Q: 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?

$$\text{Slope} = \frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2$$

Q: Which formula correctly calculates the percentage change in U.S. real GDP from 2021 ($$19,610 billion) to 2022 (20$$,018 billion)?

$$\text{Percentage change} = \frac{20,018 - 19,610}{19,610} \times 100 = 2.1\%$$

Question 1

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

Accepted Answer

Scarcity means that resources are limited and cannot satisfy all human wants.

Question 2

A government decides to increase funding for healthcare, which results in less funding for education. This situation is best described as:

Accepted Answer

A trade-off, because increasing one means reducing the other due to limited resources.

Question 3

Which of the following is an example of making a decision at the margin?

Accepted Answer

Choosing to study one more hour instead of watching TV.

Question 4

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

$$	ext{Slope} = \frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2$$

Question 5

Which of the following is a normative statement?

Accepted Answer

The government should increase the minimum wage to reduce poverty.

Question 6

What is the opportunity cost of a student attending college full-time?

Accepted Answer

The income the student could have earned by working instead of attending college.

Question 7

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

Accepted Answer

Market economies rely on voluntary exchange and competition, leading to productive and allocative efficiency.

Question 8

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

Accepted Answer

The firm will substitute machines for labor to minimize costs.

Question 9

Which formula correctly calculates the percentage change in U.S. real GDP from 2021 ($$19,610 billion) to 2022 (20$$,018 billion)?

Accepted Answer

$$	ext{Percentage change} = \frac{20,018 - 19,610}{19,610} 	imes 100 = 2.1\%$$

Question 10

Which of the following is an example of allocative efficiency?

Accepted Answer

Producing goods up to the point where the marginal benefit equals the marginal cost.

Question 11

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 the economy typically outweigh the gains to producers and government revenue.

Question 12

Which of the following best distinguishes microeconomics from macroeconomics?

Accepted Answer

Microeconomics studies individual markets and choices, while macroeconomics studies the economy as a whole.

Question 13

A firm’s total revenue can be represented graphically as:

Accepted Answer

The area of a rectangle with base equal to quantity and height equal to price: $$	ext{Total Revenue} = 	ext{Quantity} 	imes 	ext{Price}$$

Question 14

Which of the following is a positive statement?

Accepted Answer

An increase in the gasoline tax will reduce gasoline consumption.

Question 15

If the area of a triangle on a graph has a base of 25,000 and a height of $0.50, what is the area?

Accepted Answer

$$	ext{Area} = \frac{1}{2} 	imes 25,000 	imes 0.50 = 6,250$$

Question 16

Which of the following is a key step in building an economic model?

Accepted Answer

Formulating a testable hypothesis based on assumptions.

Question 17

Which of the following best describes voluntary exchange?

Accepted Answer

A transaction in which both the buyer and seller are made better off.

Question 18

Which of the following is an example of a real-world application of economic incentives?

Accepted Answer

Requiring convicted felons to submit DNA samples, which reduces repeat offenses.

Question 19

If a graph shows a positive relationship between two variables, what does this mean?

Accepted Answer

As one variable increases, the other variable also increases.

chapter 4

Study Guide - Practice Questions

Study Guide - Flashcards