#1
Which of the following is a fundamental principle of economics?
Scarcity
ExplanationResources are limited relative to human wants.
#2
In economics, what does GDP stand for?
Gross Domestic Product
ExplanationTotal value of all goods and services produced within a country's borders.
#3
What does the 'law of demand' state?
As prices decrease, quantity demanded increases
ExplanationInverse relationship between price and quantity demanded.
#4
What is the concept of 'opportunity cost'?
The cost of the next best alternative foregone
ExplanationValue of the best alternative forgone when a decision is made.
#5
What is the formula for calculating elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to changes in price.
#6
Which of the following is NOT a factor of production according to classical economics?
Money
ExplanationMedium of exchange, not a primary factor of production.
#7
In the context of market structures, which type of market has the most competition?
Perfect competition
ExplanationMarket structure with many buyers and sellers, homogeneous products, and easy entry and exit.
#8
What does the term 'ceteris paribus' mean in economics?
All other things being equal
ExplanationAssumption that all other relevant factors remain constant except the one being studied.
#9
Which of the following is NOT considered a type of unemployment?
Monopolistic unemployment
ExplanationTerm not commonly used in economics; unemployment types typically include frictional, structural, and cyclical.
#10
Which economic concept is described by 'the ability of a good or service to satisfy human wants'?
Utility
ExplanationMeasure of satisfaction derived from consuming a good or service.
#11
What is the 'invisible hand' concept in economics associated with?
Adam Smith
ExplanationMetaphor describing how self-interest and competition lead to the most efficient allocation of resources.
#12
Which economic theory is concerned with the long-term growth of an economy through technological advancement?
Endogenous growth theory
ExplanationFocuses on internal factors driving economic growth, like innovation and human capital.
#13
Which economic theory emphasizes the importance of expectations and confidence in influencing economic behavior?
Rational expectations theory
ExplanationEconomic agents make decisions based on expectations of the future, which are often rational and self-fulfilling.
#14
Who introduced the concept of 'creative destruction' in economics?
Joseph Schumpeter
ExplanationProcess where new innovations replace outdated technologies and industries.
#15
What is the 'Laffer curve' used to illustrate?
The relationship between tax rates and tax revenue
ExplanationShows the theoretical relationship between tax rates and tax revenue; depicts the point at which tax revenue is maximized.