Question 1

Which of the following best describes the fundamental economic problem faced by all societies?

Accepted Answer

How to allocate scarce resources to satisfy unlimited wants.

Question 2

Which of the following statements is an example of a normative economic statement?

Accepted Answer

The government should increase spending on healthcare.

Question 3

Suppose a country can produce either 100 units of wheat or 200 units of corn with its available resources. What is the opportunity cost of producing 1 unit of wheat?

Accepted Answer

$$2$$ units of corn

Question 4

Which of the following best illustrates the concept of 'choice at the margin'?

Accepted Answer

Choosing to work an extra hour for additional pay.

Question 5

A production possibilities curve (PPC) is bowed outward from the origin. What does this shape indicate about opportunity costs?

Accepted Answer

Opportunity costs increase as more of one good is produced.

Question 6

Which of the following is NOT one of the five fundamental economic questions?

Accepted Answer

How to maximize profits?

Question 7

If a market is in equilibrium, which of the following must be true?

Accepted Answer

Quantity demanded equals quantity supplied.

Question 8

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

Accepted Answer

Microeconomics focuses on individual markets and agents, while macroeconomics examines the economy as a whole.

Question 9

Suppose the demand for oranges is given by the model $$D_v = f(P_p, P_s, Y, O). If$$ $$P_p$$ increases, what is the expected effect on $$D_v$$?

Accepted Answer

$$D_v$$ will decrease.

Question 10

Which of the following is an example of a positive economic statement?

Accepted Answer

Raising the minimum wage will increase unemployment among teenagers.

Question 11

A country faces a choice between producing more consumer goods or more capital goods. If it chooses to produce more capital goods, what is the opportunity cost?

Accepted Answer

The consumer goods that must be forgone.

Question 12

Which of the following best explains why doctors typically earn more than nurses?

Accepted Answer

The forces of supply and demand for doctors' services result in higher wages.

Question 13

If a government decides to intervene in the price system by setting a price ceiling below the equilibrium price, what is the likely result?

Accepted Answer

A shortage of the good.

Question 14

Which of the following is a key step in the economic methodology for constructing a theory?

Accepted Answer

Building postulates and hypotheses.

Question 15

Suppose a new technology increases the productivity of workers in the car manufacturing industry. According to economic theory, what is the most likely effect in the short run?

Accepted Answer

The supply of cars will increase, leading to lower prices.

Question 16

Which of the following best describes the concept of efficiency in economics?

Accepted Answer

Producing the maximum output with given resources and technology.

Question 17

A country is currently producing at a point inside its production possibilities curve (PPC). What does this indicate?

Accepted Answer

The country is experiencing unemployment or underutilization of resources.

Question 18

Which of the following is an example of a real-world economic institution at the global level?

Accepted Answer

IMF (International Monetary Fund)

Question 19

If a country experiences a good harvest in its agricultural sector, what is the likely effect on the market price of its crops, according to supply and demand theory?

Accepted Answer

Market price will decrease due to higher supply.

Question 20

Which of the following best describes the role of models in economic analysis?

Accepted Answer

Models are simplifications intended to capture only the most important aspects of reality.

The Nature and Scope of Economics: Microeconomics Foundations

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