Basic Economic Concepts Quiz

Test your knowledge on scarcity, demand, supply, GDP, inflation, elasticity, and more. Explore fundamental economic principles in this quiz!

Practice Learn Test

Which of the following best defines the concept of scarcity in economics?

The unlimited wants and needs of individuals or society exceed the limited resources available to fulfill them.

The surplus of goods and services in the market.

The equal distribution of resources among all members of society.

The absence of wants and needs.

What does GDP stand for in economics?

Gross Domestic Product

Global Demand Projection

Government Debt Percentage

General Demand Preference

What is the formula to calculate profit in economics?

Profit = Revenue - Cost

Profit = Revenue + Cost

Profit = Revenue / Cost

Profit = Cost / Revenue

Which of the following is NOT considered a factor of production in economics?

Labor

Land

Money

Capital

What is the law of supply in economics?

As the price of a good increases, the quantity supplied increases.

As the price of a good increases, the quantity supplied decreases.

As the price of a good decreases, the quantity supplied remains constant.

As the price of a good decreases, the quantity supplied increases.

Which of the following is a characteristic of a perfectly competitive market?

Many buyers and one seller

A single buyer and many sellers

Few buyers and few sellers

Many buyers and many sellers

What is the law of demand in economics?

As the price of a good increases, the quantity demanded increases.

As the price of a good increases, the quantity demanded decreases.

As the price of a good decreases, the quantity demanded remains constant.

As the price of a good decreases, the quantity demanded increases.

What is the opportunity cost of a decision?

The total value of all alternatives that are forgone when a choice is made.

The actual cost of a decision in monetary terms.

The cost of the cheapest alternative available.

The cost of the most expensive alternative available.

In economics, what does the term 'inflation' refer to?

A decrease in the general price level of goods and services.

An increase in the general price level of goods and services over time.

A situation where there is no change in the general price level.

A decrease in the value of money relative to other currencies.

#10

What does the term 'elasticity' measure in economics?

The responsiveness of quantity demanded to changes in price.

The total quantity demanded in the market.

The amount of profit a firm generates.

The extent of government intervention in the market.

#11

What is the law of diminishing marginal utility in economics?

As the quantity of a good consumed increases, the total utility derived from consuming that good also increases.

As the quantity of a good consumed increases, the marginal utility derived from consuming that good also increases.

As the quantity of a good consumed decreases, the total utility derived from consuming that good decreases.

As the quantity of a good consumed increases, the marginal utility derived from consuming that good decreases.

#12

What is fiscal policy in economics?

Government policy that regulates the money supply and interest rates to control economic fluctuations.

Government policy that focuses on adjusting taxes and government spending to influence economic activity.

Government policy that aims to regulate the overall economy through measures such as price controls and production quotas.

Government policy that focuses on trade relations with other countries to promote economic growth.

#13

What is the difference between microeconomics and macroeconomics?

Microeconomics focuses on individual markets, while macroeconomics studies the economy as a whole.

Microeconomics focuses on the entire economy, while macroeconomics focuses on individual markets.

Microeconomics deals with the behavior of individual consumers, while macroeconomics deals with the behavior of firms.

Macroeconomics focuses on supply and demand, while microeconomics focuses on inflation and unemployment.

#14

What is the difference between a normal good and an inferior good?

Normal goods have an income elasticity of demand greater than 1, while inferior goods have an income elasticity of demand less than 1.

Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand.

Normal goods are necessities, while inferior goods are luxuries.

Normal goods are purchased more as income increases, while inferior goods are purchased less as income increases.

#15

What is the difference between absolute advantage and comparative advantage in international trade?

Absolute advantage refers to the ability of a country to produce a good at a lower opportunity cost, while comparative advantage refers to the ability of a country to produce a good more efficiently than another country.

Absolute advantage refers to the ability of a country to produce a good more efficiently than another country, while comparative advantage refers to the ability of a country to produce a good at a lower opportunity cost.

Absolute advantage refers to the ability of a country to produce a good without any opportunity cost, while comparative advantage refers to the ability of a country to produce a good with some opportunity cost.

Absolute advantage refers to the ability of a country to produce a good at a higher opportunity cost, while comparative advantage refers to the ability of a country to produce a good more efficiently than another country.

#16

What is the concept of the Phillips curve in economics?

The relationship between inflation and unemployment, suggesting that there is a trade-off between the two variables.

The relationship between government spending and economic output, suggesting that increased spending leads to higher output.

The relationship between interest rates and investment, suggesting that lower interest rates stimulate investment.

The relationship between taxation and government revenue, suggesting that higher taxes lead to higher revenue.