What does the term “economics” refer to?
A) The study of money only
B) The study of human behavior in relation to scarcity and choices
C) The study of financial markets
D) The study of government regulations
Scarcity in economics refers to:
A) Unlimited resources for human needs
B) The limitation of resources to meet unlimited wants
C) The absence of goods in the market
D) The difficulty in pricing goods
Which of the following is an example of a basic economic problem?
A) How to reduce government spending
B) How to allocate limited resources among competing uses
C) How to increase GDP
D) How to impose taxes on foreign goods
The term “opportunity cost” refers to:
A) The cost of producing a good
B) The benefits received from a good or service
C) The cost of the next best alternative foregone
D) The monetary value of a product
Which of the following is a factor of production?
A) Money
B) Consumer goods
C) Land
D) Advertising
What does the “production possibility curve” (PPC) illustrate?
A) The various combinations of goods and services that can be produced given resources
B) The different price levels in an economy
C) The relationship between demand and supply
D) The total GDP of a nation
Which of the following is a characteristic of a market economy?
A) The government controls the production of goods
B) Prices are determined by supply and demand in the market
C) All resources are owned by the state
D) Goods are allocated based on the needs of society
The law of demand states that:
A) When the price of a good increases, demand decreases
B) When the price of a good increases, demand increases
C) When income increases, demand for inferior goods increases
D) The price of a good does not affect demand
The “invisible hand” concept is associated with which economist?
A) John Maynard Keynes
B) Karl Marx
C) Adam Smith
D) Milton Friedman
What is meant by “marginal utility”?
A) The total satisfaction from all units of a good
B) The additional satisfaction from consuming one more unit of a good
C) The cost of producing an additional unit of a good
D) The total income generated from a good
What is the primary function of money in an economy?
A) To serve as a medium of exchange
B) To serve as a store of value
C) To measure national income
D) To control inflation
Which economic system is based on private ownership of the means of production?
A) Socialism
B) Mixed economy
C) Capitalism
D) Feudalism
What does “GDP” stand for?
A) Gross Domestic Price
B) Government Domestic Product
C) Gross Domestic Product
D) Gross Domestic Potential
Which of the following is an example of a “public good”?
A) A pair of shoes
B) A park open to everyone
C) A private car
D) A branded handbag
The “law of supply” states that:
A) As the price of a good increases, supply decreases
B) As the price of a good decreases, supply increases
C) As the price of a good increases, supply increases
D) Supply is not affected by price changes
What is “consumer surplus”?
A) The total amount consumers spend on a product
B) The difference between what consumers are willing to pay and what they actually pay
C) The total satisfaction from consuming all units of a good
D) The profit earned by firms from selling products
The “production function” shows the relationship between:
A) The cost of production and the quantity of output
B) The quantity of inputs and the quantity of output produced
C) The total income of the economy and the price level
D) The supply and demand of a product
What is “elasticity of demand”?
A) The change in demand when there is a change in the quantity supplied
B) The responsiveness of demand to changes in price
C) The difference between total supply and total demand
D) The measure of consumer preferences
Which of the following is a characteristic of a “monopoly”?
A) Many firms selling identical products
B) A single firm controls the entire market
C) Firms produce differentiated products
D) No firm has control over the price
Which of the following is a typical function of government in a mixed economy?
A) The government owns all the means of production
B) The government controls the pricing of all goods
C) The government provides public goods and services
D) The government avoids any regulation of businesses
What is “economic efficiency”?
A) The highest level of government spending
B) The optimal use of resources to produce the most goods and services
C) The lowest possible prices in the market
D) The most equitable distribution of wealth
“Opportunity cost” can be illustrated by:
A) The monetary cost of a good
B) The value of the next best alternative foregone
C) The cost of production in an economy
D) The price consumers are willing to pay for a good
Which of the following is a non-rivalrous and non-excludable good?
A) A public park
B) A concert ticket
C) A private car
D) A branded sweater
The term “marginal cost” refers to:
A) The total cost of producing a good
B) The cost of producing one more unit of a good
C) The average cost of all goods produced
D) The fixed cost of production
What is the “law of diminishing returns”?
A) The cost of production increases as more labor is hired
B) The total output increases at an increasing rate as more inputs are used
C) The additional output from an additional unit of input eventually decreases
D) The supply of goods always increases with price increases
Which of the following is a fundamental problem that all economies must solve?
A) How to redistribute wealth
B) How to produce goods in an environmentally friendly way
C) How to allocate scarce resources to meet unlimited wants
D) How to provide for every citizen’s needs without government intervention
