Question 1

Which of the following best defines the concept of opportunity cost in economics?

Accepted Answer

The value of the next best alternative foregone when a choice is made.

Question 2

Suppose the demand for oranges increases due to a new health trend. What is the most likely immediate effect on the equilibrium price and quantity in the orange market?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases.

Question 3

Which equation correctly represents the calculation of Gross Domestic Product (GDP) using the expenditure approach?

Accepted Answer

$$GDP = C + I + G + (X - M)$$

Question 4

If the unemployment rate rises while the labor force participation rate remains constant, what does this indicate about the economy?

Accepted Answer

A higher proportion of the labor force is unable to find work.

Question 5

A country can produce either 100 units of wine or 200 units of cheese with its resources. Another country can produce either 80 units of wine or 160 units of cheese. According to the principle of comparative advantage, which good should the first country specialize in?

Accepted Answer

Wine, because it has a lower opportunity cost in wine production.

Question 6

Which of the following scenarios best illustrates the concept of scarcity?

Accepted Answer

A student must choose between studying for an exam or going to a concert.

Question 7

If the government imposes a price ceiling below the equilibrium price in the market for rental apartments, what is the most likely outcome?

Accepted Answer

A shortage of apartments.

Question 8

Which of the following is NOT considered a component of aggregate demand?

Accepted Answer

Total factor productivity ($$A)$$

Question 9

Suppose the inflation rate is calculated using the following formula: $$	ext{Inflation Rate} = \frac{CPI_{new} - CPI_{old}}{CPI_{old}} 	imes 100. If $$the Consumer Price Index (CPI) rises from 200 to 210, what is the inflation rate?

Accepted Answer

$$5\%$$

Question 10

Which of the following best describes the effect of a tariff on imported goods?

Accepted Answer

It increases government revenue and raises the price of imports.

Question 11

If the supply curve for a product shifts to the right, what is the most likely effect on equilibrium price and quantity, assuming demand remains unchanged?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases.

Question 12

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

Accepted Answer

"Raising taxes will reduce consumer spending."

Question 13

A country’s currency depreciates relative to other currencies. What is the most likely short-term effect on its exports and imports?

Accepted Answer

Exports increase, imports decrease.

Question 14

Which of the following best explains why perfect competition leads to allocative efficiency?

Accepted Answer

Resources are allocated where they are most valued, as $$P = MC.$$

Question 15

If the marginal benefit of consuming an additional unit of a good is less than the marginal cost, what should a rational consumer do?

Accepted Answer

Decrease consumption of the good.

Question 16

Which of the following is a likely consequence of persistent inflation in an economy?

Accepted Answer

Decreased real value of savings.

Question 17

Suppose the government increases spending without raising taxes. According to the aggregate demand and supply model, what is the likely short-run effect on output and the price level?

Accepted Answer

Output increases, price level increases.

Question 18

Which of the following best describes the law of demand?

Accepted Answer

As the price of a good increases, the quantity demanded decreases.

Question 19

If a country imposes a quota on the number of cars that can be imported, what is the most likely effect on the domestic car market?

Accepted Answer

Domestic car production increases.

Question 20

Which of the following is an example of using marginal analysis in everyday decision-making?

Accepted Answer

Deciding to study one more hour because the expected grade improvement outweighs the lost leisure time.

ECON 2100: Introduction to Economics – Course Syllabus and Study Guide

Study Guide - Practice Questions

Study Guide - Flashcards