Q: Which equation correctly calculates the annual opportunity cost of spending $t$ hours per day on an activity, with an hourly opportunity cost of $w$?

$Annual\ Opportunity\ Cost = t \times 365 \times w$

Question 1

Which of the following best describes the first principle of economics?

Accepted Answer

People try to choose the best available option given their information, known as optimization.

Question 2

Suppose you spend 1 hour per day on social media, and your opportunity cost of time is $13/hour. What is the annual opportunity cost of your time spent on social media?

Accepted Answer

$4,745

Question 3

Which of the following scenarios best illustrates the concept of equilibrium in economics?

Accepted Answer

A situation where no individual can benefit by changing their own behavior, given what others are doing.

Question 4

What is the opportunity cost of attending a two-hour movie if your next best alternative is working at $10/hour?

Accepted Answer

$20

Question 5

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

Accepted Answer

A rock

Question 6

If a resource is scarce, what does this mean?

Accepted Answer

The quantity people want often exceeds the quantity available.

Question 7

Which principle of economics involves using data to test theories and determine causality?

Accepted Answer

Empiricism

Question 8

A group project in class suffers because one member does not contribute but still benefits from the group's grade. What economic concept does this illustrate?

Accepted Answer

Free rider problem

Question 9

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

Accepted Answer

Raising the minimum wage will increase unemployment among teenagers.

Question 10

Suppose you can buy a computer for $1,000 at a nearby store or drive 3 miles to buy it for $990. If the cost of driving is $15, what is the opportunity cost of driving to buy the cheaper computer?

Accepted Answer

$15

Question 11

Which of the following best describes normative economics?

Accepted Answer

It recommends what people, including society, ought to do.

Question 12

If the opportunity cost of your time is $20/hour and you spend 2 hours on an activity, what is the total opportunity cost?

Accepted Answer

$40

Question 13

Which equation correctly calculates the annual opportunity cost of spending $t$ hours per day on an activity, with an hourly opportunity cost of $w$?

Accepted Answer

$Annual\ Opportunity\ Cost = t 	imes 365 	imes w$

Question 14

Which of the following is a trade-off?

Accepted Answer

Choosing to spend money on a vacation instead of saving for retirement.

Question 15

Which of the following is the best definition of economics?

Accepted Answer

The study of how agents make choices among scarce resources and how those choices affect society.

Question 16

If everyone in a group is optimizing and no one can be better off by changing their own choice, what is this situation called?

Accepted Answer

Equilibrium

Question 17

Which of the following is an example of empiricism in economics?

Accepted Answer

Using data to test whether higher temperatures lead to more crowded beaches.

Question 18

A student decides to take only one piece of chocolate from a bowl so that everyone gets a piece. This is an example of:

Accepted Answer

Normative economics

Question 19

Which of the following is NOT a principle of economics discussed in Chapter 1?

Accepted Answer

Scarcity

Question 20

Suppose you are considering two options: working for 3 hours at $15/hour or attending a concert for 3 hours. What is the opportunity cost of attending the concert?

Accepted Answer

$45

Principles and Practice of Microeconomics: Chapter 1 Study Notes

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