Economics Basics

What is the fundamental problem that economics addresses?

• How to make more money

• How to eliminate poverty

• How to allocate limited resources to satisfy unlimited wants

What does the term "scarcity" refer to in economics?

• A lack of money in the economy

• A situation where resources are limited but wants are unlimited

• A government-imposed restriction on production

Which of the following is an example of a positive statement?

• The government should provide free healthcare for everyone

• Increasing the minimum wage will reduce employment levels

• All businesses should donate to charity

What is the difference between microeconomics and macroeconomics?

• Microeconomics focuses on individuals and firms, while macroeconomics focuses on the entire economy

• Microeconomics studies global trade, while macroeconomics studies only local businesses

• Macroeconomics deals with supply and demand, while microeconomics deals with government policies

The "Production Possibilities Frontier (PPF)" shows:

• The relationship between wages and unemployment

• The trade-offs between two goods when resources are used efficiently

• How consumer preferences change over time

• The effect of inflation on the economy

What does a point inside the PPF curve represent?

• Efficient production

• Inefficient production or underutilized resources

• Unattainable production levels

• Economic growth

If a new technology improves production efficiency, what happens to the PPF curve?

• It shifts outward

• It shifts inward

• It remains unchanged

• It becomes vertical

What does "opportunity cost" mean?

• The financial cost of starting a new business

• The value of the next best alternative given up when making a decision

• The total revenue a business earns in a year

• The tax imposed on imported goods

9. What does "ceteris paribus" mean in economics?

• All other things being equal

• Under different conditions

• With all variables changing

• Ignoring external factors

What does the term 'ceteris paribus' mean in economics?

• All other things remain unchanged

• The government should control the economy

• Prices will always rise over time

• Trade benefits only the richest countries