Economics Foundations

Economics is best defined as the study of:

• How individuals spend their money

• How governments allocate resources

• How society manages its scarce resources

• How businesses maximise profits

The opportunity cost of a decision is:

• Total monetary cost

• The highest valued alternative that must be forgone

• the total time spent on the decision

• the lowest priced alternative available

Which of the following is a positive (factual) economic statement?

• The minimum wage should be increased to reduce poverty.

• Lower taxes will lead to higher economic growth.

• The unemployment rate is 5%.

• Pollution is harmful to the environment.

Which of the following is a normative (opinion) economic statement?

• The price of gasoline is $3.50 per gallon.

• Rent control should be implemented to address housing affordability.

• The demand for luxury cars has increased.

• The supply of coffee has decreased due to adverse weather.

The law of demand states that:

• As the price of a good increases, quantity demanded increases.

• As the price of a good increases, quantity demanded decreases.

• As the price of a good decreases, quantity demanded increases.

• There is no relationship between price and quantity demanded.

Which of the following would cause a movement along the demand curve for smartphones?

• A change in consumer income.

• A change in the price of smartphones.

• A change in consumer tastes and preferences.

• A change in the price of tablet computers.

Which of the following is a determinant of supply?

• Consumer preferences.

• Technology

• Income

• Price of substitutes

If the price of coffee increases and the quantity demanded decreases, then coffee is:

• An inferior good

• A normal good

• A complement

• An elastic good

The term "invisible hand" is associated with which economist?

• Karl Marx

• John Maynard Keynes

• Adam Smith

• Milton Friedman

Gross Domestic Product (GDP) is the total:

• Value of exports minus imports

• Value of government spending

• Value of all final good and services produced within a country's borders

• Value of all goods and services consumed within a country