Economics Quiz

What is scarcity?

• Having more than enough resources

• Having limited resources for unlimited wants

• Making choices without any trade-offs

• Always having extra resources available

If you choose to spend money on a book instead of a movie ticket, what is the opportunity cost?

• The book you bought

• The money you saved

• The movie you didn’t watch

• The time spent reading

What does the Production Possibilities Curve (PPC) show?

• How much money businesses make

• All possible ways to produce two goods

• The most efficient way to produce one good

• The total profits in an economy

A bakery uses ingredients to make cakes and cookies. If it makes more cakes, what happens?

• It has more ingredients for cookies

• It has fewer ingredients for cookies

• It doesn’t affect the cookies

• It produces cookies more quickly

What is comparative advantage?

• Producing goods with the highest price

• Producing goods at a lower cost than others

• Producing everything a country needs

• Trading without any specialization

Why do countries specialize in producing certain goods?

• To become dependent on other countries

• To use resources inefficiently

• To focus on what they’re best at

• To make all goods equally

In a free market economy, who decides what is produced?

• The government

• Consumers and businesses

• International organizations

• A central authority

In a command economy, who makes decisions about production?

• Individual businesses

• The government

• Consumers

• Market demand

In the Circular Flow Model, what do businesses provide to households?

• Wages and salaries

• Only goods and services

• Only raw materials

• Only savings

What is an example of an incentive?

• A person buying a product

• A business choosing its product prices

• A bonus given to employees for working hard

• The government setting prices