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

Which of the following is NOT one of the three key economic ideas discussed in microeconomics?

Accepted Answer

People always act irrationally.

Question 3

Suppose a student is deciding whether to spend an extra hour studying for an exam. The marginal benefit (MB) of studying is higher than the marginal cost (MC). According to microeconomic theory, what should the student do?

Accepted Answer

Spend the extra hour studying, because $MB > MC$.

Question 4

Which equation represents the optimal decision point in marginal analysis?

Accepted Answer

$MB = MC$

Question 5

A company is considering producing more units of a product. If the marginal cost of producing one more unit is $10 and the marginal benefit is $12, what should the company do?

Accepted Answer

Produce the additional unit, since $MB > MC$.

Question 6

Which of the following is a fundamental economic question that every society must answer?

Accepted Answer

Who will receive the goods and services produced?

Question 7

Microeconomics primarily studies:

Accepted Answer

Individual markets and decision-making by households and firms.

Question 8

Which statement best illustrates the concept of responding to incentives?

Accepted Answer

A store lowers prices and sees an increase in sales.

Question 9

If a society decides to produce more consumer goods and fewer capital goods, which fundamental economic question is it addressing?

Accepted Answer

"What goods and services will be produced?"

Question 10

Which of the following scenarios best demonstrates making decisions at the margin?

Accepted Answer

A commuter decides whether to take one more bus ride based on the cost and benefit of that ride.

Question 11

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

Accepted Answer

Allocating resources between healthcare and education.

Question 12

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

Accepted Answer

Microeconomics focuses on individual markets, while macroeconomics studies the economy as a whole.

Question 13

A rational consumer will purchase a product if:

Accepted Answer

The marginal benefit of the product exceeds its marginal cost.

Question 14

Which of the following is NOT a part of the language of economics?

Accepted Answer

Ignoring opportunity cost in decision-making.

Question 15

If $MB < MC$, what does microeconomic theory suggest about taking the action?

Accepted Answer

The action is not worth doing.

Question 16

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

Accepted Answer

Choosing to spend money on a vacation instead of saving for a new laptop.

Question 17

Which of the following is a correct application of marginal analysis in a real-world scenario?

Accepted Answer

A restaurant adds one more table if the expected revenue from the table exceeds the cost of setting it up.

Question 18

Which of the following statements is true regarding rational behavior in economics?

Accepted Answer

Rational individuals weigh costs and benefits before making decisions.

Question 19

Which of the following is an example of society answering the question 'How will the goods and services be produced?'

Accepted Answer

Deciding whether to use labor-intensive or capital-intensive methods in manufacturing.

Question 20

A government is considering whether to allocate more resources to public transportation or healthcare. What economic concept does this scenario illustrate?

Accepted Answer

Trade-offs due to scarcity.

Microeconomics: Foundations and Models – Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards