Question 1

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

Accepted Answer

The value of the next-best alternative that must be forgone when a choice is made.

Question 2

Suppose a student decides to spend an evening studying instead of working a part-time job that pays $15 per hour. What is the opportunity cost of studying for 4 hours?

Accepted Answer

$60, which is the income forgone from not working.

Question 3

Which statement is an example of a positive economic statement?

Accepted Answer

"Raising the minimum wage increases unemployment."

Question 4

On a production possibilities curve (PPC), what does a point inside the curve represent?

Accepted Answer

Inefficient use of resources (underutilization).

Question 5

If the price of gasoline increases and the quantity demanded decreases significantly, what type of demand does gasoline exhibit?

Accepted Answer

Elastic demand

Question 6

Which of the following would cause a shift of the demand curve for concert tickets?

Accepted Answer

An increase in consumer income.

Question 7

The law of supply states that, ceteris paribus, as the price of a good increases:

Accepted Answer

Quantity supplied increases.

Question 8

A market is defined as:

Accepted Answer

A group of buyers and sellers for a good or service.

Question 9

If the equilibrium price of apples is $2 per pound and the government sets a price floor at $3 per pound, what is likely to happen?

Accepted Answer

A surplus of apples.

Question 10

Which of the following is NOT a supply shifter?

Accepted Answer

Consumer income

Question 11

Suppose the price elasticity of demand for a product is $-2$. If the price increases by 10%, what is the expected percentage change in quantity demanded?

Accepted Answer

$-20\%$

Question 12

Which of the following policies would a central bank use to combat high inflation?

Accepted Answer

Contractionary monetary policy

Question 13

Real GDP differs from nominal GDP in that real GDP:

Accepted Answer

Is adjusted for inflation.

Question 14

If the unemployment rate in a country is 8%, what does this indicate?

Accepted Answer

8% of the labor force is unemployed.

Question 15

Which of the following best illustrates marginal analysis?

Accepted Answer

Weighing the additional benefits against the additional costs of an action.

Question 16

A government increases spending and cuts taxes to stimulate the economy. This is an example of:

Accepted Answer

Expansionary fiscal policy

Question 17

Which of the following is a direct incentive for a firm to increase production?

Accepted Answer

An increase in the market price of the good

Question 18

If a point lies outside the production possibilities curve (PPC), what does this indicate?

Accepted Answer

Unattainable with current resources.

Question 19

Which of the following would cause a movement along the demand curve for coffee?

Accepted Answer

A decrease in the price of coffee.

Question 20

Suppose the Consumer Price Index (CPI) increases from 200 to 210 over one year. What is the inflation rate for that year?

Accepted Answer

$5\%$

Microeconomics Study Guide: Scarcity, Choice, and Market Principles

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