Question 1

Which of the following best describes the fundamental economic problem?

Accepted Answer

Scarcity of resources to meet unlimited wants

Question 2

Which of the following is NOT one of the four key resources of production?

Accepted Answer

Technology

Question 3

Which scenario is an example of microeconomics?

Accepted Answer

The effect of a new tax on the supply and demand for a particular product

Question 4

Which assumption do economists generally make when forming economic models?

Accepted Answer

People are rational

Question 5

Which of the following best illustrates productive efficiency in a competitive market?

Accepted Answer

A firm uses the most cost-effective production techniques and achieves the lowest possible cost per unit of output.

Question 6

Allocative efficiency is achieved when:

Accepted Answer

A firm sets the price of its product to match the marginal cost of production.

Question 7

Apple is considering producing 300,000 more iPhones. According to economic reasoning, Apple should continue production up to the point where:

Accepted Answer

$MB = MC$

Question 8

Which of the following is a positive statement?

Accepted Answer

The U.S. minimum wage increased in 2009.

Question 9

A production possibilities frontier (PPF) is best described as:

Accepted Answer

A curve showing the maximum attainable combinations of two goods that can be produced with available resources and current technology.

Question 10

Why is the PPF typically bowed outward from the origin?

Accepted Answer

Because opportunity cost increases as more of one good is produced.

Question 11

If Ford moves from producing 60 gasoline-powered F-150s and 20 Lightnings to 40 gasoline-powered F-150s and 40 Lightnings, what is the opportunity cost of producing the additional 20 Lightnings?

Accepted Answer

20 gasoline-powered F-150s

Question 12

Which of the following would cause the PPF to shift outward?

Accepted Answer

An increase in a country's resources

Question 13

If a music company moves from producing 0 banjos and 10 saxophones to 1 banjo and 9 saxophones, what is the opportunity cost of producing 1 more banjo?

Accepted Answer

1 saxophone

Question 14

Absolute advantage refers to:

Accepted Answer

Producing more of a good than another producer with the same resources.

Question 15

Comparative advantage is based on:

Accepted Answer

Who can produce a good at a lower opportunity cost.

Question 16

If the opportunity cost of producing 1 lecture for Shaun is $\frac{4}{5}$ papers and for Bryan is 2 papers, who has the comparative advantage in creating lectures?

Accepted Answer

Shaun

Question 17

Which of the following points on a PPF graph represent efficient allocations of resources?

Accepted Answer

Points on the PPF curve

Question 18

The law of increasing opportunity cost explains why:

Accepted Answer

The PPF is bowed outward

Question 19

Which of the following statements is normative?

Accepted Answer

The government should raise the minimum wage to $10.

Microeconomics Exam 1 Review: Foundations, Models, and Trade-offs

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