Economic Markets and Resource Allocation Quiz

Test your knowledge on market economics with questions on free market, monopolistic competition, central banks, and more. Take the quiz now!

Practice Learn Test

In economics, what does the term 'opportunity cost' refer to?

The total cost of producing a good or service.

The cost of an alternative that must be forgone to pursue a certain action.

The cost of inputs such as labor and materials in production.

The cost of resources that are not currently being utilized.

What is the law of demand in economics?

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

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

As the price of a good decreases, the quantity supplied decreases, ceteris paribus.

As the price of a good decreases, the quantity demanded decreases, ceteris paribus.

What is the role of entrepreneurship in an economy?

To ensure fair distribution of income among individuals.

To organize and allocate resources efficiently in the production process.

To innovate and take risks in starting new businesses or introducing new products.

To regulate prices and prevent monopolies.

Which of the following is NOT a factor of production?

Labor

Capital

Technology

Entrepreneurship

What is fiscal policy?

The government's use of taxation and spending to influence the economy.

The central bank's regulation of the money supply to control inflation.

The process of determining the optimal allocation of resources.

The regulation of interest rates to promote economic growth.

What is the law of supply in economics?

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

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

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

As the price of a good decreases, the quantity demanded decreases, ceteris paribus.

Which of the following best defines a free market economy?

An economy where the government controls all economic activities.

An economy where resources are allocated based on central planning by the government.

An economy where prices for goods and services are determined by supply and demand with minimal government intervention.

An economy where only privately-owned businesses operate.

Which of the following is NOT a characteristic of a monopolistic competition market structure?

Many buyers and sellers.

Product differentiation.

Price takers.

Low barriers to entry and exit.

What is the function of a stock exchange?

To set interest rates for borrowing and lending.

To facilitate the buying and selling of shares of publicly traded companies.

To regulate the prices of goods and services in the economy.

To oversee the production and distribution of essential goods.

#10

What is the main difference between a command economy and a market economy?

In a command economy, resources are allocated by the government, while in a market economy, resources are allocated by individuals and businesses.

In a command economy, prices are determined by supply and demand, while in a market economy, prices are set by the government.

In a command economy, there is no private ownership of property, while in a market economy, property ownership is protected by law.

In a command economy, competition among businesses is encouraged, while in a market economy, businesses are owned and operated by the government.

#11

What is price elasticity of demand?

A measure of the responsiveness of quantity demanded to changes in price.

The total amount of money consumers are willing to spend on a good or service.

The percentage change in quantity demanded divided by the percentage change in income.

The ratio of the quantity demanded to the price of the good or service.

#12

Which of the following is a characteristic of perfect competition?

Few buyers and sellers.

Product differentiation.

Barriers to entry and exit.

Price takers.

#13

What is the primary function of a central bank in a country's economy?

To regulate interest rates for individual banks.

To supervise and regulate the banking system.

To print currency and manage its circulation.

To control fiscal policy and government spending.

#14

What does the term 'invisible hand' refer to in economics?

The concept that individuals acting in their own self-interest can lead to positive outcomes for society as a whole.

The government's role in directly controlling the economy.

The process of redistributing wealth to ensure equality.

The influence of foreign markets on domestic economic policies.