Question 1

Which of the following best describes the fundamental economic problem addressed by microeconomics?

Accepted Answer

How to allocate scarce resources to satisfy unlimited wants

Question 2

Which of the following is NOT one of the three basic economic questions every society must answer?

Accepted Answer

How much money should be printed?

Question 3

A government decides to set the price of bread and determine how much each bakery should produce. This is an example of which type of economic system?

Accepted Answer

Command and control (central planning)

Question 4

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

Accepted Answer

If the government increases the minimum wage, unemployment among teenagers will rise.

Question 5

Suppose a new tax is imposed on sugary drinks. According to the rational self-interest assumption, how are consumers most likely to respond?

Accepted Answer

Reduce their consumption of sugary drinks if the cost outweighs the benefit

Question 6

Which of the following best illustrates the ceteris paribus assumption?

Accepted Answer

Analyzing the effect of a change in the price of apples on apple sales, holding all other factors constant

Question 7

Behavioral economics differs from traditional economics primarily because it:

Accepted Answer

Emphasizes psychological factors that may interfere with rational decision-making

Question 8

Which of the following is a normative economic statement?

Accepted Answer

The government should provide free access to dental care.

Question 9

If the slope of a line on a graph is calculated as $$ \frac{\Delta y}{\Delta x} = -2 $$, what does this indicate about the relationship between the two variables?

Accepted Answer

There is an inverse (negative) relationship between the variables.

Question 10

A market system relies primarily on which mechanism to allocate resources?

Accepted Answer

Decentralized decision-making through prices

Question 11

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual decision-making units, while macroeconomics studies the economy as a whole.

Question 12

Suppose the price of Toyota trucks remains constant, but Dodge lowers the price of its Ram trucks. According to the ceteris paribus assumption, what is the most likely effect on Toyota truck sales?

Accepted Answer

Toyota truck sales will decrease as consumers switch to the cheaper alternative.

Question 13

Which of the following is an example of an incentive designed to encourage a specific behavior?

Accepted Answer

Offering $100 debit cards to individuals who receive a COVID-19 vaccination

Question 14

If a graph shows a positively sloped straight line, what does this indicate about the relationship between the two variables?

Accepted Answer

As one variable increases, the other variable also increases.

Question 15

Which of the following best describes the concept of 'bounded rationality' in behavioral economics?

Accepted Answer

People seek satisfactory solutions rather than optimal ones due to limited information and cognitive ability.

Question 16

A student claims, 'If the price of movie tickets falls, I will go to the movies more often.' This is an example of:

Accepted Answer

A positive economic statement

Question 17

Which of the following is a key characteristic of economic models?

Accepted Answer

They are simplified representations of reality used to make predictions.

Question 18

Suppose a line on a graph has a slope of $$ \frac{\Delta y}{\Delta x} = 0 . $$What does this mean about the relationship between the two variables?

Accepted Answer

There is no relationship; changes in x do not affect y.

Question 19

Which of the following best explains why economists use the ceteris paribus assumption?

Accepted Answer

To isolate the effect of one variable by holding other factors constant

Question 20

A city government wants to reduce traffic congestion. Which of the following is an example of using a disincentive?

Accepted Answer

Imposing a congestion charge for driving in downtown during peak hours

ECON1110 – Microeconomics: Chapter 1 – The Nature of Economics

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