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 that is 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 3,000,000 VND and the marginal cost is 3,500,000 VND, what should a rational person do?

Accepted Answer

Do not repair the smartphone because $$MB \u003c MC.$$

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, regardless of future decisions.

Question 7

Why do markets generally organize economic activity more efficiently than centrally planned economies?

Accepted Answer

Markets use decentralized decisions and prices to reflect costs and values.

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 allows specialization and benefits both sides.

Question 11

If a government increases taxes to fund welfare programs, what is a likely trade-off according to the efficiency vs. equality principle?

Accepted Answer

Incentives to work and invest may decrease, potentially shrinking the economic pie.

Question 12

Which of the following is an example of an incentive?

Accepted Answer

A strict DUI fine that raises the marginal cost of drunk driving.

Question 13

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

Accepted Answer

In the short run, stimulus can lower unemployment but may increase inflation.

Question 14

Which of the following is NOT a function of prices in a market economy?

Accepted Answer

Ensuring equal distribution of income.

Question 15

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

Accepted Answer

Vaccinations that reduce the spread of disease.

Question 16

Why might governments fail to improve market outcomes, even when market failures exist?

Accepted Answer

Political pressures and imperfect information can lead to poor policies.

Question 17

Which of the following is the main driver of differences in living standards across countries?

Accepted Answer

Differences in productivity.

Question 18

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

Accepted Answer

An increase in inflation.

Question 19

Which of the following is NOT considered an opportunity cost of attending college in Vietnam?

Accepted Answer

Room and basic meals (since you must eat and sleep regardless).

Question 20

Which of the following best describes the 'invisible hand' as proposed by Adam Smith?

Accepted Answer

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

The Ten Principles of Economics: Foundations of Microeconomics

Study Guide - Practice Questions