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?

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

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

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

Question 1

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

Accepted Answer

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

Question 2

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

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

Question 3

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

Accepted Answer

Raising tariffs will increase the price of imported goods.

Question 4

A market economy is characterized by:

Accepted Answer

Decisions of households and firms interacting in markets.

Question 5

If a firm can produce a good using either more labor or more machines, and 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 machines and less labor.

Question 6

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

Accepted Answer

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

Question 7

Which of the following best illustrates the concept of marginal analysis?

Accepted Answer

Comparing the additional benefit of studying one more hour to the additional cost of not sleeping.

Question 8

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

Accepted Answer

To simplify reality and focus on key relationships.

Question 9

Which of the following is a normative statement?

Accepted Answer

The government should provide free healthcare to all citizens.

Question 10

A mixed economy is best described as:

Accepted Answer

An economy where most decisions are made by markets, but the government plays a significant role.

Question 11

If the area of a rectangle represents total revenue, and a firm sells 125,000 bottles at $2.00 each, what is the total revenue?

Accepted Answer

$$250,000$$

Question 12

Which of the following is an example of allocative efficiency?

Accepted Answer

Goods are produced up to the point where the last unit provides a marginal benefit equal to the marginal cost.

Question 13

A voluntary exchange in a market will:

Accepted Answer

Make both the buyer and seller better off.

Question 14

Which of the following is a microeconomic issue?

Accepted Answer

How consumers react to changes in product prices.

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

$$6,250$$

Question 16

Which of the following is NOT a reason why market outcomes may not be fully efficient?

Accepted Answer

Markets always ensure perfect equity.

Question 17

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

Accepted Answer

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

Question 18

If a government increases taxes to fund programs for the poor, what trade-off is being considered?

Accepted Answer

A trade-off between efficiency and equity.

Question 19

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

Accepted Answer

Formulate a testable hypothesis.

Question 20

If the marginal benefit of producing one more unit of a good is less than the marginal cost, what should a rational firm do?

Accepted Answer

Decrease production.

chapter 1

Study Guide - Practice Questions

Study Guide - Flashcards