Basic Economic Concepts Quiz

What is the main cause of scarcity in economics?

• Overproduction of goods

• Limited resources and unlimited wants

• Poor technology

• Government inefficiency

Which of the following would shift the Production Possibilities Curve (PPC) outward?

• A decrease in labor supply

• Technological advancements

• Reduction in resource availability

• An increase in unemployment

What type of economy relies primarily on tradition and barter?

• Command economy

• Free-market economy

• Traditional economy

• Mixed economy

In the Circular Flow Model, businesses provide which of the following to households?

• Wages

• Taxes

• Goods and services

• Capital investments

Marginal analysis involves examining:

• The additional benefits and costs of an activity

• The average costs of all units produced

• The total output of an economy

• The impact of taxes on production

An increase in the price of a substitute good will likely:

• Decrease demand for the original good

• Increase demand for the original good

• Decrease supply of the original good

• Increase supply of the original good

A movement along the demand curve is caused by:

• A change in the price of the good

• A change in consumer income

• A change in consumer preferences

• A change in the price of substitutes

What does price elasticity of demand measure?

• How much demand changes when supply shifts

• How demand changes in response to price changes

• How supply changes in response to price changes

• How much a firm produces at a given price

If the cross-price elasticity between two goods is negative, the goods are:

• Substitutes

• Complements

• Normal goods

• Inferior goods

When the government imposes a tax on a product, the deadweight loss is caused by:

• A reduction in market transactions

• An increase in government revenue

• A surplus in consumer demand

• A decrease in the elasticity of demand