Question 1

Which of the following best describes the fundamental economic problem faced by all societies?

Accepted Answer

Resources are limited, but wants are unlimited.

Question 2

Which of the following is NOT one of the three main perspectives considered in economics?

Accepted Answer

Entrepreneurs

Question 3

According to the assumptions about human behaviour in economics, which statement is correct?

Accepted Answer

People compare marginal benefit and marginal cost before making decisions.

Question 4

A market economy is characterized by which of the following advantages?

Accepted Answer

Resources are usually allocated efficiently with respect to production.

Question 5

Which of the following is a disadvantage of a centrally-planned economy?

Accepted Answer

It is difficult for the government to choose the right targets and allocate resources.

Question 6

In a mixed economy, which sector typically provides most types of goods?

Accepted Answer

The private sector

Question 7

Which of the following is a trade-off faced in a mixed economy?

Accepted Answer

Some benefits and disadvantages of both market and central-planning are present.

Question 8

Which step is NOT part of the five-step process economists use to develop models?

Accepted Answer

Retain the original model regardless of results

Question 9

Which of the following best describes positive analysis in economics?

Accepted Answer

It concerns facts and logic, focusing on what 'is' and what 'could be'.

Question 10

Microeconomics is primarily concerned with:

Accepted Answer

The behaviour of individual consumers, workers, and firm managers.

Question 11

Suppose a government decides to allocate more resources to healthcare. According to the concept of trade-offs, what is the likely consequence?

Accepted Answer

Resources for other sectors, such as education, may be reduced.

Question 12

Which equation represents the cost-benefit analysis used by rational decision-makers?

Accepted Answer

$MB = MC$

Question 13

A market economy may underproduce certain goods. Which of the following is an example of such a good?

Accepted Answer

Public parks

Question 14

Which of the following statements about mixed economies is correct?

Accepted Answer

Mixed economies combine elements of both market and centrally-planned economies.

Question 15

Which of the following is NOT a way economists explain economic concepts?

Accepted Answer

With poetry

Question 16

If a society faces limited resources and unlimited wants, what must it do?

Accepted Answer

Make choices and face trade-offs.

Question 17

Which of the following is a key difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on individual agents and markets, while macroeconomics focuses on the whole economy in aggregate.

Question 18

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

Accepted Answer

"The unemployment rate is 5%."

Question 19

A manager is deciding whether to hire an additional worker. The worker's marginal benefit to the firm is $MB = 200$ and the marginal cost is $MC = 150$. What should the manager do according to cost-benefit analysis?

Accepted Answer

Hire the worker because $MB > MC$

Question 20

Which of the following is a disadvantage of a market economy?

Accepted Answer

It can generate substantial levels of inequality.

Unit 1: Introduction to Economics – Foundations and Models

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