Q: If a firm sells 125,000 bottles of Pepsi at $2.00 per bottle, what is its total revenue?

$$\text{Total Revenue} = 125,000 \times 2.00 = 250,000$$

Question 1

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

Accepted Answer

The highest-valued alternative that must be given up to engage in an activity.

Question 2

Suppose a firm can produce a product using either more labor or more machines. If the cost of labor increases, what is the most likely response according to economic theory?

Accepted Answer

The firm will switch to a production method that uses more machines and less labor.

Question 3

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

Accepted Answer

Raising tariffs will increase the price of imported goods.

Question 4

A market economy is characterized by:

Accepted Answer

Decisions made by households and firms interacting in markets.

Question 5

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

$$\frac{\Delta y}{\Delta x} = \frac{12 - 14}{65 - 55} = \frac{-2}{10} = -0.2$$

Question 6

Which of the following best explains why market economies tend to be more efficient than centrally planned economies?

Accepted Answer

Market economies rely on voluntary exchange and competition.

Question 7

A government imposes a tax on high incomes to fund welfare programs. This is an example of:

Accepted Answer

A trade-off between efficiency and equity.

Question 8

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

Accepted Answer

Assume all variables are unrelated.

Question 9

If a firm sells 125,000 bottles of Pepsi at $2.00 per bottle, what is its total revenue?

Accepted Answer

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

Question 10

Which of the following best describes allocative efficiency?

Accepted Answer

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

Question 11

A time-series graph is used to:

Accepted Answer

Display how a variable changes over time.

Question 12

If U.S. real GDP increased from $$19,610 billion in 2021 to 20$$,018 billion in 2022, what is the percentage change?

Accepted Answer

$$\left( \frac{20,018 - 19,610}{19,610} ight) 	imes 100 = 2.1\%$$

Question 13

Which of the following is a normative statement?

Accepted Answer

The government should provide free healthcare to all citizens.

Question 14

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

Accepted Answer

Increasing funding for space exploration means less funding for cancer research.

Question 15

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

Accepted Answer

Microeconomics focuses on households and firms, while macroeconomics focuses on aggregate outcomes like inflation and unemployment.

Question 16

If the area of a triangle on a graph has a base of 25,000 and a height of $0.50, what is the area?

Accepted Answer

$$\frac{1}{2} 	imes 25,000 	imes 0.50 = 6,250$$

Question 17

Which of the following is a reason why graphs can be misleading in economics?

Accepted Answer

Graphs can omit variables or have truncated axes, leading to incorrect conclusions.

Question 18

Which of the following is an example of voluntary exchange?

Accepted Answer

A consumer buys a coffee from a café, and both the buyer and seller are better off.

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.

Question 20

If the slope of a nonlinear cost curve between two points is steeper at higher output levels, what does this imply about the marginal cost of production?

Accepted Answer

Marginal cost increases as output increases.

Microeconomics: Foundations and Models – Chapter 1 Study Notes

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