Basic Microeconomics Quiz

Which of the following best defines scarcity in economics?

• The unlimited availability of resources

• The excess of resources over demands

• A method for producing goods efficiently

• A situation where there are limited resources and unlimited wants

In which of the following situations does opportunity cost occur?

• Choosing to spend time studying instead of working a parttime job

• Receiving extra income from working overtime

• Saving money in a highinterest account

• Paying a fixed salary to employees

A small business is deciding whether to increase the price of its product. The owner has observed that a competing product in the same market raised its price, resulting in fewer sales. Using the concept of microeconomics, what should the business consider before increasing its price?

• Whether inflation rates will rise or fall

• The impact of global trade policies on their business

• The national unemployment rate and its effect on sales.

• How an increase in price may affect customer demand for their product

How is macroeconomics different from microeconomics?

• Macroeconomics studies national economies, while microeconomics studies individual units

• Microeconomics focuses on the entire economy, while macroeconomics looks at individual markets

• Microeconomics deals with government policies, while macroeconomics focuses on household decisions

• Macroeconomics is concerned with business operations, while microeconomics examines market demand

Which of the following is an example of an economic model?

• A tax policy proposal

• A government budget

• A production schedule

• A supply and demand graph

How do economic models help economists make decisions?

• By simplifying complex economic processes

• By analyzing past economic performance

• By considering every realworld variable

• By predicting exact future outcomes

What is the purpose of the Production Possibility Frontier (PPF)?

• To illustrate the tradeoffs between two goods an economy can produce

• To show how resources are allocated within markets

• To explain price changes in the marketplace

• To predict future economic growth

How does scarcity relate to opportunity cost?

• Scarcity forces individuals to make choices, which involves opportunity cost

• Scarcity leads to a surplus of goods, reducing opportunity cost

• Scarcity increases the amount of resources available

• Scarcity eliminates the need for tradeoffs

What role do assumptions play in economic models?

• They make the model applicable in every realworld scenario

• They guarantee the accuracy of the model's predictions

• They represent the actual behavior of economic agents

• They simplify the model by focusing on key variables

What concept explains the value of the next best alternative forgone when a choice is made?

• Scarcity

• Opportunity cost

• Diminishing returns

• Marginal cost