Econ 104 Quiz 1 Actual Exam Already Passed |
Complete Questions & Rationales | Microeconomics
Principles | Pass Guaranteed - A+ Graded
Foundations of Economics & Scarcity
Q1: Which of the following best defines the fundamental economic problem of scarcity?
A. Society has unlimited resources but limited wants.
B. Markets are unable to allocate resources efficiently without government intervention.
C. Society has limited resources that cannot satisfy all unlimited human wants.
D. Individuals always want more money, leading to a shortage of currency. [CORRECT]
Correct Answer: C
Rationale: The correct answer is C. For Quiz 1, remember that scarcity means finite
resources cannot satisfy infinite wants, forcing trade-offs, whereas the other options
misunderstand what resources and wants actually are in economic terms.
Q2: Which of the following questions would a macroeconomist most likely try to
answer?
A. How does a tax on cigarettes affect the quantity of cigarettes sold?
B. What causes the overall unemployment rate to rise during a recession?
C. How does a consumer choose between buying a new car or repairing their old one?
D. Why do airline ticket prices drop during certain times of the year?
Correct Answer: B
Rationale: The correct answer is B. Macroeconomics focuses on the economy as a
whole, looking at big-picture indicators like national unemployment, while the other
options deal with individual markets or consumer choices, which fall under
microeconomics.
Q3: Which of the following is a positive economic statement?
A. The government should increase the minimum wage to help low-income workers.
B. A higher minimum wage will cause a decrease in the demand for unskilled labor.
C. Raising the minimum wage is the fairest policy our country could adopt.
D. Corporations ought to pay their fair share of taxes to fund public education.
Correct Answer: B
Rationale: The correct answer is B. A positive economic statement is an objective,
testable claim about how the world works, whereas the other options contain subjective
value judgments by using words like "should," "fairest," or "ought to."
, Q4: In economics, which of the following is considered "capital"?
A. The money a business owner uses to start a company
B. A delivery truck used by a logistics company
C. The physical effort provided by a construction worker
D. A piece of land waiting to be developed
Correct Answer: B
Rationale: The correct answer is B. For Quiz 1, remember that capital refers to
human-made goods used to produce other goods and services, like machinery or
vehicles, distinguishing it from land (natural resources), labor (physical effort), and
money (which is just financial capital, not a factor of production).
Q5: A country's production possibilities frontier (PPF) is drawn as a straight line
(constant slope) rather than a bowed-out curve. This indicates that the opportunity cost
of producing more of either good is:
A. Increasing as more of the good is produced
B. Decreasing as more of the good is produced
C. Constant as more of the good is produced
D. Zero, because resources are being used inefficiently
Correct Answer: C
Rationale: The correct answer is C. A straight-line PPF means resources are equally
productive in both industries, so the opportunity cost remains constant rather than
increasing as it would with a bowed-out shape reflecting specialized resources.
Q6: Consider the following production possibilities for two countries in a single day:
Country A can produce either 10 pizzas or 20 calzones.
Country B can produce either 6 pizzas or 18 calzones.
What is Country A's opportunity cost of producing 1 pizza?
A. 0.5 calzones
B. 2 calzones
C. 10 calzones
D. 20 calzones
Correct Answer: B
Rationale: The correct answer is B. Opportunity cost is the value of the next best
alternative given up. On a PPF, the slope tells you the opportunity cost of producing one
more unit of the good on the horizontal axis, so giving up 20 calzones to get 10 pizzas
means 1 pizza costs 2 calzones.
Q7: Based on the same production possibilities:
Country A can produce either 10 pizzas or 20 calzones.
Country B can produce either 6 pizzas or 18 calzones.
Which country has the comparative advantage in producing calzones?
Complete Questions & Rationales | Microeconomics
Principles | Pass Guaranteed - A+ Graded
Foundations of Economics & Scarcity
Q1: Which of the following best defines the fundamental economic problem of scarcity?
A. Society has unlimited resources but limited wants.
B. Markets are unable to allocate resources efficiently without government intervention.
C. Society has limited resources that cannot satisfy all unlimited human wants.
D. Individuals always want more money, leading to a shortage of currency. [CORRECT]
Correct Answer: C
Rationale: The correct answer is C. For Quiz 1, remember that scarcity means finite
resources cannot satisfy infinite wants, forcing trade-offs, whereas the other options
misunderstand what resources and wants actually are in economic terms.
Q2: Which of the following questions would a macroeconomist most likely try to
answer?
A. How does a tax on cigarettes affect the quantity of cigarettes sold?
B. What causes the overall unemployment rate to rise during a recession?
C. How does a consumer choose between buying a new car or repairing their old one?
D. Why do airline ticket prices drop during certain times of the year?
Correct Answer: B
Rationale: The correct answer is B. Macroeconomics focuses on the economy as a
whole, looking at big-picture indicators like national unemployment, while the other
options deal with individual markets or consumer choices, which fall under
microeconomics.
Q3: Which of the following is a positive economic statement?
A. The government should increase the minimum wage to help low-income workers.
B. A higher minimum wage will cause a decrease in the demand for unskilled labor.
C. Raising the minimum wage is the fairest policy our country could adopt.
D. Corporations ought to pay their fair share of taxes to fund public education.
Correct Answer: B
Rationale: The correct answer is B. A positive economic statement is an objective,
testable claim about how the world works, whereas the other options contain subjective
value judgments by using words like "should," "fairest," or "ought to."
, Q4: In economics, which of the following is considered "capital"?
A. The money a business owner uses to start a company
B. A delivery truck used by a logistics company
C. The physical effort provided by a construction worker
D. A piece of land waiting to be developed
Correct Answer: B
Rationale: The correct answer is B. For Quiz 1, remember that capital refers to
human-made goods used to produce other goods and services, like machinery or
vehicles, distinguishing it from land (natural resources), labor (physical effort), and
money (which is just financial capital, not a factor of production).
Q5: A country's production possibilities frontier (PPF) is drawn as a straight line
(constant slope) rather than a bowed-out curve. This indicates that the opportunity cost
of producing more of either good is:
A. Increasing as more of the good is produced
B. Decreasing as more of the good is produced
C. Constant as more of the good is produced
D. Zero, because resources are being used inefficiently
Correct Answer: C
Rationale: The correct answer is C. A straight-line PPF means resources are equally
productive in both industries, so the opportunity cost remains constant rather than
increasing as it would with a bowed-out shape reflecting specialized resources.
Q6: Consider the following production possibilities for two countries in a single day:
Country A can produce either 10 pizzas or 20 calzones.
Country B can produce either 6 pizzas or 18 calzones.
What is Country A's opportunity cost of producing 1 pizza?
A. 0.5 calzones
B. 2 calzones
C. 10 calzones
D. 20 calzones
Correct Answer: B
Rationale: The correct answer is B. Opportunity cost is the value of the next best
alternative given up. On a PPF, the slope tells you the opportunity cost of producing one
more unit of the good on the horizontal axis, so giving up 20 calzones to get 10 pizzas
means 1 pizza costs 2 calzones.
Q7: Based on the same production possibilities:
Country A can produce either 10 pizzas or 20 calzones.
Country B can produce either 6 pizzas or 18 calzones.
Which country has the comparative advantage in producing calzones?
