Question 1

Which of the following best describes the primary focus of microeconomics?

Accepted Answer

The study of decision-making by individual households and firms.

Question 2

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

Accepted Answer

How will the government set the price of goods?

Question 3

Suppose a government introduces a $100 debit card incentive for individuals who receive a COVID-19 vaccination. This is an example of:

Accepted Answer

An incentive designed to encourage a particular behavior.

Question 4

Which of the following statements is an example of positive economics?

Accepted Answer

If the price of admission to each NHL hockey game is reduced, there will be a higher attendance at each NHL game.

Question 5

A direct relationship between two variables means:

Accepted Answer

An increase in one variable is associated with an increase in the other.

Question 6

Which of the following best illustrates the ceteris paribus assumption?

Accepted Answer

Assuming all other factors remain constant when analyzing the effect of a price change on demand.

Question 7

If the slope of a line is calculated as $$\frac{\Delta y}{\Delta x}$$, what does a negative slope indicate about the relationship between $$x$$ and $$y$$?

Accepted Answer

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

Question 8

Which of the following is a characteristic of a market (price) system?

Accepted Answer

Prices act as signals to coordinate decentralized decision-making.

Question 9

Behavioral economics differs from traditional economics primarily because it:

Accepted Answer

Emphasizes psychological factors that may interfere with rational decision-making.

Question 10

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

Accepted Answer

The government should increase spending on public education.

Question 11

Suppose the price of Dodge Ram trucks decreases significantly. According to the ceteris paribus assumption, what would you expect to happen to the demand for Toyota trucks?

Accepted Answer

Demand for Toyota trucks will decrease.

Question 12

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

Accepted Answer

The value of the next best alternative forgone when making a choice.

Question 13

A student claims, 'If the price of pizza increases, I will stop buying pizza.' However, after the price increases, the student continues to buy pizza. This is an example of:

Accepted Answer

A revealed preference differing from a stated preference.

Question 14

Which of the following is true about the slope of a nonlinear curve at its maximum point?

Accepted Answer

The slope is zero.

Question 15

In the context of economic models, what is the primary purpose of making assumptions?

Accepted Answer

To simplify reality and focus on key relationships.

Question 16

If a graph shows the number of t-shirts purchased per week as the dependent variable and the price of t-shirts as the independent variable, what type of relationship would you expect to see?

Accepted Answer

An inverse relationship: as price increases, quantity purchased decreases.

Question 17

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

Accepted Answer

Microeconomics focuses on individual decision-making units, while macroeconomics examines aggregate economic variables.

Question 18

Suppose a country uses a mixed economic system. Which of the following is most likely true?

Accepted Answer

Some decisions are made by the government, while others are determined by the market.

Question 19

If the slope of a line on a graph is $$2$$, what does this mean in terms of 'rise over run'?

Accepted Answer

For every increase of $$1 in$$ $$x$$, $$y$$ increases by $$2.$$

Question 20

Which of the following best explains why economics is considered an empirical science?

Accepted Answer

It uses data and evidence to test the validity of models and theories.

Microeconomics Study Notes: Chapter 1 – The Nature of Economics

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