Elements of Economics Quiz

What does microeconomics primarily focus on?

• Global trade relations

• Economic behavior of individual units

• Government fiscal policies

• The economy as a whole

What is the main concern of macroeconomics?

• Resource allocation among firms

• Individual consumer choices

• Economic aggregates like GDP and inflation

• Market prices and competition

What does positive economics deal with?

• Normative statements about the economy

• Subjective value judgments

• Objective predictions and explanations

• Theoretical models without empirical data

What is opportunity cost?

• The price of goods in the market

• The total cost of resources used

• The value of the most highly valued foregone alternative

• The cost of producing goods

What does the law of diminishing returns explain?

• Higher output with less input

• Decreasing benefits with additional input

• Constant returns regardless of input

• Increasing costs with more production

What is the Production Possibility Curve (PPC) used to illustrate?

• The impact of government policies

• The trade-offs between two goods

• The effects of inflation on production

• The relationship between supply and demand

What is absolute advantage?

• The ability to produce more of a good than others

• The ability to produce a good at a lower opportunity cost

• The total output of an economy

• The efficiency of resource allocation

Which country has a comparative advantage in bauxite production?

• Trinidad

• Neither country

• Jamaica

• Both countries

What is the main benefit of specialization according to Adam Smith?

• Lower opportunity costs

• Reduced labor costs

• Higher total output

• Increased consumption

What happens to the production possibilities curve when resources increase?

• It shifts inward

• It remains unchanged

• It shifts outward

• It becomes a straight line