Question 1

Which of the following best describes the fundamental economic problem faced by all societies?

Accepted Answer

Unlimited wants and limited resources

Question 2

Which of the following is NOT considered one of the four factors of production?

Accepted Answer

Money

Question 3

Suppose a country decides to produce more consumer goods and fewer capital goods. In the long run, what is the most likely consequence of this decision?

Accepted Answer

The country will experience slower economic growth

Question 4

Which of the following statements best illustrates the concept of opportunity cost?

Accepted Answer

Choosing to attend college means giving up the income from a full-time job

Question 5

A rational choice is one that:

Accepted Answer

Compares marginal benefit and marginal cost

Question 6

Which of the following is an example of a positive statement?

Accepted Answer

An increase in the minimum wage will lead to higher unemployment among teenagers

Question 7

If the marginal benefit of an action exceeds its marginal cost, a rational person will:

Accepted Answer

Take the action

Question 8

Which of the following best explains why economics is considered a social science?

Accepted Answer

It studies the choices people make as they cope with scarcity

Question 9

Suppose you are deciding whether to study for an extra hour or go to a movie. The marginal cost of studying for an extra hour is:

Accepted Answer

The enjoyment you would have received from watching the movie

Question 10

Which of the following is an example of a normative statement?

Accepted Answer

The government should provide free healthcare for everyone

Question 11

Which of the following best describes the difference between self-interest and social interest?

Accepted Answer

Self-interest is when individuals make choices best for themselves; social interest is when choices are best for society as a whole

Question 12

Which of the following is NOT one of the 'big questions' of economics?

Accepted Answer

How are goods and services distributed equally?

Question 13

If a country experiences rapid technological innovation, which of the following is most likely to occur?

Accepted Answer

The production possibilities frontier will shift outward

Question 14

Which of the following is an example of choosing at the margin?

Accepted Answer

Deciding whether to study one more hour for an exam

Question 15

Suppose the marginal benefit of producing an additional unit of a good is given by $MB = 100 - 2Q$ and the marginal cost is $MC = 20 + Q$. What is the optimal quantity $Q^*$ to produce?

Accepted Answer

$Q^* = 26.67$

Question 16

Which of the following best describes the role of entrepreneurship in the economy?

Accepted Answer

Combining land, labor, and capital to produce goods and services

Question 17

Which of the following is a real-world example of opportunity cost?

Accepted Answer

A student who chooses to travel during spring break instead of working loses potential earnings

Question 18

Which of the following is most likely to be considered a capital good?

Accepted Answer

A factory machine used to produce cars

Question 19

Which of the following best illustrates the concept of a trade-off?

Accepted Answer

A government increases spending on healthcare, resulting in less spending on education

Question 20

Which of the following is an example of a situation where self-interest can promote the social interest?

Accepted Answer

A business innovates to reduce costs, leading to lower prices for consumers

Chapter 1: What is Economics? — Foundations and Core Concepts

Study Guide - Practice Questions

Study Guide - Flashcards