Question 1

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

Accepted Answer

The value of the next best alternative foregone when making a choice.

Question 2

Suppose a country can produce either 100 units of wheat or 200 units of corn with its available resources. What is the opportunity cost of producing 1 unit of wheat?

Accepted Answer

$2$ units of corn

Question 3

If the demand for a product is given by $Q_d = 100 - 2P$ and the supply is $Q_s = 4P$, what is the equilibrium price?

Accepted Answer

$P = 25$

Question 4

Which of the following statements about the law of demand is correct?

Accepted Answer

As the price of a good decreases, the quantity demanded increases.

Question 5

A bakery finds that when it raises the price of its bread from $\$2$ to $\$2.20$, the quantity demanded falls from $500$ to $450$ loaves per week. What is the price elasticity of demand (using the midpoint formula)?

Accepted Answer

$-1.11$

Question 6

Which of the following would cause a rightward shift in the demand curve for electric cars?

Accepted Answer

An increase in consumer income (assuming electric cars are normal goods).

Question 7

If the cross-price elasticity of demand between two goods is positive, what does this imply about the relationship between the goods?

Accepted Answer

They are substitutes.

Question 8

Suppose the supply of oranges is perfectly inelastic. What will happen to the equilibrium price and quantity if there is a sudden increase in demand?

Accepted Answer

Price will increase, quantity will remain unchanged.

Question 9

A government imposes a price ceiling below the equilibrium price for rental apartments. What is the most likely outcome?

Accepted Answer

A shortage of apartments.

Question 10

If a 10% increase in the price of a good leads to a 5% decrease in quantity demanded, what is the price elasticity of demand, and how would you classify the demand?

Accepted Answer

$-0.5$, inelastic

Question 11

Which of the following best illustrates the concept of the 'Invisible Hand' as described by Adam Smith?

Accepted Answer

Individuals pursuing their own self-interest unintentionally benefit society as a whole.

Question 12

A new technology reduces the cost of producing smartphones. What is the likely effect on the supply curve and equilibrium price?

Accepted Answer

Supply curve shifts right, equilibrium price falls.

Question 13

If the government introduces a tax on sellers, which of the following is true about the effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 14

Suppose the market for coffee is in equilibrium. Suddenly, a disease destroys half of the coffee crop. What is the most likely short-run effect on price and quantity?

Accepted Answer

Price increases, quantity decreases.

Question 15

Which of the following is NOT a determinant of demand?

Accepted Answer

Production technology

Question 16

A market is in equilibrium at price $P^*$ and quantity $Q^*$. If the government sets a minimum price above $P^*$, what is the likely result?

Accepted Answer

A surplus at the minimum price.

Question 17

If the supply of a good is elastic, what does this imply about producers' responsiveness to price changes?

Accepted Answer

Producers are highly responsive to price changes.

Question 18

Which of the following real-world scenarios best illustrates the concept of comparative advantage?

Accepted Answer

A country produces both cars and wheat, but specializes in wheat because it can produce it at a lower opportunity cost than cars.

Question 19

Suppose the demand for public transit is given by $Q_d = 200 - 5P$ and the supply is $Q_s = 20 + 3P$. What is the equilibrium quantity?

Accepted Answer

$Q = 160$

Microeconomics Syllabus and Study Guide: ECO101H5F (Fall 2025)

Study Guide - Practice Questions

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