Econ Midterm Review

Sarah must decide between attending a concert or working overtime to earn extra income. What economic concept best explains her dilemma?

• Marginal benefit

• Opportunity cost

• Sunk cost

• Elasticity of demand

government implements a tax on sugary drinks to reduce sugar consumption. This is an example of:

• Incentive

• Marginal utility

• Subsidy

• Market Equilibrium

A farmer specializes in growing wheat while another focuses on dairy products. Both benefit from exchanging goods. This demonstrates:

• Absolute advantage

• Comparative advantage

• Diminishing returns

• Perfect competition

If a city introduces a policy stating that rent should not exceed $1,000 per month, but the market equilibrium rent is $1,200, this policy will result in:

• Surplus of apartments

• Shortage of apartments

• No effect on the market

• Lower construction costs

A local grocery store notices that every time it raises the price of milk, demand decreases slightly. The change in demand reflects:

• Price elasticity of demand

• Diminishing marginal utility

• Inelastic demand

• Income effect

If a farmer produces 100 kg of apples with one worker and 120 kg with two workers, the marginal product of the second worker is:

• 10kg

• 20kg

• 40kg

• 60kg

A rise in the price of movie tickets causes a decrease in popcorn sales. This indicates that these goods are:

• Substitutes

• Complements

• Independent goods

• Inferior goods

Aarav's factory can increase output without increasing its average total cost. This is an example of:

• Diseconomies of scale

• Economies of scale

• Constant returns to scale

When Olivia received a raise at her job, she started buying more organic vegetables. These vegetables are considered:

• Inferior goods

• Luxury goods

• Normal goods

A firm finds that producing 10 units costs $200, and producing 11 units costs $220. The marginal cost of the 11th unit is:

• 20

• 30

• 40

• 50