$$\text{Slope} = \frac{\Delta y}{\Delta x}$$

$$\text{Percentage change} = \frac{\text{Value in the second period} - \text{Value in the first period}}{\text{Value in the first period}}$$

$$\text{Area} = \frac{1}{2} \times \text{Base} \times \text{Height}$$

Question 1

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

Accepted Answer

Scarcity is when unlimited wants exceed limited resources available to fulfill those wants.

Question 2

A government introduces a tax on sugar-sweetened drinks to reduce obesity rates. Which key economic idea does this policy primarily illustrate?

Accepted Answer

People respond to incentives.

Question 3

Suppose you are deciding whether to study for an extra hour or watch TV. The additional benefit you get from studying is called:

Accepted Answer

Marginal benefit

Question 4

Which formula correctly calculates the slope of a straight line on a graph?

Accepted Answer

$$	ext{Slope} = \frac{\Delta y}{\Delta x}$$

Question 5

If 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 demand line?

Accepted Answer

$$-0.2$$

Question 6

Which of the following is an example of opportunity cost?

Accepted Answer

The value of the best alternative forgone when a choice is made.

Question 7

In a market economy, how are economic resources allocated?

Accepted Answer

By the interaction of households and firms in markets.

Question 8

Which type of efficiency is achieved when goods and services are produced at the lowest possible cost?

Accepted Answer

Productive efficiency

Question 9

A voluntary exchange in a market makes both the buyer and seller better off. This is most closely related to which concept?

Accepted Answer

Allocative efficiency

Question 10

Which of the following best describes a mixed economy?

Accepted Answer

An economy where most decisions result from market interactions, but the government plays a significant role.

Question 11

Which formula is used to calculate the percentage change in an economic variable?

Accepted Answer

$$	ext{Percentage change} = \frac{	ext{Value in the second period} - 	ext{Value in the first period}}{	ext{Value in the first period}}$$

Question 12

Which of the following is a positive economic statement?

Accepted Answer

"An increase in the minimum wage will lead to higher unemployment among teenagers."

Question 13

A graph shows a positive relationship between income and consumption. What does this mean?

Accepted Answer

As income increases, consumption increases.

Question 14

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

Accepted Answer

Ignore assumptions to make the model more realistic.

Question 15

If a firm sells 125,000 bottles at $2.00 each, what is its total revenue?

Accepted Answer

$$250,000$$

Question 16

Which formula gives the area of a triangle, as used in economic graphs?

Accepted Answer

$$	ext{Area} = \frac{1}{2} 	imes 	ext{Base} 	imes 	ext{Height}$$

Question 17

Which of the following is an example of a trade-off resulting from scarcity?

Accepted Answer

Increasing funding for health care means fewer university scholarships.

Question 18

Which concept refers to the fair distribution of economic benefits?

Accepted Answer

Equity

Question 19

Which of the following statements about economic models is correct?

Accepted Answer

Economic models are simplified versions of reality used to analyze real-world situations.

Question 20

Which of the following best distinguishes microeconomics from macroeconomics?

Accepted Answer

Microeconomics studies how households and firms make choices and interact in markets.

Microeconomics Chapter 1: Foundations and Models – Study Notes

Study Guide - Practice Questions