Question 1

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

Accepted Answer

People try to optimize by choosing the best available option given their information.

Question 2

Suppose a student is deciding whether to spend an extra hour studying for an exam or working at a part-time job. The wage for the job is $15 per hour. What is the opportunity cost of spending the hour studying?

Accepted Answer

The $15 wage the student forgoes by not working.

Question 3

Which equation represents a budget constraint for a consumer who can spend up to $$M$$ dollars on two goods, $$x$$ and $$y$$, with prices $$p_x$$ and $$p_y$$ respectively?

Accepted Answer

$$p_x x + p_y y \leq M$$

Question 4

A city government is deciding between building a new hospital or a new school. If the cost of the hospital is $$H$$ and the cost of the school is $$S$$, and the city only has enough funds for one, what concept does this scenario illustrate?

Accepted Answer

Trade-off

Question 5

Which of the following is an example of a positive economic statement?

Accepted Answer

Raising the minimum wage will increase unemployment among teenagers.

Question 6

If a country must choose between spending $$2.8$$ trillion on climate change mitigation and $$3$$ trillion on education and health care, what economic concept is most relevant?

Accepted Answer

Budget constraint

Question 7

Which of the following best describes equilibrium in economics?

Accepted Answer

A situation where everyone is optimizing and no one can benefit by changing their own behavior.

Question 8

A public park is funded by the city, but some residents use it without paying taxes. What economic problem does this illustrate?

Accepted Answer

Free rider problem

Question 9

Which of the following statements about empiricism in economics is correct?

Accepted Answer

Empiricism involves using data to test theories and determine causality.

Question 10

Suppose a consumer faces the following budget constraint: $$2x + 3y \leq 30. If $$the consumer buys 5 units of $$x$$, what is the maximum number of units of $$y$$ they can buy?

Accepted Answer

$$y \leq 4$$

Question 11

Which of the following is NOT typically considered an economic agent?

Accepted Answer

A rock

Question 12

If a person chooses to travel for a year before attending university, what is the opportunity cost of this decision?

Accepted Answer

The income and experience they could have gained by attending university immediately

Question 13

Which of the following best illustrates a trade-off?

Accepted Answer

Choosing between spending time with family or working overtime for extra pay.

Question 14

Which of the following is a normative economic statement?

Accepted Answer

The government should provide free healthcare to all citizens.

Question 15

If the equilibrium in a market results in too much pollution, what type of market failure is this?

Accepted Answer

Negative externality

Question 16

Which of the following is true about the relationship between correlation and causality in economics?

Accepted Answer

Correlation does not necessarily imply causality.

Question 17

A finance minister must choose between funding hospitals for lung disease or switching to electric buses. What concept is most relevant to this decision?

Accepted Answer

Trade-off

Question 18

Which of the following best describes microeconomics?

Accepted Answer

The study of incentives and choices facing individuals, firms, and governments.

Question 19

If a consumer is willing to drive 3 miles to save $$10 on a 20 $$book but not to save $$10 on a 1$$,000 computer, what does this behavior illustrate?

Accepted Answer

People's perception of savings depends on the context, not just the absolute amount.

Question 20

Which of the following is a key insight from Dwight D. Eisenhower's 'Opportunity Cost' speech?

Accepted Answer

Resources spent on one activity, such as defense, could have been used for other valuable purposes.

Lecture 1

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