Question 1

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

Accepted Answer

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

Question 2

Suppose a country can produce either 100 units of wheat or 200 units of corn. If the country decides to produce 50 units of wheat, what is the opportunity cost in terms of corn?

Accepted Answer

100 units of corn

Question 3

If the price of a normal good increases, what is most likely to happen to the quantity demanded, according to the law of demand?

Accepted Answer

Quantity demanded will decrease.

Question 4

A shift in the demand curve to the right could be caused by which of the following?

Accepted Answer

An increase in the price of a substitute good.

Question 5

Which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 6

If a supply curve shifts to the left, which of the following could be a possible cause?

Accepted Answer

An increase in the price of inputs

Question 7

Given the demand function $Q_d = 100 - 2P$, what is the price elasticity of demand when $P = 20$?

Accepted Answer

$-0.4$

Question 8

If the cross-price elasticity of demand between two goods is $+0.8$, what does this indicate?

Accepted Answer

The goods are substitutes.

Question 9

A country has a comparative advantage in producing a good if:

Accepted Answer

It can produce the good at a lower opportunity cost than other countries.

Question 10

Suppose the price elasticity of supply for a product is $1.5$. If the price increases by 10%, what is the expected percentage change in quantity supplied?

Accepted Answer

15%

Question 11

If a good has an income elasticity of demand of $-0.3$, what type of good is it?

Accepted Answer

Inferior good

Question 12

Which of the following statements is a positive economic statement?

Accepted Answer

"Increasing the minimum wage will lead to higher unemployment among teenagers."

Question 13

If both demand and supply increase simultaneously, what happens to equilibrium quantity and price?

Accepted Answer

Equilibrium quantity increases, but the effect on price is indeterminate.

Question 14

A market is experiencing a shortage. Which of the following is most likely to occur?

Accepted Answer

The price will increase.

Question 15

Which of the following best illustrates the concept of marginalism?

Accepted Answer

Deciding whether to study one more hour for an exam.

Question 16

If the government imposes a price ceiling below the equilibrium price, what is the likely result?

Accepted Answer

A shortage of the good

Question 17

Which of the following would cause a movement along the demand curve rather than a shift?

Accepted Answer

A change in the price of the good itself

Question 18

Suppose the demand for a product is perfectly inelastic. What is the value of the price elasticity of demand?

Accepted Answer

$0$

Question 19

If a firm faces increasing opportunity costs as it expands production, what will the shape of its production possibilities frontier (PPF) be?

Accepted Answer

A curve bowed outward from the origin

Question 20

Which of the following is an example of a supply shifter?

Accepted Answer

A change in the price of inputs

Microeconomics Exam Study Guide: Core Concepts and Applications

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