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 get something.

Question 2

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

Accepted Answer

$$\frac{2}{1}$$ units of corn

Question 3

Which of the following statements is a normative statement?

Accepted Answer

"The government ought to provide free healthcare for everyone."

Question 4

A production possibilities frontier (PPF) is bowed outward from the origin. What does this shape indicate?

Accepted Answer

Increasing opportunity cost.

Question 5

If a firm is producing at a point inside its PPF, what does this imply?

Accepted Answer

The firm has unused or misallocated resources.

Question 6

Which of the following is an example of a marginal benefit?

Accepted Answer

The additional satisfaction from consuming one more unit of a good.

Question 7

A country can produce either 50 cars or 100 computers. Another country can produce either 30 cars or 90 computers. Which country has the comparative advantage in producing computers?

Accepted Answer

The second country, because it has a lower opportunity cost for computers.

Question 8

Which of the following best illustrates the law of demand?

Accepted Answer

As the price of coffee increases, the quantity demanded decreases.

Question 9

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

Accepted Answer

Demand for the original good will increase.

Question 10

Which of the following is NOT a factor of production?

Accepted Answer

Money

Question 11

Suppose the marginal cost of producing an additional unit of a good is $$\10$, and the marginal benefit to consumers is $$\$$8. $$What should happen in an efficient market?

Accepted Answer

Production should decrease.

Question 12

Which of the following is an example of capital as a factor of production?

Accepted Answer

A factory building used to manufacture cars.

Question 13

If a technological innovation allows more goods to be produced with the same resources, what happens to the PPF?

Accepted Answer

It shifts outward.

Question 14

Which of the following is a positive statement?

Accepted Answer

"Raising taxes will reduce disposable income."

Question 15

A market is defined as:

Accepted Answer

Any arrangement that enables buyers and sellers to get information and do business.

Question 16

If the demand for a normal good increases as income increases, which of the following is also true?

Accepted Answer

It is a normal good.

Question 17

Which of the following best describes allocative efficiency?

Accepted Answer

Producing the combination of goods and services most highly valued by society.

Question 18

Suppose a new law increases property rights protection in a country. Which of the following is a likely result?

Accepted Answer

Economic coordination will improve.

Question 19

If the price of a good rises from $$\5$ to $$\$$7$$ and the quantity supplied increases from $$100 to$$ $$140$$ units, which law does this illustrate?

Accepted Answer

Law of Supply

Question 20

Which of the following is an example of a real-world tradeoff?

Accepted Answer

A student spends an hour studying economics instead of working a part-time job.

Foundations of Economics: Core Concepts and Principles

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