Question 1

Which of the following best describes the concept of 'scarce resources' in economics?

Accepted Answer

Resources that people want, but the quantity available is less than the quantity people want.

Question 2

According to the principle of optimization, what do individuals typically seek to maximize?

Accepted Answer

Their overall well-being or utility.

Question 3

A student is deciding whether to spend an hour studying or working a part-time job that pays NOK 150 per hour. What is the opportunity cost of studying for one hour?

Accepted Answer

NOK 150, which is the wage forgone from not working.

Question 4

Which equation correctly represents the net benefit in cost-benefit analysis?

Accepted Answer

$$Net\ Benefit = Benefit - Opportunity\ Cost$$

Question 5

In economics, what does 'equilibrium' refer to?

Accepted Answer

A situation where all agents are optimizing and no one can benefit by changing their own behavior.

Question 6

Which of the following is an example of a positive economic analysis?

Accepted Answer

Describing how consumers respond to a change in the price of gasoline.

Question 7

A firm is considering building a new factory. According to economic theory, what is the main objective the firm is trying to optimize?

Accepted Answer

Maximize profits.

Question 8

Which of the following statements about correlation and causation is correct?

Accepted Answer

Causation means that one variable directly affects another.

Question 9

Suppose a model predicts that each additional year of education increases future wages by 10%. If a worker with 12 years of education earns $100, what is the predicted wage for a worker with 16 years of education according to the model?

Accepted Answer

$$100 	imes 1.46 = 146$

Question 10

Which of the following best illustrates the concept of trade-off in optimization?

Accepted Answer

Choosing to work more hours means less time for leisure activities.

Question 11

In the scientific method used in economics, what is the correct sequence of steps?

Accepted Answer

Develop models, make predictions, test with data.

Question 12

Which of the following is an example of an omitted variable problem in economic analysis?

Accepted Answer

Assuming that higher education causes higher wages without considering work ethic.

Question 13

If the price of a scarce good was set to zero, what would happen according to economic theory?

Accepted Answer

Not everyone who wants the good would get it.

Question 14

Which of the following is a normative economic statement?

Accepted Answer

The government should increase spending on healthcare.

Question 15

Suppose you have 5 hours of spare time and can either work or surf the web. If you spend 2 hours working and 3 hours surfing, which equation represents your budget constraint?

Accepted Answer

$$5 = Hours\ Working + Hours\ Surfing$$

Question 16

Why do economists use models in their analysis?

Accepted Answer

To simplify complex realities and make useful predictions.

Question 17

Which of the following is a real-world example of causation?

Accepted Answer

Smoking increases the likelihood of lung cancer.

Question 18

If a government wants to know whether a new tax policy causes a change in consumer spending, what is the gold standard method for determining causality?

Accepted Answer

Running a randomized controlled experiment.

Question 19

Which of the following best describes the role of prices in allocating scarce resources?

Accepted Answer

Prices help allocate scarce resources by signaling value and rationing demand.

Question 20

A study finds a positive correlation between education and wages. Which of the following is a valid conclusion?

Accepted Answer

There is an association between education and wages, but causality is not established.

Principles of Economics: Introduction and Core Concepts (SE 112 Lecture 1 Study Notes)

Study Guide - Practice Questions

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