing hamburgers increases as more are produced, which shape best describes the PPF?

Accepted Answer

A curve bowed outward from the origin.

Question 7

Which of the following statements about marginal benefit is correct?

Accepted Answer

Marginal benefit is unrelated to the PPF and based on preferences.

Question 8

Suppose Bob can produce 100 hamburgers or 50 milkshakes with 5 robots, while Sam can produce 50 hamburgers or 100 milkshakes with 5 robots. Who has the absolute advantage in producing hamburgers?

Accepted Answer

Bob

Question 9

If Bob gives up fewer milkshakes for each hamburger than Sam, who has the comparative advantage in producing hamburgers?

Accepted Answer

Bob

Question 10

Which of the following best describes allocative efficiency?

Accepted Answer

Producing more of one good only by giving up another good that provides greater benefit.

Question 11

A country is operating at a point inside its PPF. What does this indicate?

Accepted Answer

The country is not using all its resources efficiently.

Question 12

If the marginal benefit of consuming hamburgers is greater than the marginal cost, what should a rational consumer do?

Accepted Answer

Increase consumption of hamburgers.

Question 13

Which of the following is a reason why trade can increase total output?

Accepted Answer

Because agents specialize according to their comparative advantage.

Question 14

Suppose the equation for a line is $$y = -x + 20. $$What is the slope and intercept?

Accepted Answer

Slope $$= -1$$, Intercept $$= 20$$

Question 15

If a person can produce a good using fewer resources than another, what is this called?

Accepted Answer

Absolute advantage

Question 16

Which formula represents the average slope between $$x = 5$$ and $$x = 20 if$$ $$y$$ changes from $$10 to$$ $$20$$?

Accepted Answer

$$\frac{20 - 10}{20 - 5}$$

Question 17

If the slope of a tangent to a curve at a point is zero, what does this indicate about the point?

Accepted Answer

It is a point of maximum or minimum.

Question 18

Which of the following is NOT a feature of the production possibilities frontier (PPF)?

Accepted Answer

It is always a straight line.

Question 19

If John Urschel is both a talented NFL player and a mathematician, what does the concept of comparative advantage suggest he should do?

Accepted Answer

Focus on the career where he has the lowest opportunity cost.

The Economic Problem: Mathematical Foundations and Production Possibilities in Microeconomics

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