Question 1

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

Accepted Answer

Scarcity refers to the inability to satisfy all human wants due to limited resources.

Question 2

Microeconomics is primarily concerned with:

Accepted Answer

The choices that individuals and businesses make, and how these choices interact in markets.

Question 3

Which of the following is NOT a factor of production?

Accepted Answer

Money

Question 4

In the context of economics, an incentive is:

Accepted Answer

A reward that encourages an action or a penalty that discourages an action.

Question 5

Which of the following statements is a positive statement?

Accepted Answer

"Raising the minimum wage will increase unemployment among teenagers."

Question 6

The opportunity cost of attending a concert includes:

Accepted Answer

The highest-valued alternative forgone, including both money spent and time used.

Question 7

Resource use is considered efficient if:

Accepted Answer

It is not possible to make someone better off without making someone else worse off.

Question 8

Which of the following best illustrates a tradeoff?

Accepted Answer

Choosing to study for an exam instead of going to a party.

Question 9

A rational choice is one that:

Accepted Answer

Maximizes the benefit over cost for the person making the choice.

Question 10

Marginal analysis involves:

Accepted Answer

Evaluating the consequences of incremental changes in the use of resources.

Question 11

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

Accepted Answer

"The government should reduce taxes to help the economy."

Question 12

If the marginal benefit of an activity exceeds its marginal cost, what should a rational individual do?

Accepted Answer

Increase the activity.

Question 13

Which of the following is a flaw in reasoning commonly encountered in economics?

Accepted Answer

Assuming correlation implies causation (post hoc, ergo propter hoc).

Question 14

Which factor of production earns 'interest'?

Accepted Answer

Capital

Question 15

Globalization is in the self-interest of which group?

Accepted Answer

Consumers who buy low-cost imported goods.

Question 16

Which of the following best describes the relationship between self-interest and social interest?

Accepted Answer

Self-interest may or may not promote the social interest, depending on incentives.

Question 17

Suppose a government wants to reduce carbon emissions. According to economic theory, which approach is most likely to succeed?

Accepted Answer

Changing incentives so that self-interested choices align with the social interest.

Question 18

Which of the following is the correct formula for the slope of a straight line in economics?

Accepted Answer

$ \frac{\Delta y}{\Delta x} $

Question 19

When plotting the relationship between two variables while holding other variables constant, economists use the concept of:

Accepted Answer

Ceteris paribus

Question 20

A scatter diagram is useful in economics because it:

Accepted Answer

Shows the relationship between two variables for multiple observations.

Microeconomics Chapter 1: What Is Economics? (Study Notes)

Study Guide - Practice Questions