Question 1

Which of the following best describes the fundamental problem that economics seeks to address?

Accepted Answer

How to allocate scarce resources among unlimited wants.

Question 2

Which of the following is an example of a macroeconomic question?

Accepted Answer

What determines the overall unemployment rate in the United States?

Question 3

Suppose the government is considering a new tax on gasoline to fund road maintenance. Which economic principle is most relevant when evaluating whether this policy is fair for electric vehicle (EV) drivers?

Accepted Answer

Incentives and opportunity cost

Question 4

Which of the following statements best distinguishes between positive and normative economics?

Accepted Answer

Positive economics describes what is, while normative economics prescribes what ought to be.

Question 5

A rational choice is one that:

Accepted Answer

Compares marginal benefit and marginal cost, choosing the option where marginal benefit equals or exceeds marginal cost.

Question 6

Which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 7

If the marginal benefit of producing one more unit of a good is less than the marginal cost, what should a rational producer do?

Accepted Answer

Produce fewer units of the good.

Question 8

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

Accepted Answer

A student chooses to attend college instead of working full-time, giving up potential earnings.

Question 9

Suppose a new technology reduces the cost of producing electric vehicles (EVs). Which of the following statements best describes the likely macroeconomic effect, assuming ceteris paribus?

Accepted Answer

The equilibrium price of EVs will decrease, and the quantity sold will increase.

Question 10

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

Accepted Answer

"The government should increase taxes on the wealthy to promote fairness."

Question 11

A government economist is analyzing the impact of a new carbon tax on different regions. Which key economic question is she addressing?

Accepted Answer

"How are different regions impacted, especially relative to their carbon emissions?"

Question 12

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

Accepted Answer

Microeconomics studies individual and business choices, while macroeconomics studies the performance of national and global economies.

Question 13

Suppose the marginal cost of producing a good is given by $$MC = 2Q$$, and the marginal benefit is $$MB = 100 - Q$$, where $$Q is $$the quantity produced. What is the equilibrium quantity where marginal benefit equals marginal cost?

Accepted Answer

$$Q = 33.33$$

Question 14

Which of the following is an example of a real-world application of the concept of incentives?

Accepted Answer

A city offers tax breaks to companies that build affordable housing.

Question 15

Which of the following best explains why economists use the ceteris paribus assumption in their models?

Accepted Answer

To isolate the effect of one variable by holding other relevant factors constant.

Question 16

A recent study finds a strong correlation between ice cream sales and drowning incidents. Which economic concept is most relevant when interpreting this result?

Accepted Answer

Correlation does not imply causality.

Question 17

Which of the following is a skill that is especially important for economists working in government or private firms?

Accepted Answer

Statistical analysis

Question 18

If a country wants to increase the social interest in its tax system, which of the following policies would most likely be considered?

Accepted Answer

Structuring taxes to be fair and equitable across income groups.

Question 19

Which of the following best describes the earnings pattern for economics majors compared to other majors, according to the study materials?

Accepted Answer

Economics majors earn more than most other majors at mid-career, though not the highest at starting salary.

Question 20

Which of the following is a current challenge for the economics profession, as described in the study materials?

Accepted Answer

Attracting more women and minorities at all levels.

Principles of Macroeconomics: Introduction and Fundamental Concepts

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