Q: Which formula correctly calculates the percentage change in an economic variable?

$$ \frac{\text{Value in second period} - \text{Value in first period}}{\text{Value in first period}} \times 100 $$

Question 1

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

Accepted Answer

Scarcity is when unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

Which of the following is an example of a trade-off in a real-world scenario?

Accepted Answer

A government increases funding for space exploration, resulting in less funding available for cancer research.

Question 3

What is the opportunity cost of a student spending an extra hour studying instead of working a part-time job?

Accepted Answer

The wage the student could have earned during that hour.

Question 4

Which of the following statements about mixed economies is correct?

Accepted Answer

Most economic decisions are made in markets but the government plays a significant role in the allocation of resources.

Question 5

Productive efficiency in a market economy is most likely to result from:

Accepted Answer

Competition among firms.

Question 6

Allocative efficiency occurs when:

Accepted Answer

Every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.

Question 7

Which of the following is an example of positive analysis?

Accepted Answer

Higher tariffs on imported cars lead to higher prices of imported cars in the US.

Question 8

A firm is deciding whether to automate its production process or hire more workers. Which economic concept is most relevant to this decision?

Accepted Answer

Trade-off

Question 9

Which formula correctly calculates the percentage change in an economic variable?

Accepted Answer

$$ \frac{	ext{Value in second period} - 	ext{Value in first period}}{	ext{Value in first period}} 	imes 100 $$

Question 10

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

Accepted Answer

Microeconomics studies the choices of households and firms, while macroeconomics studies the economy as a whole.

Question 11

If the slope of a line on a graph is calculated as $$ \frac{\Delta y}{\Delta x} $$, what does a negative slope indicate in an economic context?

Accepted Answer

As $$ x $$ increases, $$ y $$ decreases.

Question 12

Which of the following is a behavioral assumption commonly made in economic models?

Accepted Answer

Consumers will buy goods and services to maximize their well-being.

Question 13

A government is considering raising taxes to fund programs for the poor. What trade-off does this policy illustrate?

Accepted Answer

A trade-off between efficiency and equity.

Question 14

Which of the following is NOT a step in building an economic model?

Accepted Answer

Ignore new information that contradicts the model.

Question 15

If a firm continues an activity until the marginal cost equals the marginal benefit, which type of analysis is it using?

Accepted Answer

Marginal analysis

Question 16

Which of the following is a plausible reason why market outcomes might not be fully efficient?

Accepted Answer

Governments might interfere with market outcomes.

Question 17

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

Accepted Answer

The government should increase the minimum wage.

Question 18

If the price of pizza decreases from $$14 to 12 $$and the quantity demanded increases from 59 to 65 per week, what is the slope of the demand line?

Accepted Answer

$$ \frac{12-14}{65-59} $$

Question 19

Which of the following best describes voluntary exchange?

Accepted Answer

A situation that occurs in markets when both the buyer and the seller of a product are made better off by the transaction.

Chapter 1: Foundations of Economics – Key Concepts for Macroeconomics

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