Question 1

Which of the following best defines 'opportunity cost' in economics?

Accepted Answer

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

Question 2

According to the law of demand, what happens to the quantity demanded when the price of a good increases, ceteris paribus?

Accepted Answer

Quantity demanded decreases.

Question 3

Which of the following is NOT a factor of production?

Accepted Answer

Money

Question 4

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

Accepted Answer

Decrease consumption of the good.

Question 5

Which equation represents allocative efficiency?

Accepted Answer

$$MB = MC$$

Question 6

A point inside the Production Possibility Frontier (PPF) represents:

Accepted Answer

Inefficient use of resources

Question 7

If the price of energy bars increases and energy drinks are a substitute, what happens to the demand for energy drinks?

Accepted Answer

It increases.

Question 8

Which of the following best describes the substitution effect?

Accepted Answer

When the price of a good rises, consumers switch to substitutes, decreasing quantity demanded.

Question 9

Suppose a new technology makes it cheaper to produce both hamburgers and fries. What is the likely effect on the demand for fries if hamburgers and fries are complements?

Accepted Answer

Demand for fries will increase.

Question 10

Which of the following shifts the demand curve for a normal good to the right?

Accepted Answer

An increase in consumer income.

Question 11

If a country can produce more of both goods than another country, it has:

Accepted Answer

Absolute advantage

Question 12

Which of the following is an example of a rational choice?

Accepted Answer

Choosing the option with the greatest net benefit after comparing costs and benefits.

Question 13

A rightward shift in the demand curve, as shown in the second image, could be caused by:

Accepted Answer

An increase in expected future income.

Question 14

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

Accepted Answer

It decreases.

Question 15

Which of the following best describes the law of demand using the demand schedule in the first image?

Accepted Answer

As price decreases from $$2.50 to 1.00$$, quantity demanded increases from 5 to 22.

Question 16

Which of the following is true about points on the PPF?

Accepted Answer

They are efficient.

Question 17

If a consumer's willingness to pay for an additional unit of a good is $$10, but the price is 12$$, what is the marginal benefit and what should the consumer do?

Accepted Answer

Marginal benefit is $10; the consumer should not buy the good.

Question 18

Which of the following is an example of an inferior good?

Accepted Answer

Long-distance bus trips

Question 19

If the marginal cost (MC) of producing a good is given by $$MC = 2Q$$, and the marginal benefit (MB) is given by $$MB = 20 - Q$$, what is the allocatively efficient quantity?

Accepted Answer

$$Q = 10$$

Question 20

Which of the following best describes the concept of 'trade-off'?

Accepted Answer

Exchanging one thing to get something else.

Introduction to Microeconomics: Scarcity, Opportunity Cost, and Demand

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