Question 1

Which of the following best describes the main focus of microeconomics?

Accepted Answer

The study of how prices and markets determine the allocation of scarce resources to various industries.

Question 2

Suppose a student is deciding whether to attend a 2-hour class or work a part-time job during that time. The job pays $15 per hour. The student has already paid tuition and bought textbooks. What is the opportunity cost of attending the class?

Accepted Answer

$30, representing the foregone wages from not working.

Question 3

Which of the following is NOT considered a resource in economics?

Accepted Answer

Scarcity

Question 4

A country can produce either 400,000 electric vehicles (EVs) or a certain amount of another good with the same resources. If the country chooses to produce 400,000 EVs, what is the opportunity cost?

Accepted Answer

The value of the other good that could have been produced with those resources.

Question 5

Which of the following statements about the Production Possibilities Boundary (PPB) is correct?

Accepted Answer

Points on the PPB are efficient because all resources are fully utilized.

Question 6

If the opportunity cost of producing more guns increases as more guns are produced, what does this imply about the shape of the PPB?

Accepted Answer

The PPB is concave to the origin.

Question 7

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

Accepted Answer

A student spends all weekend studying and does not go out with friends.

Question 8

A child has $$2.00 to spend. Bubble gum costs 0.10 $$and lollipops cost $0.40. What is the opportunity cost of buying one lollipop in terms of bubble gum?

Accepted Answer

$$\frac{0.40}{0.10} = 4$$ pieces of bubble gum

Question 9

Which of the following is an example of an implicit cost?

Accepted Answer

Foregone income from not working while attending class.

Question 10

If a country is operating inside its PPB, what does this indicate?

Accepted Answer

The country is not using all its resources efficiently.

Question 11

Which of the following would most likely cause the PPB to shift outward?

Accepted Answer

An improvement in production technology.

Question 12

What is the formula for opportunity cost when both explicit and implicit costs are present?

Accepted Answer

$$	ext{Opportunity cost} = 	ext{explicit cost} + 	ext{implicit cost}$$

Question 13

Which of the following is a macroeconomic question?

Accepted Answer

What determines the overall level of national output?

Question 14

If productivity increases in both industries in an economy, what happens to the PPB?

Accepted Answer

The PPB shifts outward.

Question 15

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

Accepted Answer

The limited availability of resources compared to potential uses.

Question 16

A manufacturer can use its resources to produce either 100 extra doors or 200 extra windows. What is the opportunity cost of producing one door?

Accepted Answer

$$\frac{200}{100} = 2$$ windows

Question 17

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

Accepted Answer

A bonus for meeting sales targets.

Question 18

If the slope of the PPB at a certain point is $$-3$$, what is the opportunity cost of producing one more unit of the good on the x-axis?

Accepted Answer

3 units of the good on the y-axis

Question 19

Which of the following is a result of decentralized decision making in markets?

Accepted Answer

Outcomes are determined by the actions of buyers and sellers.

Question 20

If a country moves from point B to point C on its PPB, and the opportunity cost is 20 units of butter, what does this mean?

Accepted Answer

The country must give up 20 units of butter to produce more guns.

Fundamental Concepts in Microeconomics: Scarcity, Opportunity Cost, and Production Possibilities

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