QUIZ 2: DEM 2133 BASIC ECONOMICS

What is the definition of economics?

• A science that studies human behavior as a relationship between ends and scarce resources

• A study of how to maximize profits

• An analysis of government policies

• A method to evaluate market trends

What does microeconomics focus on?

• Global trade relations

• Individual parts of the economy

• The economy as a whole

• National income statistics

What is the main difference between positive and normative analysis?

• Positive analysis is concerned with government policies, while normative analysis is about individual choices

• Positive analysis focuses on future predictions, while normative analysis looks at past events

• Positive analysis is subjective, while normative analysis is objective

• Positive analysis deals with facts, while normative analysis involves value judgments

What does scarcity refer to in economics?

• The abundance of resources

• Wants exceeding limited resources

• The availability of goods in the market

• The distribution of wealth

What is opportunity cost?

• The price of goods in the market

• The total cost of resources used

• The second best alternative forgone for another choice

• The cost of production

Which of the following is NOT one of the basic economic problems?

• How to distribute wealth?

• What to produce?

• How to produce?

• For whom to produce?

What does the Production Possibilities Curve (PPC) illustrate?

• The impact of government policies on production

• The relationship between supply and demand

• The effects of inflation on production

• The various combinations of goods and services produced

What happens to the PPC when there is economic growth?

• It remains unchanged

• It becomes steeper

• It shifts to the left

• It shifts outward

Which economic system is characterized by private ownership of resources?

• Capitalism

• Islamic Economy

• Socialism

• Mixed Economy

What is a major disadvantage of capitalism?

• Inefficient resource allocation

• Lack of consumer choice

• Inequality of wealth distribution

• High levels of government intervention