Q: Which formula correctly calculates the slope of a straight line on a graph?

$$ \text{Slope} = \frac{\Delta y}{\Delta x} $$

Q: If the price of pizza decreases from $$14 to 12 $$and the quantity demanded increases from 55 to 65 per week, what is the slope of the demand curve between these two points?

$$ \text{Slope} = \frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2 $$

Question 1

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

Accepted Answer

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

Question 2

Apple decides to manufacture iPhones in China rather than the United States. Which economic principle does this decision most directly illustrate?

Accepted Answer

People respond to economic incentives.

Question 3

What is the opportunity cost of a government increasing funding for space exploration?

Accepted Answer

The value of the next best alternative forgone, such as funding for cancer research.

Question 4

Which of the following is an example of a marginal decision?

Accepted Answer

Deciding whether to study for one more hour or watch TV.

Question 5

A market economy is characterized by:

Accepted Answer

Decisions made by households and firms interacting in markets.

Question 6

Which formula correctly calculates the slope of a straight line on a graph?

Accepted Answer

$$ 	ext{Slope} = \frac{\Delta y}{\Delta x} $$

Question 7

If the price of pizza decreases from $$14 to 12 $$and the quantity demanded increases from 55 to 65 per week, what is the slope of the demand curve between these two points?

Accepted Answer

$$ 	ext{Slope} = \frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2 $$

Question 8

Which of the following best describes allocative efficiency?

Accepted Answer

Production is in accordance with consumer preferences, where marginal benefit equals marginal cost.

Question 9

A voluntary exchange in a market economy:

Accepted Answer

Makes both the buyer and the seller better off.

Question 10

Which of the following is a normative statement?

Accepted Answer

The government should increase the minimum wage to reduce poverty.

Question 11

Which of the following is NOT a step in building an economic model?

Accepted Answer

Ignoring all available data.

Question 12

Suppose a firm’s total revenue is calculated as price times quantity. If the price is $2.00 and the quantity sold is 125,000 units, what is the total revenue?

Accepted Answer

$$ 	ext{Total Revenue} = 2.00 	imes 125,000 = 250,000 $$

Question 13

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

Accepted Answer

Microeconomics studies individual households and firms; macroeconomics studies the economy as a whole.

Question 14

If a government policy unintentionally gives colleges an incentive to increase tuition, this is an example of:

Accepted Answer

Unintended consequences of changing economic incentives.

Question 15

Which of the following is the correct formula for percentage change?

Accepted Answer

$$ 	ext{Percentage Change} = \frac{	ext{New Value} - 	ext{Old Value}}{	ext{Old Value}} 	imes 100 $$

Question 16

Which of the following is an example of productive efficiency?

Accepted Answer

A car manufacturer produces vehicles at the lowest possible cost.

Question 17

Which of the following is a potential problem when using graphs to analyze economic relationships?

Accepted Answer

Confusing correlation with causation.

Question 18

If the area of a triangle on a graph is used to represent a value, which formula should you use?

Accepted Answer

$$ 	ext{Area} = \frac{1}{2} 	imes 	ext{base} 	imes 	ext{height} $$

Question 19

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

Accepted Answer

Assumptions simplify reality to make models useful for analysis.

Microeconomics: Foundations and Models – Chapter 1 Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards