Economics 101: Understanding the Basics of Economics

Question 1

What is the term for the study of economic behaviour at the level of individual consumers and firms?

Accepted Answer

Microeconomics

Answer

Macroeconomics

Answer

Development Economics

Answer

Behavioural Economics

Question 2

What is the purpose of positive economics?

Accepted Answer

To describe economic phenomena without making value judgements.

Answer

To prescribe economic policies and make recommendations.

Answer

To evaluate the ethical implications of economic decisions.

Answer

To promote a particular economic system.

Question 3

Which of the following is an example of macroeconomic data?

Accepted Answer

The unemployment rate

Answer

The price of a particular product

Answer

The sales revenue of a specific company

Answer

The profit margin of a particular industry

Question 4

What is the primary function of the central bank?

Accepted Answer

To regulate the money supply and interest rates.

Answer

To provide loans to businesses and individuals.

Answer

To set corporate tax rates.

Answer

To control prices and wages in the economy.

Question 5

Define economics as comprehensively as possible.

Accepted Answer

Economics is the study of how individuals, businesses, and nations allocate scarce resources to satisfy unlimited wants.

Answer

Economics is the science of wealth, examining its production, distribution, and consumption.

Answer

Economics analyzes economic data to make informed predictions about the future.

Answer

Economics is the application of mathematical models to understand economic behavior.

Question 6

Distinguish between microeconomics and macroeconomics.

Accepted Answer

Microeconomics focuses on individual markets and decision-making, while macroeconomics examines the economy as a whole.

Answer

Microeconomics analyzes supply and demand, while macroeconomics uses Keynesian models.

Answer

Microeconomics is qualitative, while macroeconomics is quantitative.

Answer

Microeconomics studies businesses as producers, while macroeconomics studies households as consumers.

Question 7

Describe the law of diminishing returns.

Accepted Answer

As more of a variable input is employed, its marginal productivity eventually decreases.

Answer

As more of a variable input is employed, its marginal cost eventually increases.

Answer

As more of a variable input is employed, its average productivity eventually decreases.

Answer

As more of a variable input is employed, its fixed cost eventually decreases.

Question 8

Microeconomics is characterized by:

Accepted Answer

A focus on the behavior of individual entities.

Answer

Analysis of the entire economy as a whole.

Answer

Examination of market interactions.

Answer

Assessment of government policies' economic impact.

Question 9

Scarcity refers to:

Accepted Answer

Limited resources relative to human desires.

Answer

Unequal distribution of resources among individuals.

Answer

Government control over resource allocation.

Answer

The absence of scarcity.

Question 10

Market equilibrium occurs when:

Accepted Answer

Quantity demanded matches quantity supplied.

Answer

Price exceeds equilibrium price.

Answer

Price falls below equilibrium price.

Answer

There is a surplus of goods.

Question 11

Which of the following is NOT a characteristic of microeconomics?

Accepted Answer

Considers the economy as a whole

Answer

Focuses on individual markets

Answer

Examines the behavior of consumers and firms

Answer

Analyzes supply and demand

Question 12

Which of the following is NOT a goal of economic policy?

Accepted Answer

Increased income inequality

Answer

Economic growth

Answer

Price stability

Answer

Full employment

Question 13

Which of the following is NOT a factor of production in economics?

Accepted Answer

Profit

Answer

Land

Answer

Capital

Answer

Labour

Question 14

Scarcity in economics refers to the:

Accepted Answer

Limited availability of resources relative to human wants.

Answer

Unequal distribution of wealth.

Answer

High prices of goods and services.

Question 15

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The value of the next best alternative that is given up when a decision is made.

Answer

The total cost of producing a good or service.

Answer

The difference between revenue and profit.

Question 16

Identify the type of economic statement that is based solely on objective, verifiable data:

Accepted Answer

Positive economic statement

Answer

Speculative economic statement

Answer

Normative economic statement

Question 17

According to the law of diminishing marginal utility, what happens to the additional satisfaction (utility) derived from consuming each additional unit of a good as more of it is consumed?

Accepted Answer

It decreases.

Answer

It remains constant.

Answer

It increases.

Answer

It fluctuates randomly.

Question 18

What type of elasticity measures the responsiveness of quantity demanded to changes in price?

Accepted Answer

Price elasticity of demand

Answer

Elasticity of substitution

Answer

Income elasticity of demand

Answer

Cross-price elasticity of demand

Question 19

Keynesian economics advocates for which approach to economic policy during recessions?

Accepted Answer

Government intervention to increase spending and stimulate economic activity.

Answer

Reducing government spending to balance the budget.

Answer

Raising interest rates to control inflation.

Question 20

Economics primarily focuses on...

Accepted Answer

The allocation of limited resources to fulfill unlimited human desires.

Answer

Governmental financial management.

Answer

Predictive analysis of financial markets.

Question 21

In economics, which branch analyzes the behavior of individual entities, such as firms and households?

Accepted Answer

Microeconomics

Answer

Behavioral Economics

Answer

Development Economics

Answer

Macroeconomics

Question 22

According to the concept of scarcity in economics...

Accepted Answer

Resources are finite, while wants are insatiable.

Answer

Scarcity only affects the underprivileged.

Answer

Goods and services are perpetually insufficient.

Answer

People are inherently greedy and materialistic.

Question 23

Which of the following is NOT considered a factor of production?

Accepted Answer

Government regulations

Answer

Labor

Answer

Land

Question 24

The total value of all final goods and services produced in a country within a specific time period is measured by:

Accepted Answer

Gross Domestic Product (GDP)

Answer

Consumer Price Index (CPI)

Answer

Balance of Payments

Answer

Inflation Rate

Question 25

When an individual must choose between two mutually exclusive options, the value of the option not chosen is referred to as:

Accepted Answer

Opportunity cost

Answer

Demand

Answer

Scarcity

Answer

Supply

Question 26

The branch of economics that examines individual decision-making in the face of limited resources is:

Accepted Answer

Microeconomics

Answer

Development Economics

Answer

Macroeconomics

Answer

Behavioral Economics

Question 27

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

Accepted Answer

Heavy machinery used in manufacturing

Answer

Bread

Answer

A pair of sneakers

Answer

A concert ticket

Question 28

The branch of economics that focuses on the economy as a whole, including issues like unemployment and inflation, is called:

Accepted Answer

Macroeconomics

Answer

Behavioral Economics

Answer

Microeconomics

Answer

Development Economics

Question 29

The statement "All resources are scarce" implies that:

Accepted Answer

There are finite resources available to satisfy our limitless desires.

Answer

Only certain resources are limited, while others are abundant.

Answer

People are inherently selfish and hoard resources.