Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity is the inability to satisfy all of our wants due to limited money, time, and energy.

Question 2

A student has $$50 to spend and must choose between buying a concert ticket or a textbook. If the concert ticket costs 50 $$and the textbook costs $40, what is the opportunity cost of buying the concert ticket?

Accepted Answer

The opportunity cost is the textbook, which the student cannot buy.

Question 3

Which formula correctly calculates the opportunity cost of an additional unit produced?

Accepted Answer

$$ Opportunity\ cost = \frac{Give\ up}{Get} $$

Question 4

Jill can make either 40 loaves of bread or chop 40 logs in one month. What is Jill's opportunity cost of making one loaf of bread?

Accepted Answer

$$ Opportunity\ cost = \frac{40\ logs}{40\ loaves} = 1\ log\ per\ loaf $$

Question 5

Which statement best describes comparative advantage?

Accepted Answer

Comparative advantage is the ability to produce a good at a lower opportunity cost than another producer.

Question 6

Marie can make either 20 loaves of bread or chop 10 logs in one month. What is Marie's opportunity cost of chopping one log?

Accepted Answer

$$ Opportunity\ cost = \frac{20\ loaves}{10\ logs} = 2\ loaves\ per\ log $$

Question 7

If Jill specializes in making bread and Marie specializes in chopping logs, what is the main economic benefit they can achieve through trade?

Accepted Answer

They can both consume more than they could produce alone due to mutually beneficial gains from trade.

Question 8

Which of the following is an example of a positive statement in economics?

Accepted Answer

"If the price of gas increases, the quantity of gas sold will decrease."

Question 9

Which of the following is a negative externality?

Accepted Answer

A driver causing air pollution that others breathe but do not pay for.

Question 10

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics analyzes choices made by individuals and businesses, while macroeconomics focuses on the economy as a whole.

Question 11

Which of the following is NOT a feature of a good economic model?

Accepted Answer

It includes every possible variable to ensure complete accuracy.

Question 12

Suppose a country can produce either 100 units of wheat or 50 units of corn with its available resources. What is the opportunity cost of producing one unit of corn?

Accepted Answer

$$ Opportunity\ cost = \frac{100\ wheat}{50\ corn} = 2\ units\ of\ wheat\ per\ corn $$

Question 13

Which statement about incentives is correct?

Accepted Answer

Incentives are rewards or penalties that influence choices by making a path more or less attractive.

Question 14

Which of the following is an example of a voluntary trade?

Accepted Answer

Two neighbors exchanging bread for chopped wood because both benefit.

Question 15

If the opportunity cost of going to Cuba is $$50 and the benefit is 100$$, what should a rational decision-maker do?

Accepted Answer

Go to Cuba, because the benefit exceeds the opportunity cost.

Question 16

Which of the following best describes the Production Possibilities Frontier (PPF)?

Accepted Answer

A graph showing the maximum combinations of products that can be produced with existing inputs.

Question 17

Which of the following is a normative statement?

Accepted Answer

"We should decrease global warming by using alternative energy sources."

Question 18

Which of the following is an example of a positive externality?

Accepted Answer

A homeowner planting trees that improve air quality for neighbors.

Question 19

Which of the following is a key insight from the circular flow model?

Accepted Answer

Households provide inputs and buy goods, while businesses produce goods and pay for inputs.

Scarcity, Opportunity Cost, Trade, and Economic Models: Microeconomics Study Notes

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