Question 1

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The value of the next best alternative foregone when making a decision.

Question 2

Suppose a student spends an hour studying microeconomics instead of working at a part-time job that pays $15 per hour. What is the opportunity cost of studying for that hour?

Accepted Answer

$15, which is the wage the student could have earned.

Question 3

Which of the following statements about scarcity is correct?

Accepted Answer

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

Question 4

If the price of a product increases, what happens to the quantity demanded according to the law of demand?

Accepted Answer

Quantity demanded decreases.

Question 5

Given the demand equation $Q_d = 10 - 2P$, what is the quantity demanded when the price $P$ is $3$?

Accepted Answer

$Q_d = 4$

Question 6

Which of the following best explains why people are required to make tradeoffs?

Accepted Answer

Because scarcity forces choices between competing alternatives.

Question 7

If the supply curve shifts to the right, what is the most likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 8

Suppose the supply equation is $Q_s = 2P - 4$ and the demand equation is $Q_d = 12 - P$. What is the equilibrium price?

Accepted Answer

$P = 5.33$

Question 9

Which of the following scenarios best illustrates a tradeoff?

Accepted Answer

A company must decide whether to invest in new machinery or increase employee wages.

Question 10

If the demand for a product increases while supply remains constant, what happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price increases and equilibrium quantity increases.

Question 11

Which equation represents the equilibrium condition in a market?

Accepted Answer

$Q_s = Q_d$

Question 12

A bakery can produce either bread or cakes with its limited resources. If it chooses to produce more bread, what is the opportunity cost?

Accepted Answer

The number of cakes not produced.

Question 13

If a market is experiencing a shortage, which of the following is true?

Accepted Answer

Quantity demanded is greater than quantity supplied.

Question 14

Suppose the demand curve for a product shifts to the left. What is the most likely result?

Accepted Answer

Equilibrium price and quantity both decrease.

Question 15

Which of the following is NOT a core concept in microeconomics according to the cheat sheet?

Accepted Answer

Inflation

Question 16

If $Q_s = 3P$ and $Q_d = 12 - P$, what is the equilibrium quantity?

Accepted Answer

$Q = 9$

Question 17

A city government must choose between building a new park or repairing roads. What economic concept does this decision illustrate?

Accepted Answer

Tradeoffs

Question 18

If the price of a good is set below the equilibrium price, what is likely to occur in the market?

Accepted Answer

A shortage

Question 19

Which of the following best describes the law of supply?

Accepted Answer

As price increases, quantity supplied increases.

Question 20

A farmer can grow either corn or soybeans on her land. If she chooses to grow soybeans, what is the opportunity cost?

Accepted Answer

The amount of corn she could have grown.

Microeconomics Core Concepts and Supply & Demand: Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards