Question 1

Which of the following best describes scarcity?

Accepted Answer

Limited resources and unlimited wants

Answer

Limited resources and limited wants

Answer

Abundance of resources and limited wants

Answer

Abundance of resources and unlimited wants

Question 2

What is the opportunity cost of a decision?

Accepted Answer

The value of the next best alternative foregone

Answer

The cost of indecision

Answer

The value of the chosen alternative

Answer

The monetary cost of making a decision

Answer

The total cost of making a decision

Question 3

What is the basic economic problem?

Accepted Answer

Scarcity

Answer

Inflation

Answer

Unemployment

Answer

Equilibrium

Answer

Abundance

Question 4

Which of the following best describes the concept of scarcity?

Accepted Answer

Limited resources and unlimited wants

Answer

Abundance of resources and unlimited wants

Answer

Limited resources and limited wants

Answer

Abundance of resources and limited wants

Question 5

Which of the following is a consequence of scarcity?

Accepted Answer

Opportunity cost

Answer

Market competition

Answer

Gross domestic product (GDP)

Answer

Equilibrium price

Answer

Demand and supply

Question 6

Which of the following is a characteristic of scarcity?

Accepted Answer

It exists due to limited resources

Answer

It can be eliminated completely

Answer

It is a temporary condition

Answer

It is caused by excessive consumption

Answer

It only affects developed economies

Question 7

Which of the following is NOT a cause of scarcity?

Accepted Answer

Equilibrium

Answer

Limited resources

Answer

Unlimited wants

Answer

Population growth

Answer

Technological advancements

Question 8

What is meant by opportunity cost?

Accepted Answer

The value of the next best alternative that must be given up in order to obtain something.

Answer

The total value of all the goods and services that are produced in an economy during a specific period of time.

Answer

The process of making choices to satisfy unlimited wants with limited resources.

Answer

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Answer

The total market value of all final goods and services produced within a country in a given period of time.

Question 9

What does the production possibilities curve (PPC) represent?

Accepted Answer

The various combinations of two goods or services that an economy can produce using its available resources and technology.

Answer

The total value of all the goods and services that are produced in an economy during a specific period of time.

Answer

The value of the next best alternative that must be given up in order to obtain something.

Answer

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Answer

The process of making choices to satisfy unlimited wants with limited resources.

Question 10

What is the relationship between opportunity cost and the production possibilities curve?

Accepted Answer

Opportunity cost is illustrated by the trade-offs represented on the production possibilities curve.

Answer

Opportunity cost has no relationship with the production possibilities curve.

Answer

Opportunity cost and the production possibilities curve are unrelated concepts.

Answer

Opportunity cost is only relevant in the short run, while the production possibilities curve is a long-run concept.

Answer

Opportunity cost determines the shape of the production possibilities curve.

Question 11

What does the downward slope of the production possibilities curve indicate?

Accepted Answer

The opportunity cost of producing one good increases as more of that good is produced.

Answer

The economy is producing at its maximum efficiency and cannot produce more of either good.

Answer

The opportunity cost of producing one good decreases as more of that good is produced.

Answer

There is a surplus of resources in the economy, allowing for increased production of both goods.

Answer

The production of one good has no effect on the opportunity cost of producing another good.

Question 12

What is the concept of a trade-off?

Accepted Answer

The sacrifice of one thing in order to gain or achieve something else.

Answer

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Answer

The various combinations of two goods or services that an economy can produce using its available resources and technology.

Answer

The process of making choices to satisfy unlimited wants with limited resources.

Answer

The total value of all the goods and services that are produced in an economy during a specific period of time.

Question 13

What does the concept of scarcity imply?

Accepted Answer

There are limited resources to fulfill unlimited wants and needs.

Answer

There is an abundance of resources to fulfill unlimited wants and needs.

Answer

There are ample resources to fulfill all wants and needs.

Answer

There are surplus resources that exceed the wants and needs of individuals.

Answer

There is an equal distribution of resources to fulfill all wants and needs.

Question 14

What is the relationship between the production possibilities frontier and economic efficiency?

Accepted Answer

Economic efficiency occurs when the economy is producing on the production possibilities frontier.

Answer

Economic efficiency is only achievable when the production possibilities frontier is curved.

Answer

Economic efficiency is achieved when the economy operates within the production possibilities frontier.

Answer

The production possibilities frontier represents the trade-offs of economic efficiency.

Answer

The production possibilities frontier is irrelevant to economic efficiency.

Question 15

What is the concept of opportunity cost in relation to a production possibilities curve?

Accepted Answer

The opportunity cost of producing more of one good is the amount of the other good that must be given up.

Answer

Opportunity cost is not relevant in the analysis of production possibilities curves.

Answer

The opportunity cost of producing goods never changes on a production possibilities curve.

Answer

The production possibilities curve does not represent opportunity cost.

Answer

The opportunity cost of producing more of one good always exceeds the value of the other good.

Question 16

What does the law of increasing opportunity cost state?

Accepted Answer

As production of one good increases, the opportunity cost of producing that good increases.

Answer

The opportunity cost of producing a good remains constant regardless of production levels.

Answer

The opportunity cost of producing a good is unrelated to production levels.

Answer

As production of one good increases, the opportunity cost of producing that good decreases.

Answer

The law of increasing opportunity cost is not applicable to production.

Question 17

What is the concept of a production possibilities curve?

Accepted Answer

A graphical representation that shows the different combinations of two goods or services that an economy can produce given its available resources and technology.

Answer

The value of the next best alternative that must be given up in order to obtain something.

Answer

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Answer

The process of making choices to satisfy unlimited wants with limited resources.

Answer

The total market value of all final goods and services produced within a country in a given period of time.

Question 18

What is comparative advantage?

Accepted Answer

When a country can produce a good at a lower opportunity cost than another country

Answer

When a country can produce a good at a higher opportunity cost than another country

Answer

When a country can produce a good without trading with other countries

Answer

When a country can produce a good without considering opportunity cost

Question 19

What is the main benefit of gains from trade?

Accepted Answer

Increased consumption possibilities

Answer

Decreased employment opportunities

Answer

Higher production costs

Answer

Reduced economic growth

Question 20

What is the opportunity cost of a good?

Accepted Answer

The value of the best alternative forgone when making a choice

Answer

The price paid to acquire the good

Answer

The revenue generated from selling the good

Answer

The cost of producing the good

Question 21

What is the principle behind comparative advantage?

Accepted Answer

Specialization and trade can result in mutual gains for countries

Answer

Countries should only produce goods for domestic consumption

Answer

Specialization and trade will lead to a loss in resources

Answer

Countries should strive for self-sufficiency in all goods

Question 22

Which of the following is NOT a condition for a country to have a comparative advantage?

Accepted Answer

Having a large population

Answer

Having specialized skills

Answer

Having access to abundant resources

Answer

Having technological advancements

Question 23

What is the key concept behind gains from trade?

Accepted Answer

Opportunity cost

Answer

Scarcity

Answer

Inflation

Answer

Unemployment

Question 24

Which of the following is an example of comparative advantage?

Accepted Answer

A country with fertile land producing agricultural goods

Answer

A country with limited natural resources producing energy goods

Answer

A country with high wages producing manufactured goods

Answer

A country with strict environmental regulations producing pollution-intensive goods

Question 25

What is the purpose of the principle of comparative advantage?

Accepted Answer

To maximize total output and promote efficiency through specialization and trade

Answer

To eliminate competition and establish monopolies in the global market

Answer

To promote self-sufficiency and reduce dependence on other countries

Answer

To protect domestic industries and maintain high employment rates

Question 26

Which of the following is an example of a country having a comparative advantage?

Accepted Answer

A country with advanced technology producing high-tech electronics

Answer

A country with limited access to natural resources producing energy goods

Answer

A country with low wages producing labor-intensive garments

Answer

A country with a small population producing agricultural goods

Question 27

What is the law of demand?

Accepted Answer

As price increases, quantity demanded decreases.

Answer

As price decreases, quantity demanded increases.

Answer

As price increases, quantity demanded increases.

Answer

As price decreases, quantity demanded decreases.

Question 28

What is a substitute good?

Accepted Answer

A good that can be used in place of another good.

Answer

A good that is complementary to another good.

Answer

A good that is produced in a foreign country.

Answer

A good that is only consumed by a specific group of people.

Question 29

What is the income effect in relation to demand?

Accepted Answer

The change in quantity demanded due to a change in purchasing power resulting from a change in income.

Answer

The change in quantity demanded due to a change in supply.

Answer

The change in quantity demanded due to a change in price.

Answer

The change in quantity demanded due to a change in population size.

Answer

The change in quantity demanded due to a change in preferences.

Question 30

What is the law of supply?

Accepted Answer

As price increases, quantity supplied increases.

Answer

As price decreases, quantity supplied decreases.

Answer

As price decreases, quantity supplied increases.

Answer

As price increases, quantity supplied decreases.

Question 31

What is the difference between a change in quantity demanded and a change in demand?

Accepted Answer

A change in quantity demanded is a movement along a demand curve due to a change in price, while a change in demand is a shift of the entire demand curve due to factors other than price.

Answer

A change in quantity demanded and a change in demand are the same thing.

Answer

A change in quantity demanded is solely influenced by changes in price, while a change in demand is solely influenced by changes in income.

Answer

A change in quantity demanded and a change in demand are both caused by changes in price.

Answer

A change in quantity demanded is a shift of the entire demand curve due to factors other than price, while a change in demand is a movement along a demand curve due to a change in price.

Question 32

What is the difference between a change in quantity supplied and a change in supply?

Accepted Answer

A change in quantity supplied is a movement along a supply curve due to a change in price, while a change in supply is a shift of the entire supply curve due to factors other than price.

Answer

A change in quantity supplied is solely influenced by changes in price, while a change in supply is solely influenced by changes in production technology.

Answer

A change in quantity supplied and a change in supply are the same thing.

Answer

A change in quantity supplied and a change in supply are both caused by changes in price.

Answer

A change in quantity supplied is a shift of the entire supply curve due to factors other than price, while a change in supply is a movement along a supply curve due to a change in price.

Question 33

Which of the following best describes market equilibrium?

Accepted Answer

A state where the quantity demanded equals the quantity supplied at a certain price.

Answer

A state where the price of a certain good or service remains constant.

Answer

A state where the quantity supplied exceeds the quantity demanded at a certain price.

Answer

A state where there is no demand or supply for a certain good or service.

Answer

A state where the quantity demanded exceeds the quantity supplied at a certain price.

Question 34

What happens to market equilibrium if there is an increase in demand?

Accepted Answer

The equilibrium price and quantity will both rise.

Answer

There will be no change in market equilibrium.

Answer

The equilibrium price will decrease and the equilibrium quantity will increase.

Answer

The equilibrium price and quantity will both decrease.

Answer

The equilibrium price will rise and the equilibrium quantity will decrease.

Question 35

What happens to market equilibrium if there is a decrease in supply?

Accepted Answer

The equilibrium price will rise and the equilibrium quantity will decrease.

Answer

The equilibrium price will decrease and the equilibrium quantity will increase.

Answer

There will be no change in market equilibrium.

Answer

The equilibrium price and quantity will both decrease.

Answer

The equilibrium price and quantity will both rise.

Question 36

Which of the following is a cause of disequilibrium in the market?

Accepted Answer

An increase in taxes on the product.

Answer

An increase in the price of substitute goods.

Answer

An increase in the price of complementary goods.

Answer

An increase in consumer income.

Answer

An increase in government subsidies on the product.

Question 37

What happens to market equilibrium if there is an increase in both demand and supply?

Accepted Answer

The equilibrium quantity will increase, but the change in equilibrium price is uncertain.

Answer

There will be no change in market equilibrium.

Answer

The equilibrium price will decrease and the equilibrium quantity will increase.

Answer

The equilibrium price and quantity will both decrease.

Answer

The equilibrium price and quantity will both increase.

Question 38

What is the result of a surplus in the market?

Accepted Answer

The price will decrease and the quantity supplied will exceed the quantity demanded.

Answer

The price will increase and the quantity supplied will exceed the quantity demanded.

Answer

The price and quantity will remain unchanged.

Answer

The price will decrease and the quantity demanded will exceed the quantity supplied.

Answer

The price will increase and the quantity demanded will exceed the quantity supplied.

Question 39

What happens to market equilibrium if there is a decrease in both demand and supply?

Accepted Answer

The equilibrium quantity will decrease, but the change in equilibrium price is uncertain.

Answer

The equilibrium price and quantity will both decrease.

Answer

The equilibrium price and quantity will both increase.

Answer

There will be no change in market equilibrium.

Answer

The equilibrium price will decrease and the equilibrium quantity will increase.

Question 40

Which of the following is a determinant of demand?

Accepted Answer

Consumer income

Answer

Technological advancements

Answer

Cost of production

Answer

Market supply

Question 41

Which of the following is a factor that can shift the demand curve?

Accepted Answer

Number of buyers

Answer

Technological advancements

Answer

Cost of production

Answer

Price of the product

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