Question 1

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

Accepted Answer

A company uses its resources to produce smartphones instead of laptops; the opportunity cost is the laptops that could have been produced.

Question 2

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

Accepted Answer

The government should increase spending on healthcare.

Question 3

Suppose a country can produce either 100 units of capital goods or 200 units of consumption goods. If the country is currently producing 80 units of capital goods and 100 units of consumption goods, what does this indicate about its production?

Accepted Answer

The country is operating inside its production possibilities curve and is inefficient.

Question 4

Which of the following best describes the law of increasing opportunity costs?

Accepted Answer

As more of one good is produced, the opportunity cost of producing additional units of that good increases.

Question 5

If the demand for electric cars increases due to a rise in gasoline prices, what will happen to the equilibrium price and quantity of electric cars, ceteris paribus?

Accepted Answer

Both equilibrium price and equilibrium quantity will increase.

Question 6

Which of the following is NOT a determinant of demand for a good?

Accepted Answer

Technology used in production

Question 7

A government sets a price ceiling below the equilibrium price for rental apartments. What is the most likely result?

Accepted Answer

A shortage of rental apartments

Question 8

Which of the following best explains why specialization and trade can benefit two countries, even if one country has an absolute advantage in both goods?

Accepted Answer

Because each country can benefit by specializing in the good in which it has a comparative advantage.

Question 9

Which of the following is an example of a positive relationship between two variables?

Accepted Answer

As the price of a good increases, the quantity supplied increases.

Question 10

Suppose the government imposes a minimum wage above the equilibrium wage. What is the most likely effect in the labor market?

Accepted Answer

A surplus of workers (unemployment)

Question 11

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual markets and decision-makers, while macroeconomics studies the economy as a whole.

Question 12

If a new technology reduces the cost of producing smartphones, what will happen to the supply curve for smartphones?

Accepted Answer

The supply curve will shift to the right.

Question 13

Which of the following is an example of a change in quantity demanded, not a change in demand?

Accepted Answer

A decrease in the price of coffee leads to more coffee purchased.

Question 14

Which of the following is NOT a method of rationing scarce goods?

Accepted Answer

Unlimited production

Question 15

Suppose the government introduces an effective price floor in the wheat market. What is the likely outcome?

Accepted Answer

A surplus of wheat

Question 16

Which of the following best describes the role of assumptions in economic models?

Accepted Answer

Assumptions are used to simplify reality and focus on key relationships.

Question 17

If the supply of oranges decreases due to a hurricane, but demand remains unchanged, what will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price will increase and equilibrium quantity will decrease.

Question 18

Which of the following is an example of a direct relationship?

Accepted Answer

As the price of a good increases, the quantity supplied increases.

Question 19

A country can produce 10 tons of steel or 20 tons of wheat with the same resources. Another country can produce 5 tons of steel or 15 tons of wheat. Which country has the comparative advantage in steel?

Accepted Answer

The second country, because it has a lower opportunity cost for steel.

Question 20

Which of the following best describes 'bounded rationality' in behavioral economics?

Accepted Answer

Individuals make decisions with limited information and cognitive limitations.

Microeconomics Exam 1 Study Guide: Step-by-Step Guidance

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