Understanding Basic Economics Concepts

1. Which of the following best defines economics?

• The study of how governments regulate trade.

• B) The study of how people choose to use limited resources to satisfy unlimited wants.

• The study of how to invest in the stock market.

• The study of consumer behavior in retail stores.

2. What is the definition of goods in economics?

• E) Items that are always free of charge.

• A) Items that satisfy human wants and provide utility.

• G) Intangible benefits that do not meet needs.

• F) Physical objects that cannot be sold.

3. Which of the following is NOT a characteristic of goods?

• A) Goods are always perishable.

• B) Goods are produced and consumed simultaneously.

• D) Goods are intangible.

• C) Goods cannot be produced in advance.

4. Microeconomics primarily focuses on which of the following?

• G) Historical economic events.

• B) Individual consumers and businesses.

• F) Global market trends.

• E) National economic policies.

5. What is the primary purpose of a market economy?

• E) To promote government ownership of resources.

• F) To prioritize consumer preferences over production costs.

• B) To allocate resources efficiently through supply and demand.

• G) To maintain fixed prices for all goods and services.

6. Which of the following is an example of a service?

• B) A haircut

• C) A magazine

• D) A tablet

• A) A bicycle

7. What does the term 'opportunity cost' refer to?

• G) The income generated from investments.

• F) The expenses incurred in marketing.

• E) The price of a single product.

• B) The value of the next best alternative foregone.

8. In economics, what is meant by 'scarcity'?

• A situation where resources are temporarily unavailable.

• A situation where resources are evenly distributed.

• A situation where wants are limited and resources are abundant.

• B) A situation where resources are limited and wants are unlimited.

9. Which of the following is a factor of production?

• C) Land

• E) Capital

• F) Labor

• G) Technology

10. What is the law of demand?

• As prices increase, demand remains the same.

• A) As prices increase, demand decreases.

• Higher prices lead to higher demand.

• Demand increases regardless of price changes.