Question 1

Which of the following best defines economics?

Accepted Answer

The study of how individuals and societies allocate scarce resources to satisfy unlimited wants.

Question 2

Which of the following is a microeconomic topic?

Accepted Answer

The reasons why a consumer buys less honey.

Question 3

What are the two big economic questions?

Accepted Answer

How do choices determine what, how, and for whom goods and services are produced? When do choices made in self-interest also promote the social interest?

Question 4

Which of the following pairs does NOT match correctly?

Accepted Answer

Capital and profit

Question 5

If you choose to travel in Europe for the summer instead of taking a job that pays $$11,600, and you incur 2$$,200 in transportation, $$350 in visas, and 1$$,400 in living expenses, what is your opportunity cost?

Accepted Answer

$15,550

Question 6

Which of the following statements is a positive statement?

Accepted Answer

If the price of gasoline rises, people will drive less and use less gasoline.

Question 7

What is the opportunity cost of attending university?

Accepted Answer

The highest-valued alternative forgone, such as income from a job you could have taken instead.

Question 8

Suppose the marginal benefit of studying an extra hour is greater than the marginal cost. According to the economic way of thinking, what should you do?

Accepted Answer

Study more.

Question 9

Which of the following best describes a tradeoff?

Accepted Answer

Giving up one thing to get something else.

Question 10

In the context of the economic way of thinking, what is a marginal cost?

Accepted Answer

The opportunity cost of pursuing an incremental increase in an activity.

Question 11

A straight line on a graph has a slope of $$-2. $$What does this indicate about the relationship between the two variables?

Accepted Answer

The variables move in opposite directions.

Question 12

Given the equation $$y = 20 + 4x$$, what is the slope of the line?

Accepted Answer

$$4$$

Question 13

If the slope of a line is calculated as $$\frac{12}{16}$$, what is the value of the slope?

Accepted Answer

$$0.75$$

Question 14

Which of the following is an example of a decision made in self-interest that could also promote the social interest?

Accepted Answer

A business expanding into a new market, creating jobs and increasing consumer choice.

Question 15

If the marginal benefit of an activity is less than its marginal cost, what is the rational choice?

Accepted Answer

Decrease the activity.

Question 16

Which of the following best describes a normative statement?

Accepted Answer

Greece is the best place to vacation.

Question 17

In the graph showing household expenditure versus household income, if the line passes through the points (0, 8) and (16, 20), what is the equation of the line?

Accepted Answer

$$y = 8 + 0.75x$$

Question 18

Which of the following is NOT a key idea that defines the economic way of thinking?

Accepted Answer

All resources are unlimited.

Question 19

If the slope of a curve at point A is $$-2$$ and at point B is $$-0.25$$, what does this indicate about the curve?

Accepted Answer

The curve is steeper at point A than at point B.

Question 20

Which of the following is an example of a variable used in economic models?

Accepted Answer

Profit ($$\pi)$$

Chapter 1: Introduction to Economics – Core Concepts and Graphical Analysis

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