Economic Decision Making and Resource Allocation Quiz

Explore decision theory with questions on market economy, GDP, elasticity, resource allocation, and more. Challenge yourself now!

Practice Learn Test

Which of the following is a characteristic of a market economy?

Centralized planning by the government

Private ownership of resources

Equal distribution of income

Government control over prices

In economics, what does GDP stand for?

Gross Domestic Profit

Gross Domestic Product

Global Distribution Process

Government Development Protocol

Which of the following is a factor of production?

Money

Labor

Technology

All of the above

What is a subsidy in economics?

A payment made by the government to producers or consumers to encourage the production or consumption of a certain good or service

A tax levied on imported goods

A limit on the quantity of a good that can be imported

A price ceiling set by the government

What is the law of demand?

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

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

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

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

What is the law of supply?

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

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

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

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

What does the term 'opportunity cost' refer to?

The total cost of production

The cost of producing an additional unit of a good

The cost of using resources for one purpose over another

The cost of inflation on consumer goods

What is the concept of 'elasticity of demand'?

The measure of how much the quantity demanded of a good responds to a change in income

The measure of how much the quantity demanded of a good responds to a change in the price of that good

The measure of how much the quantity demanded of a good responds to a change in the price of a related good

The measure of how much the quantity demanded of a good responds to a change in the weather

What is the law of diminishing marginal utility?

As consumption of a product increases, the marginal utility derived from each additional unit decreases

As consumption of a product decreases, the marginal utility derived from each additional unit increases

As consumption of a product increases, the marginal utility derived from each additional unit increases

As consumption of a product decreases, the marginal utility derived from each additional unit decreases

#10

What does the production possibility frontier represent?

The maximum level of production achievable given current resources and technology

The ideal level of production in an economy

The level of production that maximizes profits for firms

The minimum level of production required to avoid a recession

#11

What is the main function of the price mechanism in a market economy?

To ensure equal distribution of income

To set production quotas for firms

To coordinate the decisions of buyers and sellers

To control inflation

#12

What is the difference between microeconomics and macroeconomics?

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

Macroeconomics studies individual markets, while microeconomics studies the economy as a whole

Both microeconomics and macroeconomics study individual markets

Both microeconomics and macroeconomics study the economy as a whole

#13

Which of the following is a feature of a command economy?

Private ownership of resources

Market forces determine resource allocation

Government control over production and distribution

Absence of government intervention