Question 1

Which of the following best defines 'Economics' as presented in the study materials?

Accepted Answer

The study of how individuals and societies choose how to use scarce resources.

Question 2

Suppose you have 2 hours of free time. You can either study for your macroeconomics exam, work a part-time job, or watch a movie. If you choose to study, what is your opportunity cost?

Accepted Answer

The value of the best alternative you gave up, either working or watching a movie.

Question 3

Which principle of rational decision making is illustrated by the statement: 'The true cost of something is what you give up for it'?

Accepted Answer

Principle of Opportunity Cost

Question 4

A student chooses to live with their parents for free rather than pay $650/month for an apartment. According to the study materials, which of the following is NOT part of the opportunity cost of living with parents?

Accepted Answer

The $650/month saved.

Question 5

Which of the following scenarios is an example of a macroeconomic issue?

Accepted Answer

The impact of a federal income tax on employment and wages.

Question 6

According to the study materials, what does 'self interest' mean in economics?

Accepted Answer

People choose to do the things that interest them, which may include helping others.

Question 7

Which of the following best describes an 'incentive' in economics?

Accepted Answer

An opportunity to make yourself better off or something that induces a person to act.

Question 8

If LeBron can earn $$1 million per year as a chef but 48 $$million per year as a basketball player, what is the opportunity cost of opening a cupcake shop?

Accepted Answer

$48 million per year

Question 9

Which of the following is NOT recommended for doing well in a macroeconomics course, according to the study materials?

Accepted Answer

Cram for exams at the last minute.

Question 10

Which of the following is a microeconomic topic?

Accepted Answer

How a household decides to allocate its monthly budget.

Question 11

Suppose a student spends an hour commuting to campus instead of working a job that pays $15/hour. What is the opportunity cost of commuting?

Accepted Answer

$15, the wage they could have earned.

Question 12

Which of the following statements about self-interest is TRUE according to the study materials?

Accepted Answer

Self-interest means people act in ways they believe are best for themselves, which can include helping others.

Question 13

Which of the following is an example of responding to an incentive?

Accepted Answer

A student studies harder after learning that extra credit is available.

Question 14

Which equation best represents the calculation of opportunity cost?

Accepted Answer

$$ Opportunity\ Cost = Value\ of\ Best\ Alternative\ Not\ Chosen $$

Question 15

Which of the following is a key difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics deals with individual households and markets; macroeconomics examines the entire economy of a society.

Question 16

A city government is considering adding bike lanes to increase cycling. Is this primarily a microeconomic or macroeconomic issue?

Accepted Answer

Microeconomic, because it affects individual choices and local markets.

Question 17

Which of the following is NOT an example of a limited resource?

Accepted Answer

Unlimited access to online videos.

Question 18

According to the study materials, what is the best way to improve your performance in a macroeconomics course?

Accepted Answer

Practice problems regularly and review under test-like conditions.

Question 19

Which of the following is a rational decision according to economic theory?

Accepted Answer

Choosing the option that you believe makes you better off, given your preferences and constraints.

Question 20

Which of the following is a plausible misconception about opportunity cost?

Accepted Answer

Opportunity cost only includes monetary costs.

Fundamentals 1

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