Question 1

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

Accepted Answer

A situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

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

Accepted Answer

The highest-valued alternative given up, such as funding cancer research.

Question 3

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

Accepted Answer

People always act in the interest of society.

Question 4

A firm is deciding whether to use more machines or more workers in its production process. This decision is an example of:

Accepted Answer

How goods and services will be produced.

Question 5

Which type of economy is characterized by the government making all decisions about resource allocation?

Accepted Answer

Centrally planned economy

Question 6

Market economies tend to be more efficient than centrally-planned economies because they promote:

Accepted Answer

Productive and allocative efficiency

Question 7

Voluntary exchange in a market economy leads to:

Accepted Answer

Both the buyer and seller being made better off by the transaction.

Question 8

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

Accepted Answer

Choosing to spend more time studying instead of watching TV.

Question 9

If the marginal benefit (MB) of an action is greater than the marginal cost (MC), what should a rational person do?

Accepted Answer

Take the action.

Question 10

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

Accepted Answer

$\frac{\Delta y}{\Delta x}$

Question 11

Which of the following is a positive economic statement?

Accepted Answer

Raising tariffs will increase government revenue.

Question 12

A pie chart is useful in economics because it:

Accepted Answer

Represents market share as the size of the 'slice of the pie'.

Question 13

Which of the following is an example of an economic variable?

Accepted Answer

The number of people employed in manufacturing.

Question 14

If a firm’s total revenue is calculated as price times quantity, what is the total revenue if the price is $200 and the quantity is 125,000?

Accepted Answer

$250,000$

Question 15

Which of the following best describes allocative efficiency?

Accepted Answer

Production is in accordance with consumer preferences.

Question 16

Which of the following is a normative economic statement?

Accepted Answer

The government ought to reduce unemployment.

Question 17

What is the formula for calculating the area of a triangle, as used in economic graphs?

Accepted Answer

$\frac{1}{2} 	imes 	ext{Base} 	imes 	ext{Height}$

Question 18

Which of the following is a skill that economists can provide to businesses?

Accepted Answer

Forecasting demand for products.

Question 19

Which of the following is an example of marginal analysis?

Accepted Answer

Deciding whether to watch an extra hour of TV or study instead.

Question 20

Which of the following terms refers to manufactured goods that are used to produce other goods and services?

Accepted Answer

Capital

Microeconomics Foundations: Key Concepts and Models (Chapter 1 Study Guide)

Study Guide - Practice Questions