Basic Economic Concepts Quiz

Scarcity is best described as:

• The abundance of resources.

• Unlimited resources but limited wants.

• Limited resources and unlimited wants.

• The inability to produce goods and services.

What does a point inside the Production Possibilities Curve (PPC) indicate?

• Economic growth

• Inefficiency in resource use

• Maximum production

• Unattainable production

Which economic system is characterized by private property and minimal government intervention?

• Command Economy

• Mixed Economy

• Free Market Economy

• Traditional Economy

In the Circular Flow Model, households primarily:

• Provide goods and services

• Supply factors of production

• Impose price controls

• Set market demand and supply curves

If the price of a good increases, what happens to its quantity demanded?

• It increases.

• It decreases.

• It remains unchanged.

• It becomes perfectly elastic.

Which of the following is a determinant of supply?

• Consumer preferences

• Production costs

• Price of substitute goods

• Income levels

If the demand for a product is inelastic, an increase in price will:

• Decrease total revenue.

• Increase total revenue.

• Keep total revenue unchanged.

• Make demand more elastic.

Consumer surplus is defined as:

• The difference between total utility and marginal utility.

• The extra cost paid for a good above its equilibrium price.

• The benefit consumers receive when they pay less than they are willing to pay.

• The loss incurred due to taxes.

What is the primary reason for deadweight loss in a market?

• Perfect competition

• Government price controls or taxes

• Increased elasticity of supply

• Reduction in marginal costs

What does the Total Revenue Test determine?

• How total revenue changes when supply shifts.

• How price changes affect total revenue based on elasticity.

• Whether a tax will reduce producer surplus.

• The point where supply and demand meet.