Question 1

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

Accepted Answer

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

Question 2

Suppose you spend 2 hours watching a movie instead of working, and you earn $15 per hour at your job. What is the opportunity cost of watching the movie?

Accepted Answer

$30

Question 3

Which of the following is NOT an example of an economic agent?

Accepted Answer

A rock

Question 4

What is the main unifying feature of all things that economists study?

Accepted Answer

Choice

Question 5

Which of the following statements is an example of positive economics?

Accepted Answer

Raising taxes will reduce consumer spending.

Question 6

A situation in which no individual would be better off by changing their own behavior is called:

Accepted Answer

Equilibrium

Question 7

If a person chooses to drive 3 miles to save $$10 on a 20 $$book, but not to save $$10 on a 1$$,000 computer, which economic principle are they violating?

Accepted Answer

Optimization

Question 8

Which of the following best describes the concept of scarcity?

Accepted Answer

Resources are limited and wants are unlimited.

Question 9

What is a budget constraint?

Accepted Answer

The set of things a person can choose to do or buy without exceeding their budget.

Question 10

Which of the following is an example of the free rider problem?

Accepted Answer

A person who enjoys a public park without contributing to its maintenance.

Question 11

Empiricism in economics refers to:

Accepted Answer

Using data to test theories and answer questions.

Question 12

If U.S. adults spend 1 hour per day on social media and the opportunity cost of time is $13/hour, what is the annual opportunity cost?

Accepted Answer

$4,745

Question 13

Which of the following is a normative economic statement?

Accepted Answer

The government should provide free education to all citizens.

Question 14

Which principle of economics is illustrated when economists use data to determine if a theory matches actual human behavior?

Accepted Answer

Empiricism

Question 15

A student is deciding whether to take an economics course. The costs include tuition, time, and stress. The benefits include knowledge and higher earnings potential. This decision is an example of:

Accepted Answer

Cost-benefit analysis

Question 16

Which of the following best describes microeconomics?

Accepted Answer

The study of how individuals, firms, and governments make choices.

Question 17

Suppose you can either spend 2 hours working at $12/hour or go to a concert. What is the opportunity cost of attending the concert?

Accepted Answer

$24

Question 18

Which of the following is NOT a step in dealing with the free rider problem?

Accepted Answer

Markets automatically ensure fairness.

Question 19

If a market is in equilibrium, which of the following is true?

Accepted Answer

No agent can improve their situation by changing their behavior.

Question 20

Which of the following equations correctly calculates the opportunity cost of seeing a two-hour movie if your next best alternative is working for $10/hour?

Accepted Answer

$$Opportunity\ Cost = 2 	imes 10 = 20$$

Principles and Practice of Economics: Microeconomics Chapter 1 Study Guide

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