Economic Principles in Resource Allocation Quiz

Test your knowledge with these questions on opportunity cost, perfectly competitive markets, Laffer curve, taxation, marginal utility, public goods, and more!

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What does the term 'opportunity cost' refer to in economics?

The total cost of producing a good or service

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

The cost of raw materials used in production

The total cost of inputs used in production

What is the main function of the Federal Reserve System in the United States?

To regulate international trade

To control government spending and taxation

To manage the money supply and regulate the banking system

To promote competition and prevent monopolies

What is 'monetary policy' in economics?

The use of government spending and taxation to influence the economy

The use of interest rates and the money supply to control economic variables

The regulation of international trade agreements

The promotion of competition and prevention of monopolies

Which of the following is NOT a characteristic of a perfectly competitive market?

Many buyers and sellers

Homogeneous products

Barriers to entry

Perfect information

In economics, what is the 'Laffer curve' used to illustrate?

The relationship between inflation and unemployment

The relationship between government spending and economic growth

The relationship between tax rates and government revenue

The relationship between interest rates and investment

Which of the following is an example of a regressive tax?

Sales tax

Progressive income tax

Property tax

Corporate income tax

Which of the following is an example of a public good?

Healthcare services

Private education

Fast food

Luxury cars

What is the 'law of diminishing returns' in economics?

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

As more units of a variable input are added to a fixed input, the total product of the variable input eventually increases

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

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

What is 'elasticity of demand' in economics?

A measure of how responsive quantity demanded is to a change in price

A measure of how responsive quantity supplied is to a change in price

A measure of how responsive price is to a change in quantity demanded

A measure of how responsive price is to a change in quantity supplied

#10

What is the concept of 'marginal utility' in economics?

The total satisfaction derived from consuming a good or service

The additional satisfaction gained from consuming one more unit of a good or service

The satisfaction derived from consuming the first unit of a good or service

The total utility divided by the quantity consumed

#11

What is the 'Tragedy of the Commons' in economics?

A situation where common resources are overused and depleted due to individuals' self-interest

A market failure caused by the absence of property rights

A situation where the government controls all resources in a society

A theory that explains the relationship between unemployment and inflation

#12

What is the main difference between a progressive tax and a regressive tax?

A progressive tax takes a larger percentage of income from low-income earners, while a regressive tax takes a larger percentage from high-income earners

A progressive tax takes a larger percentage of income from high-income earners, while a regressive tax takes a larger percentage from low-income earners

A progressive tax is applied to consumption, while a regressive tax is applied to income

A progressive tax is a flat tax, while a regressive tax varies based on income levels

#13

What is the 'Phillips Curve' in economics?

A curve illustrating the relationship between inflation and unemployment

A curve illustrating the relationship between interest rates and investment

A curve illustrating the relationship between tax rates and government revenue

A curve illustrating the relationship between government spending and economic growth

#14

What is the 'Paradox of Thrift' in economics?

The idea that saving leads to increased consumption

The belief that consumption drives economic growth

The notion that increased saving can lead to decreased consumption and economic slowdown

The concept that high consumption levels lead to low savings rates

#15

In economics, what does the term 'moral hazard' refer to?

The tendency of individuals to consume more goods when prices are low

The risk that a party to a transaction has not entered into the contract in good faith

The behavior of individuals or firms acting differently when they are insured against adverse events

The situation where a good's price does not accurately reflect its true value