What is Economics?

It is the study of how society manages its scarce resources.

It is the study of how people interact within the society.

It is the study of past events.

It is the study of the human behaviour and mental processes.

Which of the following statements best contrasts microeconomics and

macroeconomics?

Microeconomics focuses on the economy as a whole, while macroeconomics studies individual

markets.
Microeconomics analyzes individual behavior, whereas macroeconomics looks at
aggregate outcomes.
Microeconomics is concerned with government policies, while macroeconomics deals with
consumer choices.
Microeconomics examines international trade, while macroeconomics focuses on domestic issues.

Microeconomics primarily studies:

The economy as a whole

Individual consumers and firms
International trade
Government fiscal policies

It refers to the limited nature of society’s resources.

Shortage
Scarcity

Surplus
Economic boom

Which of the following is NOT a major type of economic system?

Capitalism
Socialism
Communism
 Feudalism

What is the primary purpose of constructing economic theories?

To predict future economic events

To provide a framework for understanding economic phenomena
To justify government policies
To analyze historical economic data

Which of the following best describes the nature of economics?

It is a purely theoretical discipline.

It deals with scarcity and choice.

It focuses solely on financial markets.

It is concerned only with government policies.

Which economic theory emphasizes the role of government in the economy?

Classical economics
Keynesian economics
Marxian economics
Malthusian economics

Which of the following best describes the core focus of Marxian economic theory?

Analyzing the benefits of capitalism and its role in promoting economic growth.
Examining the relationship between labor and capital and critiquing the inherent
contradictions of capitalism.
Developing a system of economic planning that would replace capitalism with a centrally-controlled
economy.
Proposing a return to traditional economic systems based on barter and local production.

It is the amount of a good that buyers are willing and able to purchase.

Quantity Supplied
Price
 Quantity Demanded
Elasticity

Governments may intervene in a market economy in order to ___________.

Protect property rights.

Correct a market failure due to externalities.
Achieve a more equal distribution of income.
All of the above

What is the opportunity cost?

It is when people do the best they can to achieve their objectives.

It is a small incremental adjustment to a plan of action.

It is when something must be given up to obtain some item.

It is the ability of an individual to own and exercise control over scarce resources.

Who is the economist who believes that population growth will always tend to outrun the
food supply and that betterment of humankind is impossible without stern limits on
reproduction.

Karl Marx
John Maynard Keynes
Thomas Malthus
Adam Smith

Which of the following best describes "macroeconomics"?

The study of individual markets

The analysis of the economy as a whole
The examination of consumer behavior
The focus on specific industries
These are the goods produced abroad and sold domestically.

Imports
Exports
Products
Supply

Which economic system is characterized by private ownership of resources and free

markets?

Command Economy
Market Economy
Traditional Economy
Mixed Economy

It is a visual model of the economy that shows how dollars flow through markets among
household and firms.

Flow Chart
Graph
Circular Flow diagram
Survey

Household: consumer

Firm: _____________

Buyers
Individual
Producer
Group of people

It traces out the effect of a good’s price on the quantity of the good consumers want to
buy.

Demand Schedule
 Demand Curve
Supply Schedule
Supply Curve

Which of the following is NOT a factor of production?

Labor
Money
Land
Capital

What happens to the price of a good when there is a shortage?

The price decreases.

The price increases.

The price stays the same.

The price fluctuates wildly.

Who is the father of Communism?

Adam Smith
Karl Marx

Thomas Malthus
Maynard Keynes

What does the term 'land' refer to in the context of factors of production?

Financial resources
Natural resources used in production
Human effort
Machinery and tools

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

Choosing to invest in machinery instead of hiring more workers

 The total cost of production
The profit made from selling goods
The wages paid to employees

Which economic system is often associated with socialist or communist ideologies?

Command Economy
Market Economy
Traditional Economy
Mixed Economy

The circular-flow diagram illustrates that, in markets for the factors of production
__________.

Households are sellers and firms are buyers

Households are buyers and firms are sellers
Household and firms are both sellers
Household and firms are both buyers

What is a mixed economy?

An economy that is entirely controlled by the government.

An economy that is entirely free from government intervention.
An economy that combines elements of both market and command systems.
An economy that is based on barter and trade.

Entrepreneurship is best described as:

The ability to combine other factors of production

The physical tools used in production

The natural resources available

The workforce involved in production

If more people want to buy bread, what happens to the demand curve for bread?
 It shifts to the left
It shifts to the right
It stays the same
It disappears

Which of the following is NOT a characteristic of a market economy?

Competition
Private ownership
Central planning
Price signals

In economic theory, what does the term "ceteris paribus" mean?

All other things remain constant

All other things remain changing
All other things remain costly
All other things remain unequal

This economic situation describes what happens when the price of one good increases,
leading to an increase in demand for another good. What is this situation called?

Normal good
Inferior good

Substitute good
Complement good

In a country, businesses operate independently, and prices are determined by supply

and demand, but the government regulates certain industries to protect consumers.
What type of economic system is this country practicing?

Command economy
Mixed economy

Traditional economy
Pure market economy
A new technology company is emerging, and the government has minimal regulations,
allowing the company to innovate freely and compete in the market. What type of
economic system does this scenario illustrate?

Command economy
Market economy
Traditional economy
Socialist economy

A country has a planned economy where the government decides what goods to
produce, how much to produce, and who receives them. Which economic system does
this describe?

Market economy
Traditional economy
Command economy
Mixed economy

A small village relies on farming and fishing, passing down techniques and practices
from generation to generation. What type of economic system does this village most
likely represent?

Market economy
Command economy
Traditional economy
Mixed economy

Which of the following would cause a rightward shift in the demand curve?

An increase in the price of a substitute good

A decrease in consumer income
A change in consumer preferences favoring the good
An increase in the price of the good itself
A table that shows the relationship between the price of a good and the quantity
supplied.

Supply curve
Supply schedule
Demand curve