Use this free practice quiz with 20 questions to review Foundations of Macroeconomics: Scarcity, Choice, and Economic Systems, test your knowledge, and prepare for your next test or exam.
A student is deciding whether to attend one additional hour of a review session. The expected marginal benefit is $30, while the marginal cost, including forgone leisure, is $22. Based on marginal decision-making, what should the student do?
Do not attend because any cost makes an activity irrational.
Attend because the marginal benefit exceeds the marginal cost.
Attend only if the total benefit of all study is greater than the total cost.
Do not attend because opportunity cost applies only to firms.
True or false: A production point inside a production possibilities curve is attainable but productively inefficient.
True
False
A person attends a two-hour lecture instead of working at $18 per hour. Ignoring other possible uses of the time, what is the opportunity cost in forgone wages?
A sustained increase in the overall price level is called .
Which question is primarily macroeconomic rather than microeconomic?
Why one coffee shop raises its price
Why a particular firm hires fewer workers
Why unemployment rises throughout a country
How one household chooses between two brands
True or false: Moving from a point inside a production possibilities curve to a point on the curve is an example of economic growth.
True
False
Select all of the following that are factors of production.
A forest used as a source of timber
Workers' physical and mental effort
A firm's sales revenue
A machine used to produce goods
The ability to organize resources and accept business risk
In the factor market, households provide to firms, and firms pay households for that resource.
Alex can produce 4 pizzas or 8 salads per hour. Jordan can produce 3 pizzas or 3 salads per hour. Which statement is correct?
Jordan has both absolute and comparative advantage in salads.
Alex has comparative advantage in pizzas because Alex produces more pizzas.
Alex has absolute and comparative advantage in salads.
Neither producer can gain from specialization because Alex has an absolute advantage in both goods.
Select all statements that correctly describe additions in an expanded circular-flow model.
The government collects taxes.
The government purchases goods and services.
The financial sector receives saving and provides funds for borrowing and investment.
The foreign sector buys only imports from domestic sellers.
The foreign sector buys domestic exports and sells imports to domestic buyers.
Explain how a production possibilities curve illustrates scarcity, productive efficiency, trade-offs, opportunity cost, and economic growth. Distinguish a movement from an inefficient point to the curve from an outward shift of the curve.
Which measure is commonly used to represent a nation's total production and income?
The price of one firm's product
Gross domestic product
The wage paid to one worker
The number of products made by one household
True or false: A major destruction of capital can shift a production possibilities curve inward.
True
False
Which question is primarily macroeconomic?
Why does a country’s total production change over time?
How does one firm choose its output level?
Why does the price of coffee rise in one market?
How does one consumer choose between two brands?
A factory purchases an automated machine to help produce furniture. Which factor of production does the machine represent?
A forest used for timber
The physical effort of factory workers
A machine used to assemble products
The ability to organize a business and accept risk
A student attends a two-hour lecture instead of working at a job that pays $18 per hour. What is the opportunity cost of the forgone wages, in dollars? Enter the number only, without a dollar sign.
An economy is producing at a point inside its production possibilities curve. What does this point indicate?
It is unattainable with current resources and technology.
It is attainable but productively inefficient.
It is productively efficient and cannot be improved.
It represents an outward shift caused by economic growth.
Using the production possibilities combinations in the material, what is the opportunity cost of increasing food production from 2 units to 3 units? Enter the number of clothing units given up, without a unit label.
Morgan can complete 12 design projects or 6 software projects per week. Taylor can complete 9 design projects or 6 software projects per week. Who has the comparative advantage in producing software?
Morgan, because Morgan can produce more design projects per week.
Taylor, because Taylor has the lower opportunity cost of producing software.
Morgan, because Morgan has the higher opportunity cost of producing software.
Neither person, because comparative advantage depends only on total output.
What economic concept describes a producer’s ability to produce a good at a lower opportunity cost than another producer?