$$\text{Opportunity Cost of 1A} = \frac{B}{A}$$

Question 1

Which of the following is NOT considered a factor of production in economics?

Accepted Answer

Money

Question 2

Which of the following best describes opportunity cost?

Accepted Answer

The value of the next best alternative forgone

Question 3

Suppose a student chooses to attend college full-time. Which of the following is an implicit cost of this decision?

Accepted Answer

Wages lost from not working while in college

Question 4

If the production possibilities curve (PPC) is bowed outward, what does this indicate about opportunity costs?

Accepted Answer

Opportunity costs are increasing

Question 5

Which of the following would cause the PPC to shift outward?

Accepted Answer

An improvement in technology

Question 6

Given the following data for producing lawns and memos:

A.J.: 3 hours (lawn), 2 hours (memo)
Nicole: 2 hours (lawn), 1 hour (memo)

Who has the absolute advantage in both tasks?

Accepted Answer

Nicole

Question 7

For an output problem, the opportunity cost of 1 unit of good A is calculated as:

Accepted Answer

$$	ext{Opportunity Cost of 1A} = \frac{B}{A}$$

Question 8

If Michelle can make 100 toys or 50 cakes in a day, what is her opportunity cost of making one toy?

Accepted Answer

0.5 cakes

Question 9

Which of the following best describes diminishing marginal utility?

Accepted Answer

The additional satisfaction from consuming each additional unit of a good decreases

Question 10

If a consumer spends all her income on two goods, X and Y, and maximizes utility, which equation must be true?

Accepted Answer

$$\frac{MU_X}{P_X} = \frac{MU_Y}{P_Y}$$

Question 11

Which of the following is a defining characteristic of a market economy?

Accepted Answer

Private ownership of resources

Question 12

A country is producing at a point inside its PPC. What does this indicate?

Accepted Answer

The country is experiencing unemployment or inefficiency

Question 13

Which of the following is an example of physical capital?

Accepted Answer

A tractor used in farming

Question 14

If the marginal benefit of studying an additional hour is less than the marginal cost, what should a rational student do?

Accepted Answer

Study fewer hours

Question 15

Which of the following would NOT be included in the opportunity cost of attending college?

Accepted Answer

Room and board

Question 16

If a country moves from a point inside its PPC to a point on the curve, what has occurred?

Accepted Answer

An increase in efficiency

Question 17

Which of the following best explains why scarcity exists?

Accepted Answer

Resources are limited and wants are unlimited

Question 18

If the opportunity cost of producing one more unit of good X increases as more of good X is produced, the PPC is:

Accepted Answer

Bowed outward

Question 19

Which of the following is NOT a characteristic of a command economy?

Accepted Answer

Private ownership of resources

Question 20

A country can produce either 100 units of good A or 200 units of good B. What is the opportunity cost of producing one unit of good A?

Accepted Answer

0.5 units of good B

Microeconomics Review: Study Guidance and Practice

Study Guide - Practice Questions