Question 1

Which of the following best describes the fundamental problem of economics?

Accepted Answer

Unlimited wants and limited resources

Question 2

Which of the following is NOT considered a resource in economics?

Accepted Answer

Money

Question 3

A student decides to spend an hour studying for an economics exam instead of watching a movie. The opportunity cost of studying is:

Accepted Answer

The enjoyment the student would have received from watching the movie

Question 4

Which of the following is a positive statement?

Accepted Answer

An increase in the minimum wage will cause a decrease in employment among the least skilled.

Question 5

In a market economy, why are goods typically produced in the least costly way?

Accepted Answer

Because firms have incentives to maximize profits

Question 6

Which of the following best illustrates a decision made at the margin?

Accepted Answer

Deciding whether to eat one more slice of pizza

Question 7

Suppose Apple increases iPhone production from 240,000,000 to 243,000,000 units. To decide if this is a good idea, what information is most relevant?

Accepted Answer

The marginal profit from producing the additional 3,000,000 iPhones

Question 8

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

Accepted Answer

The government should provide free healthcare to all citizens.

Question 9

What is the opportunity cost of attending college full-time for four years?

Accepted Answer

The value of the best alternative use of your time, such as working full-time

Question 10

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

Accepted Answer

Microeconomics studies individual households and firms; macroeconomics studies the economy as a whole.

Question 11

Which of the following is NOT one of the three fundamental questions every economy must answer?

Accepted Answer

How much money should be printed?

Question 12

If the slope of a line is calculated as $$ \frac{\Delta y}{\Delta x} $$, what does a negative slope indicate in economics?

Accepted Answer

As $$x$$ increases, $$y$$ decreases

Question 13

Which of the following is an example of a tradeoff due to scarcity?

Accepted Answer

A student chooses to study for an exam instead of going out with friends

Question 14

Which of the following is an example of a positive relationship between two variables?

Accepted Answer

Education and income

Question 15

Which of the following best explains why every economy must answer the three fundamental questions?

Accepted Answer

Because of scarcity

Question 16

Which of the following is an example of capital as a resource?

Accepted Answer

A factory building

Question 17

Adam Smith argued that voluntary exchange occurs because:

Accepted Answer

People act out of self-interest

Question 18

If a line on a graph moves upward as you move from left to right, what type of relationship does this represent?

Accepted Answer

Positive relationship

Question 19

Which of the following is an example of a decision made at the margin in a real-world business context?

Accepted Answer

A manager considers hiring one more worker to increase output

Question 20

Which of the following best describes opportunity cost?

Accepted Answer

The highest valued alternative that must be given up to engage in an activity

Microeconomics Foundations: Chapter 1 Study Notes

Study Guide - Practice Questions