#1
Which of the following is an example of an opportunity cost?
The value of the next best alternative foregone
ExplanationOpportunity cost represents the value of the alternative that must be forgone when a choice is made.
#2
In economics, what does the term 'trade-off' refer to?
The decision to give up one thing in exchange for another
ExplanationTrade-off refers to the exchange or sacrifice of one thing to obtain another.
#3
Which of the following best describes the concept of 'marginal analysis' in economics?
Studying changes in economic variables at the margin
ExplanationMarginal analysis involves examining the effects of small changes in an economic variable.
#4
What is the primary purpose of a production possibilities frontier (PPF) in economics?
To represent the maximum output combinations of two goods an economy can produce
ExplanationPPF illustrates the trade-offs an economy faces when allocating resources between two goods.
#5
Which of the following is an example of a positive economic statement?
Unemployment is a significant problem in the economy.
ExplanationPositive economic statements are objective statements about what 'is', like unemployment rates.
#6
What is the 'law of diminishing marginal utility' in economics?
As a consumer consumes more of a good, the additional satisfaction from each additional unit decreases.
ExplanationThis law states that as consumption of a good increases, the additional satisfaction gained from each additional unit decreases.
#7
Which of the following is a characteristic of a perfectly competitive market?
Homogeneous products and easy entry and exit
ExplanationIn perfect competition, firms produce homogeneous products and there are no barriers to entry or exit.
#8
In economic decision-making, what does 'utility' refer to?
The satisfaction or benefit derived from consuming a good or service
ExplanationUtility measures the satisfaction or happiness derived from consuming a good or service.
#9
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationPrice elasticity of demand measures the responsiveness of quantity demanded to changes in price.
#10
Which of the following is a characteristic of a monopolistic competition market structure?
Many sellers with differentiated products
ExplanationMonopolistic competition features many firms selling similar but not identical products.
#11
Which of the following is a characteristic of a command economy?
Government control over resource allocation and production decisions
ExplanationCommand economies are characterized by central planning and government control over economic decisions.
#12
What is the 'invisible hand' concept in economics, as proposed by Adam Smith?
The principle that individuals pursuing their self-interest unintentionally promote the good of society
ExplanationThe invisible hand suggests that individuals acting in self-interest indirectly benefit society as a whole.