Question 1

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

Accepted Answer

The value of the next best alternative that is forgone when a choice is made.

Question 2

A student decides to spend an hour studying for an economics exam instead of watching a movie. What is the opportunity cost of studying?

Accepted Answer

The enjoyment the student would have received from watching the movie.

Question 3

Which of the following statements is an example of positive economics?

Accepted Answer

Raising taxes will decrease consumer spending.

Question 4

Which of the following is NOT a characteristic of scarce resources?

Accepted Answer

They are available in unlimited quantities.

Question 5

A consumer has $$20 to spend on pens (2 $$each) and pencils ($1 each). Which equation represents the consumer's budget constraint?

Accepted Answer

$$2x + 1y = 20$$

Question 6

Maria can either drive or take a train to her destination. The train costs $$400 and takes 4 hours. Driving takes 6 hours and costs 250 in $$gasoline. If her opportunity cost of time is $15 per hour, what is the total cost of driving?

Accepted Answer

$$340$$

Question 7

Which of the following is an example of a sunk cost?

Accepted Answer

The cost of a non-refundable concert ticket you bought last month.

Question 8

Which of the following best describes equilibrium in economics?

Accepted Answer

A situation where everyone is optimizing and no one can be made better off by changing their behavior.

Question 9

Which of the following is a normative economic statement?

Accepted Answer

The government should provide free college education.

Question 10

A consumer has $$50 to spend on magazines (5 $$each) and DVDs ($10 each). Which combination of magazines and DVDs will exhaust the budget?

Accepted Answer

3 magazines and 4 DVDs

Question 11

Which of the following is an example of microeconomics?

Accepted Answer

The decision of a student to work part-time while attending college.

Question 12

If the opportunity cost of Maria's time increases to $$80 per hour, and driving takes 6 hours while the train takes 4 hours, which option should Maria choose if gasoline costs 250 $$and the train costs $400?

Accepted Answer

Travel by train, as it saves her $150.

Question 13

Which of the following best describes empiricism in economics?

Accepted Answer

Using data and evidence to analyze and test economic theories.

Question 14

Which of the following is an example of a trade-off?

Accepted Answer

Choosing to spend money on a new phone instead of saving for a vacation.

Question 15

Which of the following statements about scarcity is TRUE?

Accepted Answer

Scarcity forces us to make choices.

Question 16

Which of the following is an example of the free rider problem?

Accepted Answer

A person who enjoys a public park without paying taxes to maintain it.

Question 17

Which of the following best describes the difference between correlation and causation?

Accepted Answer

Correlation means two events happen together; causation means one event causes another.

Question 18

Which of the following is a feasible option for a consumer with $$40 who wants to buy a camera (60$$), a cell phone ($$150), a book (10$$), or a Bluetooth speaker ($45)?

Accepted Answer

The book

Question 19

Which principle of economics states that people do the best they can given the information they have?

Accepted Answer

Optimization

Question 20

A group project where one member does not contribute but still receives the same grade as others is an example of:

Accepted Answer

Free rider problem

Chapter 1: The Principles and Practice of Economics - Microeconomics Study Guide

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