Question 1

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

Accepted Answer

The value of the next best alternative that must be given up when a choice is made.

Question 2

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

Accepted Answer

$2$ units of corn

Question 3

Which of the following statements about the Production Possibilities Boundary (PPB) is correct?

Accepted Answer

Points on the PPB represent efficient use of resources.

Question 4

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 5

Which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 6

A technological advancement in the production of smartphones will most likely cause:

Accepted Answer

A rightward shift in the supply curve for smartphones.

Question 7

If the price of coffee increases, what is the most likely effect on the supply of tea, assuming they are substitutes in production?

Accepted Answer

The supply of tea will decrease.

Question 8

Suppose the price of ice cream rises from $4 to $6 and the quantity supplied increases from 90,000 to 110,000. What is the price elasticity of supply using the midpoint method?

Accepted Answer

$2.0$

Question 9

If the cross-price elasticity of demand between two goods is $-0.5$, what does this indicate about the relationship between the two goods?

Accepted Answer

They are complements.

Question 10

A perfectly inelastic demand curve is represented by which of the following?

Accepted Answer

A vertical line.

Question 11

Which of the following would cause a rightward shift in the demand curve for chicken?

Accepted Answer

An increase in the price of beef, a substitute for chicken.

Question 12

If a 10% increase in income leads to a 20% increase in the quantity demanded of a good, what is the income elasticity of demand for this good?

Accepted Answer

$2.0$

Question 13

Which of the following is an example of a club good?

Accepted Answer

A toll road

Question 14

If the government imposes a tax on the production of a good, what is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 15

Which of the following best describes comparative advantage?

Accepted Answer

The ability to produce a good at a lower opportunity cost than another country.

Question 16

If the price elasticity of demand for a product is $0.8$, which of the following is true?

Accepted Answer

Demand is inelastic, and total revenue will increase if price increases.

Question 17

Which of the following would NOT be included in the calculation of a country's Gross Domestic Product (GDP)?

Accepted Answer

The sale of used furniture.

Question 18

Suppose a drought destroys a large portion of the coffee crop. What is the likely effect on the supply curve for coffee?

Accepted Answer

The supply curve shifts to the left.

Question 19

If producers expect the price of their product to increase in the future, what is the most likely immediate effect on current supply?

Accepted Answer

Current supply will decrease.

Question 20

A market in which products offered by different sellers are identical and buyers and sellers are price takers is known as:

Accepted Answer

A perfectly competitive market.

Macroeconomics Study Notes: Scarcity, Opportunity Cost, Supply & Demand, and Elasticity

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