#1
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.
ExplanationScarcity results from unlimited wants and needs surpassing limited resources.
#2
What does GDP stand for in economics?
Gross Domestic Product
ExplanationGDP measures the total value of goods and services produced within a country's borders.
#3
What is the formula to calculate profit in economics?
Profit = Revenue - Cost
ExplanationProfit equals total revenue minus total cost.
#4
Which of the following is NOT considered a factor of production in economics?
Money
ExplanationMoney is not a factor of production in economic theory.
#5
What is the law of supply in economics?
As the price of a good increases, the quantity supplied increases.
ExplanationThe law of supply asserts that higher prices lead to greater quantities supplied.
#6
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationPerfectly competitive markets feature numerous buyers and sellers with homogeneous products.
#7
What is the law of demand in economics?
As the price of a good increases, the quantity demanded decreases.
ExplanationThe law of demand states that there's an inverse relationship between price and quantity demanded.
#8
What is the opportunity cost of a decision?
The total value of all alternatives that are forgone when a choice is made.
ExplanationOpportunity cost encompasses the value of foregone alternatives when a decision is made.
#9
In economics, what does the term 'inflation' refer to?
An increase in the general price level of goods and services over time.
ExplanationInflation denotes a sustained rise in the overall price level of goods and services.
#10
What does the term 'elasticity' measure in economics?
The responsiveness of quantity demanded to changes in price.
ExplanationElasticity gauges the sensitivity of quantity demanded to changes in price.
#11
What is the law of diminishing marginal utility in economics?
As the quantity of a good consumed increases, the marginal utility derived from consuming that good decreases.
ExplanationThe law of diminishing marginal utility posits that additional units of a good provide diminishing extra satisfaction.
#12
What is fiscal policy in economics?
Government policy that focuses on adjusting taxes and government spending to influence economic activity.
ExplanationFiscal policy involves government manipulation of taxation and spending to regulate economic conditions.
#13
What is the difference between microeconomics and macroeconomics?
Microeconomics focuses on individual markets, while macroeconomics studies the economy as a whole.
ExplanationMicroeconomics examines individual markets, while macroeconomics analyzes aggregate economic phenomena.
#14
What is the difference between a normal good and an inferior good?
Normal goods are purchased more as income increases, while inferior goods are purchased less as income increases.
ExplanationNormal goods are purchased more as income rises, whereas inferior goods are bought less with increasing income.
#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.
ExplanationAbsolute advantage involves producing a good with lower opportunity costs, while comparative advantage is about producing a good with greater efficiency relative to 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.
ExplanationThe Phillips curve depicts the inverse relationship between unemployment and inflation rates.