Economic Principles and Rational Decision Making Quiz

Test your knowledge with questions on law of demand, GDP, game theory, tax, market structure, monetary & fiscal policy, and more!

Practice Learn Test

1. What is the law of demand in economics?

As prices increase, quantity demanded decreases

As prices decrease, quantity demanded decreases

As prices increase, quantity demanded increases

As prices and quantity increase, demand decreases

8. What is the concept of 'utility' in economics?

The satisfaction or pleasure derived from consuming a good or service

The total quantity of goods and services produced in an economy

The measure of inflation in an economy

The rate at which money circulates in the economy

15. What is the concept of 'perfect competition' in market structure?

A market with only one seller and many buyers

A market with a few sellers offering similar but not identical products

A market with many sellers offering identical products

A market with a single buyer and many sellers

18. What is the concept of 'ceteris paribus' in economic analysis?

The assumption that all other relevant factors remain constant except the one being studied

The consideration of only one variable in economic analysis

The constant change in all relevant factors

The focus on immediate economic effects without considering long-term consequences

2. According to the opportunity cost principle, what is the cost of a decision?

The monetary cost

The explicit cost

The implicit cost

The sunk cost

3. What is the formula for calculating GDP (Gross Domestic Product)?

Consumption + Investment + Government Spending - Net Exports

Consumption + Investment + Government Spending + Net Exports

Consumption - Investment + Government Spending + Net Exports

Consumption - Investment - Government Spending + Net Exports

6. What is the Tragedy of the Commons in economics?

A situation where resources are overused and depleted due to lack of property rights

A situation where resources are conserved efficiently

A situation where resources are distributed equally among individuals

A situation where resources are privatized for optimal use

7. According to the law of diminishing marginal returns, what happens as additional units of a variable input are added to a fixed input?

Total output increases at a decreasing rate

Total output increases at an increasing rate

Total output remains constant

Total output decreases

11. What is the concept of 'comparative advantage' in international trade?

A country's ability to produce a good at a lower opportunity cost than another country

A country's ability to produce a good using fewer resources than another country

A country's ability to produce all goods more efficiently than another country

A country's ability to produce a good at a higher opportunity cost than another country

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4. What does the term 'elasticity of demand' measure?

The responsiveness of quantity demanded to changes in price

The total quantity demanded in the market

The elasticity of supply

The percentage change in quantity demanded

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5. In game theory, what is a dominant strategy?

A strategy that is always the best regardless of the opponent's strategy

A strategy that depends on the opponent's strategy

A strategy that is never optimal

A strategy that is rarely used

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9. What is the difference between a progressive tax and a regressive tax?

Progressive tax takes a higher percentage from high-income individuals, while regressive tax takes a higher percentage from low-income individuals

Progressive tax takes a higher percentage from low-income individuals, while regressive tax takes a higher percentage from high-income individuals

Both progressive and regressive taxes have the same impact on different income levels

There is no difference between progressive and regressive taxes

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10. What is the difference between monetary policy and fiscal policy?

Monetary policy is controlled by the government, while fiscal policy is controlled by the central bank

Monetary policy involves changes in the money supply, while fiscal policy involves changes in government spending and taxation

Monetary policy focuses on controlling inflation, while fiscal policy focuses on controlling unemployment

There is no difference between monetary policy and fiscal policy

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13. What is the concept of 'inflation targeting' in monetary policy?

A strategy where the central bank aims to achieve a specific inflation rate as its primary objective

A strategy where the central bank focuses on controlling the money supply

A strategy where the government sets the inflation rate

A strategy where interest rates are fixed to control inflation