Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Wants are unlimited, but resources are limited.

Question 2

If you decide to spend an evening studying for an exam instead of going out with friends, the opportunity cost is:

Accepted Answer

The value of the next best alternative you gave up (going out with friends).

Question 3

Which of the following is an example of a trade-off?

Accepted Answer

Choosing to buy a new phone instead of saving the money.

Question 4

Economics is best defined as the study of:

Accepted Answer

How society manages its scarce resources.

Question 5

Marginal analysis in economics involves:

Accepted Answer

Comparing additional (extra) benefits and additional (extra) costs.

Question 6

Which formula represents the profit-maximizing point in marginal analysis?

Accepted Answer

$$Marginal\ Benefit = Marginal\ Cost$$

Question 7

Productive efficiency occurs when:

Accepted Answer

Output is maximized at the lowest possible cost.

Question 8

Allocative efficiency is achieved when:

Accepted Answer

Production represents consumer preferences.

Question 9

Which of the following is a positive statement?

Accepted Answer

Raising the minimum wage causes unemployment.

Question 10

Which of the following is NOT a factor of production?

Accepted Answer

Money

Question 11

In the circular flow diagram, households:

Accepted Answer

Sell factors of production to firms.

Question 12

Given the demand schedule: Price ($): 6, 5, 4, 3, 2; Quantity: 2, 3, 4, 5, 6. What is the slope of the demand curve?

Accepted Answer

$$Slope = \frac{\Delta Q}{\Delta P} = \frac{6-2}{2-6} = -1$$

Question 13

If the area of a triangle is calculated as $$Area = \frac{1}{2} 	imes base 	imes height$$, what is the area of a triangle with base 4 and height 6?

Accepted Answer

$$Area = 12$$

Question 14

Which of the following best describes causation?

Accepted Answer

A relationship where one event triggers another.

Question 15

If last year’s sales revenue was $$550,000 and this year’s sales revenue is 600$$,000, what is the percentage change in sales revenue?

Accepted Answer

$$Percentage\ Change = \frac{600,000 - 550,000}{550,000} 	imes 100 = 9.09\%$$

Question 16

Which of the following is an example of allocative efficiency?

Accepted Answer

A bakery produces the exact number of loaves of bread that consumers want to buy.

Question 17

Which of the following statements is normative?

Accepted Answer

The government should provide free healthcare to all citizens.

Question 18

Which of the following best describes the role of entrepreneurship in the factors of production?

Accepted Answer

It organizes, manages, and assembles the other factors of production.

Question 19

In economics, the term 'marginal' means:

Accepted Answer

All of the above

Basic Principles of Economics: Microeconomics Study Notes

Study Guide - Practice Questions