Q: If a firm's total revenue is represented by the area of a rectangle on a graph, and the firm sells 125,000 bottles at $2.00 each, what is the total revenue?

$125,000 \times 2.00 = 250,000$

Question 1

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

Accepted Answer

Scarcity means that resources are limited and cannot satisfy all human wants.

Question 2

A student is deciding whether to spend an extra hour studying for an exam or watching TV. According to marginal analysis, the student should:

Accepted Answer

Study for the extra hour if the marginal benefit of studying exceeds the marginal cost.

Question 3

Suppose you are selling your car. The transmission fails, and you have already spent $2,000 on repairs. The cost to fix the transmission is $800, and the car's value increases from $4,300 to $5,000 if repaired. What is the marginal benefit of repairing the transmission?

Accepted Answer

$700

Question 4

Which of the following is an example of opportunity cost?

Accepted Answer

Choosing to fund more health care means fewer university scholarships are available.

Question 5

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

Accepted Answer

"Increasing the minimum wage will lead to higher unemployment among teenagers."

Question 6

In a market economy, how are goods and services allocated?

Accepted Answer

Through the interaction of households and firms in markets.

Question 7

Which of the following best describes allocative efficiency?

Accepted Answer

Every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.

Question 8

A centrally planned economy is most likely to experience which of the following problems?

Accepted Answer

Inefficiency due to the difficulty of knowing and meeting all consumer preferences.

Question 9

Which of the following is a key feature of a mixed economy like Canada?

Accepted Answer

Most economic decisions result from market interactions, but the government plays a significant role in resource allocation.

Question 10

Suppose the price of pizza decreases from $14 to $12, and the quantity demanded increases from 55 to 65 per week. What is the slope of the line connecting these two points?

Accepted Answer

$\frac{-2}{10} = -0.2$

Question 11

Which of the following best illustrates the concept of voluntary exchange?

Accepted Answer

A consumer buys a coffee from a café, and both the buyer and seller are better off after the transaction.

Question 12

If a firm's total revenue is represented by the area of a rectangle on a graph, and the firm sells 125,000 bottles at $2.00 each, what is the total revenue?

Accepted Answer

$125,000 	imes 2.00 = 250,000$

Question 13

Which of the following is the correct formula for calculating the percentage change in an economic variable?

Accepted Answer

$\frac{	ext{Value in the second period} - 	ext{Value in the first period}}{	ext{Value in the first period}} 	imes 100\%$

Question 14

Which of the following is a common misconception about economics?

Accepted Answer

Economics is only about money.

Question 15

A music producer can make a song sound good by hiring a great singer or by using Auto-Tune with a mediocre singer. This example best illustrates which economic question?

Accepted Answer

"How will the goods and services be produced?"

Question 16

Which of the following is an example of a normative statement?

Accepted Answer

"The government should provide free healthcare to all citizens."

Question 17

Which of the following best describes productive efficiency?

Accepted Answer

A good or service is produced at the lowest possible cost.

Question 18

If the area of a triangle on a graph has a base of 25,000 and a height of $0.50, what is the area?

Accepted Answer

$\frac{1}{2} 	imes 25,000 	imes 0.50 = 6,250$

Question 19

Which of the following is NOT a step in the development of an economic model?

Accepted Answer

Assume all variables are constant and never test the model.

Question 20

Which of the following best distinguishes microeconomics from macroeconomics?

Accepted Answer

Microeconomics studies how households and firms make choices, while macroeconomics studies the economy as a whole.

Microeconomics Chapter 1: Foundations and Models – Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards