Question 1

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

Accepted Answer

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

Question 2

A student decides to skip a part-time job paying 25,000 VND/hour to study for an exam. What is the opportunity cost of studying?

Accepted Answer

The 25,000 VND/hour wage foregone.

Question 3

According to the marginal decision rule, a rational person should take an action if:

Accepted Answer

$$MB \geq MC$$

Question 4

Which of the following is NOT an example of a societal trade-off?

Accepted Answer

Maximizing the size of the economic pie.

Question 5

If the marginal benefit of repairing a smartphone is 4,000,000 VND and the marginal cost is 3,500,000 VND, what should a rational person do?

Accepted Answer

Repair the smartphone, because $$MB \u003e MC.$$

Question 6

Which of the following best illustrates the concept of a sunk cost?

Accepted Answer

The cost of a new battery already installed in a phone before it was broken.

Question 7

Why do markets generally allocate resources efficiently, according to Adam Smith's 'invisible hand' principle?

Accepted Answer

Because prices guide self-interested buyers and sellers to maximize social welfare.

Question 8

Which of the following is a source of market failure?

Accepted Answer

Externalities, such as pollution.

Question 9

What is the primary cause of inflation according to the study materials?

Accepted Answer

Rapid growth in the quantity of money.

Question 10

Which of the following statements about trade is correct?

Accepted Answer

Trade makes both participants better off by expanding the total pie of goods and services.

Question 11

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

Accepted Answer

Vaccinations that reduce disease spread.

Question 12

What is the main policy trade-off between efficiency and equality?

Accepted Answer

Taxing income to fund welfare increases equality but may reduce incentives to work and invest, shrinking the total economic pie.

Question 13

Which of the following best describes the role of government in a market economy?

Accepted Answer

To enforce property rights and address market failures.

Question 14

If the government prints excessive amounts of money, what is the likely long-term effect?

Accepted Answer

A rise in inflation.

Question 15

Which of the following is NOT a principle of how people interact?

Accepted Answer

People face trade-offs.

Question 16

According to the Phillips Curve, what is the short-run trade-off between inflation and unemployment?

Accepted Answer

In the short run, lower unemployment can be achieved at the cost of higher inflation.

Question 17

Which of the following is an example of a government policy that addresses a negative externality?

Accepted Answer

Fuel taxes to reduce pollution.

Question 18

Why might a centrally planned economy struggle to allocate resources efficiently?

Accepted Answer

Planners lack real-time information on costs and consumer desires.

Question 19

Which of the following best explains why productivity is crucial for a nation's standard of living?

Accepted Answer

Higher productivity means more goods and services are produced per unit of labor, raising living standards.

Question 20

Which of the following is an example of responding to incentives?

Accepted Answer

People booking more GrabCar rides after strict DUI fines increase the marginal cost of drunk driving.

The Ten Principles of Economics: Foundations of Microeconomics

Study Guide - Practice Questions