Q1. The basic concern of Microeconomics is
to keep business firms from losing money
to prove that capitalism is better than socialism
to study the choices people make
to use unlimited resources to produce goods and services to satisfy limited wants
Q2. What is the name of the graph or diagram used to study trade offs or economic growth?
The demand curve
The production possibilities frontier
The supply curve
A simple graph
Q3. You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is:
$100
your enjoyment of the new CD player
both the $100 and the your enjoyment of the new CD player
impossible to determine
Q4. Why should people make choices:
Because resources are scarce
Because resources are abundant
Because it is a government request
no goods and services are produced
Q5. When two nations trade, which of them is said to have comparative advantage?
The one with the higher opportunity cost of production
Just any of the trading nations
The nation with the lower opportunity cost in the production of the item
None has comparative advantage
Q6. Which of the following is a normative economic statement?
International trade leads to expanded consumption opportunities
Higher expenditures on health care will reduce infant mortality rates
We would all be better off if we could reduce our dependence on oil imports
Increased defense spending will lead to higher budget deficits
Q7. If Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces, then:
Brazil has a comparative advantage in coffee production and should specialize in coffee production
Brazil has a comparative advantage in coffee production and should specialize in the production of automobiles
Brazil has a comparative advantage in automobile production and should specialize in coffee
Brazil has a comparative advantage in automobile production and should specialize in automobile production
Q8. Assume an economy is operating on its production possibility frontier, which shows the production of military and civilian goods. If the output of military goods is increased, the output of civilian goods (Points : 4)
will increase, too
must decrease
will not change
may increase or decrease
Q9. Which of the following is an example of a positive statement?
Basketball players should not be paid higher salaries than teachers
a high rate of economic growth is good for the country
Everyone in the country needs to save money for retirement
The poverty rate is 14%
Q10. The law of demand states that other things equal:
as the price increases, the quantity demanded will increase, ceteris paribus
as the price decreases, the demand curve will shift to the right, ceteris paribus
as the price increases, the demand will decrease, ceteris paribus
as the price increases, the quantity demanded will decrease, ceteris paribus
Q11. It can be said that, ultimately, consumers are the driving force in answering the three basic economic questions. Explain the consumer's role in providing these answers.