Q: Which formula correctly calculates the percentage change in a variable?

$\frac{\text{Value in the second period} - \text{Value in the first period}}{\text{Value in the first period}} \times 100$

Question 1

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

Accepted Answer

Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

Apple chooses the price of its iPhones based on which key economic idea?

Accepted Answer

People are rational and weigh the benefits and costs to maximize profit.

Question 3

Which of the following is an example of a trade-off?

Accepted Answer

Choosing to increase funding for space exploration at the expense of cancer research.

Question 4

What is the opportunity cost of attending college full-time?

Accepted Answer

The highest-valued alternative that must be given up, such as working a full-time job.

Question 5

Which formula correctly calculates the percentage change in a variable?

Accepted Answer

$\frac{	ext{Value in the second period} - 	ext{Value in the first period}}{	ext{Value in the first period}} 	imes 100$

Question 6

Which of the following best illustrates marginal analysis?

Accepted Answer

Comparing the additional benefit of studying one more hour to the additional cost of lost sleep.

Question 7

In a market economy, what determines the allocation of resources?

Accepted Answer

Decisions of households and firms interacting in markets.

Question 8

Which of the following is a characteristic of productive efficiency?

Accepted Answer

Every good or service is produced at the lowest possible cost.

Question 9

What is voluntary exchange?

Accepted Answer

A situation in which both the buyer and seller are made better off by the transaction.

Question 10

Which of the following is an example of a positive economic statement?

Accepted Answer

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

Question 11

A music producer can choose between hiring a great singer or using Auto-Tune with a mediocre singer. This scenario best illustrates which economic question?

Accepted Answer

"How will the goods and services be produced?"

Question 12

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

Accepted Answer

Ignore statistical analysis and rely only on intuition.

Question 13

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

Accepted Answer

Microeconomics studies the choices of households and firms, while macroeconomics studies the economy as a whole.

Question 14

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?

Accepted Answer

$\frac{65-55}{12-14} = -5$

Question 15

Which of the following is a normative statement?

Accepted Answer

"Government intervention should reduce the severity of recessions."

Question 16

Which of the following is a reason why market outcomes may not be fully efficient?

Accepted Answer

Governments might interfere with market outcomes.

Question 17

What is the area of a rectangle representing total revenue if the price per bottle is $200 and the quantity sold is 125,000?

Accepted Answer

$200 	imes 125,000 = 25,000,000$

Question 18

Which of the following best describes allocative efficiency?

Accepted Answer

Production is in accordance with consumer preferences, and every good is produced up to the point where the last unit provides a marginal benefit equal to the marginal cost.

Question 19

Which of the following is a behavioral assumption commonly made in economic models?

Accepted Answer

Consumers will buy goods and services to maximize their well-being.

Question 20

Why do economists use models with assumptions and simplifications?

Accepted Answer

To analyze real-world economic situations more effectively.

Microeconomics: Foundations and Models – Chapter 1 Study Notes

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