Question 1

Which of the following best describes a command economy?

Accepted Answer

An economy where a central authority makes all production and distribution decisions.

Question 2

In microeconomics, what is the opportunity cost of attending a concert instead of studying for an exam?

Accepted Answer

The grade improvement you forgo by not studying.

Question 3

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

Accepted Answer

Money

Question 4

Suppose a country can produce either 10 cars or 20 computers with its available resources. What is the opportunity cost of producing one car?

Accepted Answer

$$2$$ computers

Question 5

Which principle explains why people tend to eat less of a candy bar with each additional bite?

Accepted Answer

Marginal analysis

Question 6

A city allocates more parking spaces for disabled individuals, even though it reduces the total number of parking spots. This is an example of:

Accepted Answer

Prioritizing equity over efficiency

Question 7

Which of the following best illustrates the concept of gains from trade?

Accepted Answer

Two countries specialize in different goods and exchange them, allowing both to consume more.

Question 8

If a government sets production targets for all factories, what type of economy is this?

Accepted Answer

Command economy

Question 9

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

Accepted Answer

A bonus for employees who meet sales targets

Question 10

Why are choices necessary in economics?

Accepted Answer

Because resources are scarce

Question 11

Which of the following is an example of using resources efficiently?

Accepted Answer

Assigning tasks to workers based on their skills and maximizing output

Question 12

During a recession, a drop in business spending can lead to:

Accepted Answer

Less income, less spending, and rising unemployment

Question 13

Which of the following best describes the concept of equity in economics?

Accepted Answer

Ensuring everyone gets their fair share

Question 14

If a student chooses to work part-time instead of attending a free workshop, what is the opportunity cost?

Accepted Answer

The skills and knowledge missed from the workshop

Question 15

Which of the following is an example of specialization?

Accepted Answer

A doctor focuses only on heart surgery

Question 16

Suppose a country has to choose between producing more military goods or more consumer goods. This is an example of:

Accepted Answer

A trade-off

Question 17

Which of the following statements about incentives is correct?

Accepted Answer

Incentives can change people's behavior by offering rewards or punishments.

Question 18

If a society uses all its resources to make some people better off without making others worse off, this is called:

Accepted Answer

Efficiency

Question 19

Which of the following is an example of a market failure?

Accepted Answer

A company pollutes a river, harming local residents.

Question 20

If one person’s spending becomes another person’s income, what does this illustrate?

Accepted Answer

The circular flow of economic activity

Introduction to Economics: Foundations and Models

Study Guide - Practice Questions