Q: A student spends 2 hours on social media each day. If the opportunity cost of their time is $$15 per hour, what is the annual opportunity cost of their social media usage? Use the formula $$\text{Annual Cost} = \text{Hours per day} \times 365 \times \text{Opportunity Cost per hour}$.

$$2 \times 365 \times 15 = 10,950$$

Q: Which equation correctly calculates the opportunity cost of spending time on an activity, given the value of your time per hour and the number of hours spent?

$$\text{Opportunity Cost} = \text{Hours Spent} \times \text{Value per Hour}$$

Question 1

Which of the following best describes the concept of 'scarcity' in economics?

Accepted Answer

Scarcity refers to the situation where unlimited wants exist in a world of limited resources.

Question 2

A student spends 2 hours on social media each day. If the opportunity cost of their time is $$15 per hour, what is the annual opportunity cost of their social media usage? Use the formula $$	ext{Annual Cost} = 	ext{Hours per day} 	imes 365 	imes 	ext{Opportunity Cost per hour}$.

Accepted Answer

$$2 	imes 365 	imes 15 = 10,950$$

Question 3

Which principle of economics is being applied when a company uses data to determine the best location for a new store?

Accepted Answer

Empiricism

Question 4

Suppose you have $$\50$ to spend and you want to buy either a textbook for $$\$$40 or go to a $$concert for $$\50$. If you choose the textbook, what is your opportunity cost?

Accepted Answer

The concert you could have attended

Question 5

Which of the following scenarios best illustrates the concept of equilibrium?

Accepted Answer

A situation where no individual can benefit by changing their own behavior, given what others are doing.

Question 6

If a group project allows one member to benefit from the work of others without contributing, what economic problem does this illustrate?

Accepted Answer

Free rider problem

Question 7

Which of the following is NOT an example of an economic agent?

Accepted Answer

A rock

Question 8

Normative economics is best described as:

Accepted Answer

Recommendations about what people, including society, ought to do.

Question 9

Which equation correctly calculates the opportunity cost of spending time on an activity, given the value of your time per hour and the number of hours spent?

Accepted Answer

$$	ext{Opportunity Cost} = 	ext{Hours Spent} 	imes 	ext{Value per Hour}$$

Question 10

Which of the following statements about optimization is correct?

Accepted Answer

Optimization is making the best choice possible with the given information.

Question 11

A person is deciding whether to drive 3 miles to buy a product for $$\10$ or buy it locally for $$\$$20. If $$the cost of driving is $$\2$, what is the total cost of buying the product by driving?

Accepted Answer

$$\12$

Question 12

Which of the following best describes the difference between positive and normative economics?

Accepted Answer

Positive economics describes what people actually do; normative economics recommends what people ought to do.

Question 13

Which principle of economics is most directly involved when economists use statistical analysis to test if higher education leads to higher earnings?

Accepted Answer

Empiricism

Question 14

If a market is not in equilibrium, what is likely to happen?

Accepted Answer

Some agents will change their behavior to improve their outcomes.

Question 15

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

Accepted Answer

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

Question 16

Microeconomics is primarily concerned with:

Accepted Answer

How individuals, firms, and governments make choices.

Question 17

Suppose the opportunity cost of attending a movie is the value of the next best alternative use of your time. If you could have worked for $$\12$ per hour instead, and the movie lasts 2 hours, what is your opportunity cost?

Accepted Answer

$$2 	imes 12 = 24$$

Question 18

Which of the following is NOT a principle of economics described in Chapter 1?

Accepted Answer

Inflation

Question 19

A free rider problem can be resolved in a group by:

Accepted Answer

Applying pressure or incentives to encourage contribution.

Question 20

Which of the following best illustrates empiricism in economics?

Accepted Answer

Using data to test theories and determine causality.

Chapter 1: The Principles and Practice of Economics – Microeconomics Foundations

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