Q: Which formula correctly calculates the slope of a straight line on a graph?

$\text{slope} = \frac{\Delta y}{\Delta x}$

Question 1

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The highest-valued alternative that must be given up to engage in an activity.

Question 2

Suppose a firm can produce a product using either more labor and less capital, or more capital and less labor. If the cost of labor rises, what is the most likely response according to economic theory?

Accepted Answer

The firm will switch to a production method that uses more capital and less labor.

Question 3

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

Accepted Answer

An increase in the price of gasoline will lead to a decrease in the quantity demanded.

Question 4

A market economy is characterized by:

Accepted Answer

Decisions of households and firms interacting in markets determining resource allocation.

Question 5

If the marginal benefit of watching an extra hour of TV is less than the marginal cost, what should a rational person do?

Accepted Answer

Not watch the extra hour of TV.

Question 6

Which formula correctly calculates the slope of a straight line on a graph?

Accepted Answer

$	ext{slope} = \frac{\Delta y}{\Delta x}$

Question 7

Which of the following best illustrates the concept of a trade-off?

Accepted Answer

A government increases spending on healthcare, resulting in less funding available for education.

Question 8

In the context of economic models, what is the primary purpose of making assumptions?

Accepted Answer

To simplify reality and focus on essential relationships.

Question 9

A mixed economy is best described as:

Accepted Answer

An economy where most decisions result from market interactions, but the government plays a significant role.

Question 10

Which of the following is a normative statement?

Accepted Answer

The government should provide free healthcare to all citizens.

Question 11

Suppose 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 between these two points?

Accepted Answer

$\frac{-2}{10} = -0.2$

Question 12

Which of the following best explains why market economies tend to be more efficient than centrally planned economies?

Accepted Answer

Market economies promote productive and allocative efficiency through competition and voluntary exchange.

Question 13

If a government imposes a tariff on imported goods, what is a likely outcome according to economic analysis?

Accepted Answer

The losses to consumers and some producers typically outweigh the gains to protected industries.

Question 14

Which of the following is an example of a real-world application of marginal analysis?

Accepted Answer

A student decides whether to study for one more hour or go to sleep, weighing the additional benefit of a higher grade against the cost of less sleep.

Question 15

Which of the following best describes allocative efficiency?

Accepted Answer

Production is in accordance with consumer preferences, where the last unit provides a marginal benefit equal to its marginal cost.

Question 16

A time-series graph is most useful for showing:

Accepted Answer

How a variable changes over time.

Question 17

If the area of a rectangle on a graph represents total revenue, which formula should you use to calculate it?

Accepted Answer

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

Question 18

Which of the following is a potential problem when using graphs to analyze economic relationships?

Accepted Answer

Graphs can be misleading if they omit variables or if there is reverse causality.

Question 19

What is the formula for calculating the percentage change in an economic variable?

Accepted Answer

$\frac{	ext{New Value} - 	ext{Old Value}}{	ext{Old Value}} 	imes 100$

Question 20

Which of the following best distinguishes microeconomics from macroeconomics?

Accepted Answer

Microeconomics focuses on individual households and firms, while macroeconomics focuses on aggregate measures like inflation and unemployment.

Chapter 1: Economics—Foundations, Models, and Analytical Tools

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