How Well Do You Know About Elasticity And Incentives MCQ Quiz
How well do you know about elasticity and incentives? How do elasticity and incentives work together? Try these MCQ-based questions and answers in the quiz below and evaluate your economic knowledge. Elasticity is an economic concept that measures a variable's sensitivity in accordance with another variable's change. Economic incentives are financial rewards that encourage a person to do something. Learn more about these two terms with the help of the quiz below. All the very best to you!
- 1.
Which of the following is an example of a product considered a need?
- A.
Music player
- B.
Breakfast food
- C.
Video game
- D.
Sports equipment
Correct Answer
B. Breakfast foodExplanation
Breakfast food is considered a need because it is essential for providing nourishment and energy to start the day. It is a basic requirement for maintaining good health and well-being. Unlike the other options, such as a music player, video game, or sports equipment, breakfast food is not just a form of entertainment or leisure, but rather a fundamental necessity for survival and proper functioning of the body.Rate this question:
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- 2.
Why might a consumer response to a negative incentive?
- A.
Because it could be a chance to take advantage of a purchase.
- B.
Because it could be a chance to avoid additional charges.
- C.
Because it could be a chance to take additional advantage of a sale.
- D.
Because it could be a chance to buy a good at a low price.
Correct Answer
B. Because it could be a chance to avoid additional charges.Explanation
A consumer might respond to a negative incentive because it could be an opportunity to avoid additional charges. Negative incentives often include penalties or fees that consumers can avoid by taking certain actions or making specific purchases. By responding to the negative incentive, consumers can save money and prevent themselves from incurring extra costs.Rate this question:
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- 3.
Goods considered as needs tend to be ____________ when the price changes.
- A.
Unchanged
- B.
Changed
- C.
Elastic
- D.
Inelastic
Correct Answer
D. InelasticExplanation
When goods are considered as needs, they are generally inelastic, meaning that their demand does not change significantly when the price changes. This is because needs are essential items that people require regardless of the price, such as food, water, and basic healthcare. Therefore, even if the price of these goods increases or decreases, the demand for them remains relatively stable.Rate this question:
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- 4.
Which is an example of a negative incentive for producers?
- A.
A sharp increase in production costs
- B.
A sharp decrease in production costs
- C.
A sharp increase in selling costs
- D.
A sharp decrease in selling costs
Correct Answer
A. A sharp increase in production costsExplanation
A sharp increase in production costs can be considered a negative incentive for producers because it means that their expenses will be higher, which can lead to reduced profit margins or even losses. This can discourage producers from increasing their production or investing in new projects, as it may not be financially viable. Additionally, higher production costs can also lead to higher prices for consumers, which can negatively impact demand for the product.Rate this question:
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- 5.
Which statement is true about economic incentives?
- A.
Incentives are always positive.
- B.
Incentives are always negative.
- C.
Incentives can be positive or negative.
- D.
None of the above is true about economic incentives.
Correct Answer
C. Incentives can be positive or negative.Explanation
The statement "incentives can be positive or negative" is true about economic incentives. Economic incentives can take various forms and can either encourage or discourage certain behaviors. Positive incentives are rewards or benefits that motivate individuals to engage in a particular activity or behavior. Negative incentives, on the other hand, are penalties or costs that discourage individuals from engaging in certain activities or behaviors. Therefore, economic incentives can be both positive and negative depending on the desired outcome.Rate this question:
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- 6.
In the market, actions that are known as incentives affect whom?
- A.
Consumers
- B.
Producers
- C.
Both
- D.
None
Correct Answer
C. BothExplanation
In the market, actions that are known as incentives affect both consumers and producers. Incentives can influence consumer behavior by offering discounts, rewards, or other benefits that motivate them to purchase a product or service. On the other hand, incentives can also impact producers by encouraging them to increase production, improve quality, or lower prices in order to attract more consumers. Therefore, both consumers and producers are affected by the actions known as incentives in the market.Rate this question:
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- 7.
Which of the following indicates a positive incentive for consumers?
- A.
A steady rise in company profits every year
- B.
A sale tax imposed by the state government
- C.
A coupon clipped from a newspaper
- D.
All of the above
Correct Answer
C. A coupon clipped from a newspaperExplanation
A coupon clipped from a newspaper indicates a positive incentive for consumers because it allows them to save money on a purchase. By using the coupon, consumers can get a discount or a special offer, which encourages them to buy the product or service. This incentivizes consumers to make a purchase and can lead to increased sales for the company.Rate this question:
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- 8.
What is the main purpose of economic incentives?
- A.
To provide people to alter consumption and production patterns.
- B.
To motivate people to produce desired results naturally.
- C.
It is a type of monetary motivation.
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The main purpose of economic incentives is to provide people with a motivation to alter their consumption and production patterns. By offering rewards or benefits, economic incentives aim to influence individuals' behavior and encourage them to produce desired results naturally. These incentives often involve monetary rewards or benefits, which can further motivate individuals to take specific actions. Therefore, the correct answer is "All of the above" as all the statements accurately describe the main purpose of economic incentives.Rate this question:
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- 9.
What is a tax incentive?
- A.
It is an aspect of the government to make reductions in tax.
- B.
It is a tax benefit that encourages economic development.
- C.
Both a and b
- D.
None of the above
Correct Answer
A. It is an aspect of the government to make reductions in tax.Explanation
A tax incentive is a measure taken by the government to reduce the amount of tax that individuals or businesses have to pay. This can be done through various means, such as tax credits, deductions, exemptions, or lower tax rates. The purpose of tax incentives is to encourage certain behaviors or activities that the government deems beneficial for the economy or society as a whole. By providing tax benefits, the government aims to stimulate economic development, attract investment, promote specific industries, or address social issues. Therefore, the correct answer is that a tax incentive is an aspect of the government to make reductions in tax.Rate this question:
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- 10.
Elastic demand is associated with items that are:
- A.
Products with lots of substitute goods
- B.
Not necessities
- C.
Bought more frequently
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
Elastic demand refers to a situation where a small change in price leads to a significant change in quantity demanded. This is typically seen in products that have many substitute goods available, as consumers have more options to choose from. Additionally, elastic demand is often associated with non-necessity items, as consumers are more likely to adjust their consumption patterns when prices change for non-essential goods. Lastly, products that are bought more frequently tend to have elastic demand, as consumers have more opportunities to respond to price changes. Therefore, all of the given options - products with lots of substitute goods, not necessities, and bought more frequently - are associated with elastic demand.Rate this question:
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