Q: Suppose the total annual cost for a university student is $$39,300, including tuition, books, foregone income, and others' costs. If the explicit costs are 5$$,500 and foregone income is $$22,000, what percentage of the total cost is due to foregone income? Use the formula $$\text{Percentage} = \frac{\text{Foregone Income}}{\text{Total Cost}} \times 100\%$.

$$\frac{22,000}{39,300} \times 100\% \approx 56\%$$

Question 1

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

Accepted Answer

Scarcity means that people have limited resources to deal with unlimited wants.

Question 2

If a student decides to attend university, what is the implicit opportunity cost of this decision?

Accepted Answer

The value of lost wages from not working during studies.

Question 3

Suppose the total annual cost for a university student is $$39,300, including tuition, books, foregone income, and others' costs. If the explicit costs are 5$$,500 and foregone income is $$22,000, what percentage of the total cost is due to foregone income? Use the formula $$	ext{Percentage} = \frac{	ext{Foregone Income}}{	ext{Total Cost}} 	imes 100\%$.

Accepted Answer

$$\frac{22,000}{39,300} 	imes 100\% \approx 56\%$$

Question 4

Which of the following is NOT an assumption of the Production Possibilities Curve (PPC)?

Accepted Answer

Resources can be increased or decreased at any time.

Question 5

Moving from point A $$(0, 3) to $$point B $$(1, 2.8) on a $$PPC, what is the opportunity cost of producing one more unit of newsprint?

Accepted Answer

0.2 units of auto production per unit of newsprint.

Question 6

Which of the following best illustrates the concept of marginal benefit?

Accepted Answer

The extra satisfaction gained from consuming one more cup of coffee.

Question 7

A student is considering buying a third cup of coffee. The marginal benefit (MB) is $$1.5 and the marginal cost (MC) is 2. $$Should the student buy the third cup according to economic theory?

Accepted Answer

No, because MB is less than MC.

Question 8

Which of the following is an example of an external cost in the context of opportunity cost?

Accepted Answer

Costs borne by others, such as government subsidies for education.

Question 9

Economic growth is represented on the PPC by:

Accepted Answer

A shift outward of the entire PPC.

Question 10

Which method of social coordination is most likely to be rigid and less adaptable to change?

Accepted Answer

Tradition-based system.

Question 11

In a market economy, what role do prices play?

Accepted Answer

Prices act as signals and incentives for buyers and sellers.

Question 12

Which of the following statements about economic models is correct?

Accepted Answer

Economic models are simplified representations used to make predictions.

Question 13

Suppose a country increases its investment in education, which leads to a more skilled workforce. What is the likely effect on the PPC?

Accepted Answer

The PPC will shift outward, indicating economic growth.

Question 14

Which of the following is NOT a type of opportunity cost?

Accepted Answer

Sunk cost.

Question 15

A rational economic agent will choose an action only if:

Accepted Answer

The net benefit (benefit minus cost) is positive.

Question 16

Which of the following is a prediction of the assumption of rationality in economics?

Accepted Answer

Economic agents respond to incentives.

Question 17

If a country specializes in producing a good for which it has a comparative advantage and then trades, what is the likely outcome?

Accepted Answer

Both countries can consume beyond their individual PPCs.

Question 18

Which of the following best describes the difference between efficiency and equity in evaluating economic outcomes?

Accepted Answer

Efficiency is about maximizing output with given resources, while equity is about fairness in distribution.

Question 19

Suppose a government imposes income taxes and provides social welfare. Which economic criterion is it primarily addressing?

Accepted Answer

Equity.

Question 20

If the marginal cost (MC) of working an extra hour is $$10 and the marginal benefit (MB) is 12$$, what should a rational agent do?

Accepted Answer

Work the extra hour, since $$MB \u003e MC.$$

Fundamental Economic Concepts: Scarcity, Opportunity Cost, and Social Coordination

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