Question 1

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

Accepted Answer

The highest valued alternative that must be given up to get something else.

Question 2

Suppose a country can produce either 100 units of wheat or 200 units of corn using all its 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 Possibility Frontier (PPF) is correct?

Accepted Answer

Points on the PPF are efficient because resources are fully utilized.

Question 4

If the price of hot dogs increases, what is likely to happen to the demand for hamburgers, assuming they are substitutes?

Accepted Answer

The demand for hamburgers will increase.

Question 5

Which of the following best illustrates the law of demand?

Accepted Answer

As the price of a good rises, the quantity demanded falls, ceteris paribus.

Question 6

A normal good is defined as a good for which:

Accepted Answer

Demand increases as income increases.

Question 7

Suppose the government imposes a tax on the production of a good. What is the most likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 8

If the marginal benefit of consuming an additional unit of a good is less than its marginal cost, what should a rational consumer do?

Accepted Answer

Decrease consumption of the good.

Question 9

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

Accepted Answer

"Raising the minimum wage will increase unemployment among teenagers."

Question 10

A scatter diagram is used in economics to:

Accepted Answer

Show the relationship between two variables.

Question 11

If a firm faces increasing marginal costs as it produces more output, which of the following is true?

Accepted Answer

The supply curve is upward sloping.

Question 12

Which of the following would cause a movement along the demand curve for pizza, rather than a shift of the curve?

Accepted Answer

A decrease in the price of pizza.

Question 13

Suppose the equation for a linear demand curve is $Q_d = 20 - 2P$. What is the slope of the demand curve?

Accepted Answer

$-2$

Question 14

Which of the following is NOT a factor of production?

Accepted Answer

Money

Question 15

If the price of a complement to a good increases, what happens to the demand for the original good?

Accepted Answer

It decreases.

Question 16

Which of the following best describes allocative efficiency?

Accepted Answer

Producing the combination of goods and services most valued by society at the lowest cost.

Question 17

A technological improvement in the production of electric cars will likely cause:

Accepted Answer

A rightward shift of the supply curve for electric cars.

Question 18

If the market for oranges is in equilibrium and a frost destroys half the orange crop, what is the most likely immediate effect?

Accepted Answer

The supply curve shifts to the left, raising the price.

Question 19

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

Accepted Answer

"The government should provide free education for all citizens."

Question 20

Suppose the supply of a good is given by $Q_s = 5P - 10$. If the price increases from $3$ to $4$, what is the change in quantity supplied?

Accepted Answer

$5$ units

Econ 1050 Midterm Study Guide: Introductory Microeconomics

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