Principles of Economics Quiz

Resources are limited, but wants are unlimited.

Money is not a direct factor of production, it is a medium of exchange.

Microeconomics analyzes individual economic units, while macroeconomics studies aggregate phenomena.

Tax rates increase as income rises, aiming to distribute the tax burden more evenly.

There is a direct relationship between price and quantity supplied, ceteris paribus.

An incentive given to producers to increase supply or reduce costs.

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

Adam Smith is known for his pioneering work in classical economics, particularly in 'The Wealth of Nations'.

The cost of choosing one alternative over another.

A market structure with many firms selling differentiated products, allowing some control over price.

To prevent market failures, ensure fair competition, and stabilize the economy.

Each additional unit of a good consumed adds less to total utility than the previous unit.

Using government spending and taxation to influence aggregate demand.

There is an inverse relationship between the price of a good and the quantity demanded, ceteris paribus.

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

There is a trade-off between inflation and unemployment in the short run.

Absolute advantage focuses on productivity, while comparative advantage considers opportunity cost.