Question 1

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

Accepted Answer

Societies have limited resources, but people have unlimited wants.

Question 2

According to the study materials, which of the following is NOT one of the three main assumptions about human behavior in economics?

Accepted Answer

People always act altruistically.

Question 3

A student is deciding whether to spend an extra hour studying for an economics exam or to go out with friends. According to economic theory, what should the student compare to make this decision?

Accepted Answer

The marginal benefit and marginal cost of studying for an extra hour.

Question 4

Which of the following equations correctly represents the cost-benefit analysis used in economics?

Accepted Answer

$$MB = MC$$

Question 5

In a market economy, which of the following is a likely disadvantage?

Accepted Answer

There can be high levels of inequality.

Question 6

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

Accepted Answer

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

Question 7

A mixed economy attempts to:

Accepted Answer

Combine the advantages of both market and central-planning systems.

Question 8

Which of the following is NOT one of the three main economic questions every society must answer?

Accepted Answer

How will the government regulate prices?

Question 9

Suppose a government is considering whether to build a new highway or invest in public healthcare. What economic concept does this scenario best illustrate?

Accepted Answer

Trade-offs due to scarce resources

Question 10

Which of the following best describes positive analysis in economics?

Accepted Answer

It focuses on facts and logic about what is or what could be.

Question 11

A business manager is deciding whether to increase production. She calculates the additional revenue from selling one more unit is $$50, and the additional cost is 40. $$According to economic theory, what should she do?

Accepted Answer

Increase production, because $$MB \u003e MC$$

Question 12

Which of the following is a real-world example of responding to incentives?

Accepted Answer

A student studies harder after learning that high grades lead to scholarships.

Question 13

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

Accepted Answer

A factory uses its resources to produce cars instead of trucks.

Question 14

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

Accepted Answer

Microeconomics studies the behavior of individual agents and markets, while macroeconomics focuses on the economy as a whole.

Question 15

If a country moves from a centrally-planned economy to a mixed economy, which of the following is most likely to occur?

Accepted Answer

There will be a combination of private and public provision of goods and services.

Question 16

Which of the following best describes a trade-off in economics?

Accepted Answer

Choosing one option means giving up another due to limited resources.

Question 17

A government provides free education and healthcare, but also allows private businesses to operate. This is an example of:

Accepted Answer

A mixed economy

Question 18

Which of the following steps is NOT part of the economic model-building process described in the study materials?

Accepted Answer

Ignoring failed models and never revising them

Question 19

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

Accepted Answer

The government should increase the minimum wage.

Question 20

If a society decides to allocate more resources to producing military goods, what is the most likely consequence according to the concept of trade-offs?

Accepted Answer

There will be fewer resources available for producing consumer goods.

Introduction to Economics: Fundamental Concepts in Microeconomics

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