Economics Review Questions – 1st-Year University Level
Here’s a comprehensive set of questions covering all the learning outcomes from each chapter.
These include multiple-choice, short-answer, and fill-in-the-blank questions designed for 1st-
year university students to review key concepts.
Chapter 1: The Four Core Principles of Economics
Learning Outcomes:
1. Understand the four core principles of economics.
2. Apply cost-benefit, opportunity cost, marginal, and interdependence principles to real-life
decisions.
Multiple Choice:
1. Which principle involves evaluating the full set of costs and benefits before making a
decision?
a) Opportunity Cost Principle
b) Cost-Benefit Principle
c) Marginal Principle
d) Interdependence Principle
2. The true cost of attending a concert includes the value of the next best alternative (e.g.,
studying for an exam). This is an example of:
a) Sunk Cost
b) Opportunity Cost
c) Marginal Cost
d) Economic Surplus
3. A bakery decides whether to produce one more loaf of bread by comparing the additional
revenue to the additional cost. This illustrates the:
a) Interdependence Principle
,b) Marginal Principle
c) Framing Effect
d) Law of Demand
Short Answer:
4. Explain how the Interdependence Principle applies to your decision to major in Economics
(consider other choices, job markets, etc.).
5. Give an example of a framing effect in advertising and how it might distort cost-benefit
analysis.
Fill-in-the-Blank:
6. "A cost that cannot be recovered, like a non-refundable concert ticket, is called a __________
cost."
7. "The __________ Principle states that decisions about quantities are best made
incrementally."
Chapter 2: Demand and Consumer Choice
Learning Outcomes:
1. Define individual and market demand.
2. Analyze shifts vs. movements along demand curves.
3. Apply cross-price and income elasticity concepts.
Multiple Choice:
8. If the price of coffee rises and demand for tea increases, tea and coffee are:
a) Complements
b) Substitutes
c) Inferior goods
d) Unrelated
, 9. A leftward shift in the demand curve for bicycles could be caused by:
a) A rise in bicycle prices
b) A decrease in consumer income (assuming bicycles are normal goods)
c) A new study highlighting health benefits of cycling
d) A decrease in the price of helmets (a complement)
10. If demand is perfectly inelastic, a 10% price increase will:
a) Reduce quantity demanded by 10%
b) Not change quantity demanded
c) Increase total revenue
d) Both b and c
Short Answer:
11. Explain why the demand curve for a specific brand of sneakers (e.g., Nike) is more elastic
than the demand for sneakers in general.
12. How might a network effect (e.g., social media platforms) shift a demand curve?
Fill-in-the-Blank:
13. "The __________ elasticity of demand measures responsiveness of quantity demanded to
changes in income."
14. "A good with an income elasticity of -0.5 is classified as __________."
Chapter 3: Supply and Producer Choice
Learning Outcomes:
1. Define individual and market supply.
2. Analyze determinants of supply elasticity.
Here’s a comprehensive set of questions covering all the learning outcomes from each chapter.
These include multiple-choice, short-answer, and fill-in-the-blank questions designed for 1st-
year university students to review key concepts.
Chapter 1: The Four Core Principles of Economics
Learning Outcomes:
1. Understand the four core principles of economics.
2. Apply cost-benefit, opportunity cost, marginal, and interdependence principles to real-life
decisions.
Multiple Choice:
1. Which principle involves evaluating the full set of costs and benefits before making a
decision?
a) Opportunity Cost Principle
b) Cost-Benefit Principle
c) Marginal Principle
d) Interdependence Principle
2. The true cost of attending a concert includes the value of the next best alternative (e.g.,
studying for an exam). This is an example of:
a) Sunk Cost
b) Opportunity Cost
c) Marginal Cost
d) Economic Surplus
3. A bakery decides whether to produce one more loaf of bread by comparing the additional
revenue to the additional cost. This illustrates the:
a) Interdependence Principle
,b) Marginal Principle
c) Framing Effect
d) Law of Demand
Short Answer:
4. Explain how the Interdependence Principle applies to your decision to major in Economics
(consider other choices, job markets, etc.).
5. Give an example of a framing effect in advertising and how it might distort cost-benefit
analysis.
Fill-in-the-Blank:
6. "A cost that cannot be recovered, like a non-refundable concert ticket, is called a __________
cost."
7. "The __________ Principle states that decisions about quantities are best made
incrementally."
Chapter 2: Demand and Consumer Choice
Learning Outcomes:
1. Define individual and market demand.
2. Analyze shifts vs. movements along demand curves.
3. Apply cross-price and income elasticity concepts.
Multiple Choice:
8. If the price of coffee rises and demand for tea increases, tea and coffee are:
a) Complements
b) Substitutes
c) Inferior goods
d) Unrelated
, 9. A leftward shift in the demand curve for bicycles could be caused by:
a) A rise in bicycle prices
b) A decrease in consumer income (assuming bicycles are normal goods)
c) A new study highlighting health benefits of cycling
d) A decrease in the price of helmets (a complement)
10. If demand is perfectly inelastic, a 10% price increase will:
a) Reduce quantity demanded by 10%
b) Not change quantity demanded
c) Increase total revenue
d) Both b and c
Short Answer:
11. Explain why the demand curve for a specific brand of sneakers (e.g., Nike) is more elastic
than the demand for sneakers in general.
12. How might a network effect (e.g., social media platforms) shift a demand curve?
Fill-in-the-Blank:
13. "The __________ elasticity of demand measures responsiveness of quantity demanded to
changes in income."
14. "A good with an income elasticity of -0.5 is classified as __________."
Chapter 3: Supply and Producer Choice
Learning Outcomes:
1. Define individual and market supply.
2. Analyze determinants of supply elasticity.
