Economic Factors in Production and Exchange Quiz

Test your knowledge on capital resources, supply, factors of production, opportunity cost, and more with our quiz.

Practice Learn Test

Which of the following is an example of a capital resource?

Land

Labor

Machinery

Entrepreneurship

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

The quantity of goods and services consumers are willing to purchase

The amount of money available to spend on goods and services

The quantity of goods and services producers are willing to sell

The cost of producing a unit of a good or service

What is the difference between 'fixed costs' and 'variable costs'?

Fixed costs vary with the level of output, while variable costs remain constant regardless of the level of output

Fixed costs are incurred in the short run, while variable costs are incurred in the long run

Fixed costs are costs that do not change with the level of output, while variable costs change with the level of output

Fixed costs are costs incurred by all firms in a market, while variable costs are specific to individual firms

What is 'Gross Domestic Product (GDP)'?

The total value of all goods and services produced within a country's borders in a specific period of time

The total value of all goods and services produced by a country's citizens regardless of location

The total value of all final goods and services produced within a country's borders in a specific period of time

The total value of all goods and services consumed within a country's borders in a specific period of time

What is 'comparative advantage'?

The ability to produce a good using fewer resources than another producer

The ability to produce a good at a lower opportunity cost than another producer

The ability to produce a good more efficiently than another producer

The ability to produce a good using more resources than another producer

What is 'opportunity cost'?

The total cost of producing a good or service

The cost of producing one additional unit of a good or service

The cost of resources used in the production process

The value of the next best alternative that is forgone when a decision is made

Which of the following is NOT a factor of production?

Land

Capital

Money

Entrepreneurship

What is the concept of 'opportunity cost' in economics?

The total cost of producing a good or service

The cost of producing one additional unit of a good or service

The cost of resources used in the production process

The value of the next best alternative that is forgone when a decision is made

What is the law of diminishing returns?

As more units of a variable input are added to fixed inputs, the marginal product of the variable input eventually decreases

As more units of a variable input are added to fixed inputs, the marginal product of the variable input increases indefinitely

As more units of a variable input are added to fixed inputs, the total output remains constant

As more units of a variable input are added to fixed inputs, the total output increases at a decreasing rate

#10

What does the term 'economies of scale' refer to?

The increase in average total cost that occurs when all inputs are increased by a certain percentage

The decrease in average total cost that occurs when all inputs are increased by a certain percentage

The situation where a firm is able to produce more output with the same amount of inputs

The situation where a firm is unable to produce any output

#11

What is 'perfect competition' in economics?

A market structure where there is only one seller and many buyers

A market structure where there are many sellers and only one buyer

A market structure where there are many sellers and many buyers, all selling and buying identical products with no barriers to entry or exit

A market structure where there are many sellers and many buyers, all selling and buying similar but differentiated products

#12

What is the role of 'government intervention' in a market economy?

To promote monopolies for efficiency

To regulate and correct market failures

To increase competition and create market inefficiencies

To decrease consumer welfare

#13

What is 'economic efficiency'?

A situation where resources are allocated in a way that maximizes total utility

A situation where resources are allocated in a way that minimizes total utility

A situation where resources are allocated in a way that maximizes total output

A situation where resources are allocated in a way that maximizes total cost

#14

What is the difference between 'explicit costs' and 'implicit costs'?

Explicit costs are monetary payments for resources, while implicit costs are the opportunity costs of using resources the firm already owns

Explicit costs are opportunity costs, while implicit costs are monetary payments for resources

Explicit costs are incurred in the short run, while implicit costs are incurred in the long run

Explicit costs are fixed costs, while implicit costs are variable costs

#15

What is the difference between 'monopoly' and 'monopolistic competition'?

Monopoly refers to a market with many sellers offering identical products, while monopolistic competition refers to a market with a single seller offering a unique product

Monopoly refers to a market with a single seller offering a unique product, while monopolistic competition refers to a market with many sellers offering identical products

Monopoly refers to a market with a single seller offering a unique product, while monopolistic competition refers to a market with many sellers offering similar but differentiated products

Monopoly refers to a market with many sellers offering similar but differentiated products, while monopolistic competition refers to a market with a single seller offering a unique product

#16

What is the difference between 'absolute advantage' and 'comparative advantage'?

Absolute advantage is the ability to produce a good using fewer resources than another producer, while comparative advantage is the ability to produce a good at a lower opportunity cost than another producer

Absolute advantage is the ability to produce a good at a lower opportunity cost than another producer, while comparative advantage is the ability to produce a good using fewer resources than another producer

Absolute advantage is the ability to produce a good more efficiently than another producer, while comparative advantage is the ability to produce a good using more resources than another producer

Absolute advantage is the ability to produce a good using more resources than another producer, while comparative advantage is the ability to produce a good at a higher opportunity cost than another producer

#17

What is 'monopsony'?

A market with only one buyer and many sellers

A market with only one seller and many buyers

A market with many buyers and many sellers

A market with many buyers but only one seller

#18

What is the 'Laffer curve'?

A curve that shows the relationship between the quantity of a good that producers are willing to sell and the price of the good

A curve that shows the relationship between the quantity of a good that consumers are willing to buy and the price of the good

A curve that shows the relationship between tax rates and tax revenue

A curve that shows the relationship between the quantity of a good that producers are willing to sell and the quantity of the good that consumers are willing to buy