Foundations of Economics Quiz

What is opportunity cost?

• It’s the value of the most important thing you give up when you make a decision

• A model for understanding the trade offs an economy must make dedicating it’s scarce resources

• Physical items that are created for selling

What are trade offs?

• Increasing production efficiency without considering environmental impact

• Decreasing taxes to stimulate consumer spending

• Implementing a universal basic income to reduce poverty

What is scarcity?

• An individual having limited time and money to allocate between various needs and wants

• A society achieving perfect equality in the distribution of wealth

• All resources are limited

What is a margin

• Making decisions based on total costs and total benefits.

• Prioritizing the most significant costs or benefits when making economic choices.

• What you gain by adding one unit of something

• Considering only short-term consequences of a decision while ignoring long-term effects

What is an incentive?

• Taxation measures designed to encourage investment in certain industries.

• Something that motivates a person to act in a certain way

• Monetary rewards given to workers for achieving production targets.

What is a command economy?

• A market structure in which a single firm dominates the entire industry.

• An economic system in which government authorities make most production and allocation decisions.

• An economic system where prices are determined by the forces of supply and demand.

What is a mixed economy?

• A market structure where competition is restricted to only a few large firms.

• An economic system where all factors of production are owned and controlled by the government.

• A situation where prices are determined solely by the interaction of supply and demand forces.

• An economic system characterized by both private and state ownership of businesses.

What is traditional economy?

• An economic system where production is based on customs, traditions, and rituals passed down through generations.

• A market structure where goods and services are exchanged through barter instead of currency.

• An economic system where government intervention is minimal, and markets operate freely.An economic system where government intervention is minimal, and markets operate freely.

What is Market economy?

• A structure where production is guided solely by the needs and wants of consumers without regard for profit

• An economy where prices are determined by supply and demand forces in free markets, with minimal government intervention.

• A system where economic decisions are primarily made by central planning committees.

• An economic system where government authorities control all aspects of production and distribution.

What is cost benefits analysis?

• The calculation of the average cost per unit of output in a given production process.

• An evaluation method used to assess the monetary value of an individual's preferences.

• A systematic approach for comparing the costs of an action with the benefits it generates.