Question 1

Which of the following best defines economics?

Accepted Answer

The study of how individuals and societies allocate scarce resources to satisfy unlimited wants.

Question 2

Which of the following is a microeconomic topic?

Accepted Answer

The reasons why a consumer buys less honey.

Question 3

What are the two big economic questions?

Accepted Answer

How do choices determine what, how, and for whom goods and services are produced, and when do choices made in self-interest also promote the social interest?

Question 4

If you organize land, labor, and capital to produce goods and services, you are a(n):

Accepted Answer

Entrepreneur

Question 5

Which of the following pairs does NOT match correctly?

Accepted Answer

Capital and profit

Question 6

The opportunity cost of something is:

Accepted Answer

The highest-valued alternative that must be given up to get it.

Question 7

You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $$11,600, and you won't be able to live at home for free. The cost of transportation is 2$$,200, visas cost $$350, and living expenses are 1$$,400. What is the opportunity cost of your plan to travel in Europe?

Accepted Answer

$15,550

Question 8

If the marginal benefit from an incremental increase in an activity exceeds its marginal cost, what is the rational choice?

Accepted Answer

Do more of that activity.

Question 9

Which of the following is a positive statement?

Accepted Answer

If the price of gasoline rises, people will drive less and use less gasoline.

Question 10

Suppose the equation describing the relationship between two variables is $$y = 20 + 4x. $$What is the slope of this relationship?

Accepted Answer

$$4$$

Question 11

Given the graph of household expenditure versus household income, if household income increases from $$16,000 to 32$$,000 and expenditure increases from $$16,000 to 28$$,000, what is the slope of the line?

Accepted Answer

$$0.75$$

Question 12

Which of the following best describes a situation where variables move in opposite directions on a graph?

Accepted Answer

Negative correlation

Question 13

If the slope of a straight line is calculated as 'rise over run,' which formula correctly represents the slope between two points $$(x_1$, y_1$)$$ and $$(x_2$, y_2$)$$?

Accepted Answer

$$\frac{y_2$ - y_1$}{x_2$ - x_1$}$$

Question 14

Which of the following is an example of a decision made in self-interest that could also promote the social interest?

Accepted Answer

A business expands into a new market, creating jobs and increasing consumer choice.

Question 15

If the marginal cost of an additional hour of studying is $$10$$ and the marginal benefit is $$15$$, what should a rational student do?

Accepted Answer

Study for one more hour.

Question 16

Which of the following statements about opportunity cost is correct?

Accepted Answer

Opportunity cost is the value of the next best alternative forgone.

Question 17

If a line on a graph has a constant positive slope, what does this indicate about the relationship between the two variables?

Accepted Answer

The variables move in the same direction.

Question 18

Which of the following is NOT a key idea that defines the economic way of thinking?

Accepted Answer

Resources are unlimited.

Question 19

Suppose you have two options: attend a concert or work a part-time job that pays $$100. The concert ticket costs 50. $$What is the opportunity cost of attending the concert?

Accepted Answer

$150

Question 20

Which of the following best describes a normative statement?

Accepted Answer

The government should provide free healthcare.

Chapter 1 Introduction to Microeconomics: Key Concepts and Graphical Analysis

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