Trivia: Economics Knowledge Quiz! Test
(8).png "Trivia: Economics Knowledge Quiz! Test - Quiz")
How much knowledge of economics do you have? Do you believe you can pass this quiz? With this quiz, you will be responsible for learning what the three factors of production are, what does the production possibility curve show us, what happens when prices rise, what is the shift in supply caused by, what is elastic demand, and what is the law of diminishing returns. This quiz will demonstrate your knowledge of economics. Invest in yourself and your expertise.
- 1.
What are the 3 Factors of Production?
- A.
Land/Work/Revenue
- B.
Land/Labour/Revenue
- C.
Labour/Capital/Land
- D.
Capital/Work/Primary Goods
Correct Answer
C. Labour/Capital/LandExplanation
The correct answer is Labour/Capital/Land. These three factors of production are essential in the creation of goods and services. Labour refers to the physical and mental effort put in by workers, Capital refers to the tools, machinery, and equipment used in production, and Land refers to the natural resources such as land, water, and minerals. These three factors work together to produce goods and generate revenue.Rate this question:
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- 2.
What is the Production Possibility Curve?
- A.
Curve showing Supply and Demand
- B.
Curve showing all possible combinations of all goods that a country can produce
- C.
A curve showing the possible combinations of two goods that a country can produce within a specified time with all resources employed
- D.
Shows what a country can produce with all resources fully employed
Correct Answer
C. A curve showing the possible combinations of two goods that a country can produce within a specified time with all resources employedExplanation
The production possibility curve is a graphical representation that shows the various combinations of two goods that a country can produce within a specified time period, assuming that all available resources are fully utilized. It illustrates the trade-offs a country faces when allocating its resources between the production of different goods. The curve demonstrates the maximum output levels that can be achieved given the available resources and technology.Rate this question:
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- 3.
What does Production Possibility Curve NOT show us?
- A.
Opportunity costs
- B.
Marginal costs
- C.
Increasing/decreasing opportunity costs
- D.
Growth in potential output
Correct Answer
B. Marginal costsExplanation
The Production Possibility Curve (PPC) is a graphical representation of the different combinations of goods and services that an economy can produce with its given resources and technology. It shows the trade-offs and opportunity costs of producing one good over another. It also illustrates the concept of increasing or decreasing opportunity costs as the production of one good increases. However, the PPC does not directly show us the concept of marginal costs, which is the additional cost incurred from producing one more unit of a good.Rate this question:
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- 4.
Law of Demand states:
- A.
As prices rise the quantity demanded rises
- B.
As prices rise the quantity demanded falls
- C.
As supply increases demand increases
- D.
As supply increases demand decreases
Correct Answer
B. As prices rise the quantity demanded fallsExplanation
The correct answer is "As prices rise the quantity demanded falls." This is because according to the Law of Demand, there is an inverse relationship between price and quantity demanded. When the price of a good or service increases, consumers are less willing and able to purchase it, leading to a decrease in the quantity demanded. Conversely, when the price decreases, consumers are more willing and able to purchase the good or service, resulting in an increase in the quantity demanded.Rate this question:
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- 5.
Shift ALONG a demand curve is caused by:
- A.
Price
- B.
Fashion
- C.
Income
- D.
Supply
Correct Answer
A. PriceExplanation
A shift along a demand curve is caused by a change in price. As the price of a good or service changes, the quantity demanded also changes, resulting in a movement along the demand curve. This is because consumers are willing to purchase more of a good or service at a lower price and less at a higher price. Factors such as fashion, income, and supply can affect demand, but they would cause a shift of the entire demand curve rather than a movement along it.Rate this question:
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- 6.
Shift IN THE demand curve is NOT caused by:
- A.
Tastes
- B.
Price of substitute goods
- C.
Price of complementary goods
- D.
Price of the product
Correct Answer
D. Price of the productExplanation
A shift in the demand curve is caused by factors other than the price of the product itself. Tastes, the price of substitute goods, and the price of complementary goods can all influence the demand for a product and cause the demand curve to shift. However, the price of the product itself does not cause a shift in the demand curve. Instead, changes in price result in movements along the demand curve, known as changes in quantity demanded.Rate this question:
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- 7.
As prices rise, the quantity supplied increases is…
- A.
Law of Demand
- B.
Shift in supply curve
- C.
Shift in demand curve
- D.
Law of Supply
Correct Answer
D. Law of SupplyExplanation
The correct answer is Law of Supply because it states that as prices rise, the quantity supplied increases. This is a fundamental principle in economics, which suggests that producers are willing to supply more goods or services as the price they can receive for them increases. The law of supply is based on the assumption that all other factors affecting supply remain constant, such as input costs, technology, and government regulations.Rate this question:
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- 8.
The shift in supply can be caused by a number of:
- A.
Costs of production
- B.
Profitability of alternative products
- C.
Profitability of goods in joint supply
- D.
Nature and other random shocks
- E.
Aims of producers
- F.
Expectations of producers
- G.
All of the above
Correct Answer
G. All of the aboveExplanation
The shift in supply can be caused by a number of factors including costs of production, profitability of alternative products, profitability of goods in joint supply, nature and other random shocks, aims of producers, and expectations of producers. All of these factors can influence the supply of a product and cause it to shift.Rate this question:
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- 9.
Where Demand Equals Supply is:
- A.
Equilibrium Revenue
- B.
Equilibrium Costs
- C.
Equilibrium Price
- D.
Equilibrium Output
Correct Answer(s)
C. Equilibrium Price
D. Equilibrium OutputExplanation
In a market, when the demand for a product equals the supply of the product, it is said to be in equilibrium. At this point, the price at which the product is sold is known as the equilibrium price. Similarly, the quantity of the product that is produced and sold at this price is known as the equilibrium output. Therefore, the correct answer is Equilibrium Price and Equilibrium Output.Rate this question:
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- 10.
What happens to the Equilibrium if both Demand and Supply shift right? QD = Quantity Demanded P = Price
- A.
– Decreased QD, Same P
- B.
– Decreased P, Same QD
- C.
– Increased QD, Same P
- D.
– Increased P, Same QD
Correct Answer
C. – Increased QD, Same PExplanation
If both demand and supply shift right, it means that both the quantity demanded and the quantity supplied increase. However, the price remains the same. This indicates that there is an increase in both the willingness and ability of consumers to purchase the product at the existing price. As a result, the equilibrium quantity increases, while the equilibrium price remains unchanged.Rate this question:
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- 11.
Formula: %DQd / %DP is
- A.
Formula for Elasticity
- B.
Formula for Price
- C.
Formula for Price Elasticity of Supply
- D.
Formula for Price Elasticity of Demand
Correct Answer
D. Formula for Price Elasticity of DemandExplanation
The given formula, %DQd / %DP, is the formula for Price Elasticity of Demand. Price elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in its price. The formula calculates the percentage change in quantity demanded (%DQd) divided by the percentage change in price (%DP). This helps determine how sensitive consumers are to changes in price, and whether a good is considered elastic (responsive to price changes) or inelastic (not very responsive to price changes).Rate this question:
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- 12.
>1 means... <1 means... =1 means...
Correct Answer
Elastic, Inelastic, Unit elasticExplanation
The terms "Elastic," "Inelastic," and "Unit elastic" are used to describe the responsiveness of demand or supply to changes in price.
- "Elastic" means that the quantity demanded or supplied is highly responsive to changes in price. A small change in price leads to a proportionally larger change in quantity demanded or supplied.
- "Inelastic" means that the quantity demanded or supplied is not very responsive to changes in price. A change in price leads to a proportionally smaller change in quantity demanded or supplied.
- "Unit elastic" means that the quantity demanded or supplied changes in the same proportion as the change in price. A change in price leads to an equal percentage change in quantity demanded or supplied.Rate this question:
- 13.
Elastic Demand
- A.
Revenue falls as price falls
- B.
Revenue falls as demand falls
- C.
Revenue rises as price rises
- D.
Revenue falls as price rises
Correct Answer
D. Revenue falls as price risesExplanation
The given correct answer is "Revenue falls as price rises". This is because when the price of a product increases, the demand for that product tends to decrease. As a result, fewer people are willing to purchase the product at the higher price, leading to a decrease in the quantity sold and ultimately a decrease in revenue.Rate this question:
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- 14.
Destabilising Speculation
- A.
When producers sell more to make a greater revenue
- B.
When buyers buy more (buying in bulk)
- C.
When buyers/sellers believe a change in price means similar changes in the future
- D.
When buyers/sellers believe a change in price is only temporary
Correct Answer
C. When buyers/sellers believe a change in price means similar changes in the future -
- 15.
Short Run Production
- A.
When all factors (fixed and variable factors of production) remain the same
- B.
When at least one factor remains the same
- C.
When no factors of production are the same
- D.
When only fixed factors remain the same.
Correct Answer
B. When at least one factor remains the sameExplanation
In short run production, at least one factor remains the same while other factors can vary. This means that while some factors of production can be adjusted, there is at least one factor that cannot be changed in the short run. This could be a fixed factor such as a building or equipment that cannot be easily altered or a specific skill or expertise that is necessary for production. The presence of at least one fixed factor limits the ability to fully adjust production in the short run.Rate this question:
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- 16.
Law of Diminishing Returns
- A.
When one extra unit of a variable factor will produce less extra output than the previous unit
- B.
When the company or firm produces less
- C.
When a firm begins to lose money
- D.
When one extra unit of a fixed factor will produce less extra output than the previous unit
Correct Answer
A. When one extra unit of a variable factor will produce less extra output than the previous unitExplanation
The correct answer is "When one extra unit of a variable factor will produce less extra output than the previous unit." This answer accurately describes the concept of the law of diminishing returns, which states that as more units of a variable factor are added to a fixed factor, the marginal product of the variable factor will eventually decrease. In other words, each additional unit of the variable factor will result in a smaller increase in output compared to the previous unit. This phenomenon occurs because the fixed factor becomes increasingly scarce or limited in its ability to efficiently utilize the additional variable factor.Rate this question:
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- 17.
Average Physical Product
- A.
APP = TPP/QV
- B.
APP = TPP/QV
- C.
APP =MPP/Lb
- D.
APP = TTP/Lb
Correct Answer
A. APP = TPP/QVExplanation
The correct answer is APP = ΔTPP/ΔQV. This equation represents the average physical product (APP) which is calculated by dividing the change in total physical product (ΔTPP) by the change in variable quantity (ΔQV). This formula helps to measure the average output or productivity per unit of input.Rate this question:
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- 18.
Law of Diminishing Returns
- A.
When one extra unit of a variable factor will produce less extra output than the previous unit
- B.
When the company or firm produces less
- C.
When a firm begins to lose money
- D.
When one extra unit of a fixed factor will produce less extra output than the previous unit
Correct Answer
A. When one extra unit of a variable factor will produce less extra output than the previous unitExplanation
The correct answer is "When one extra unit of a variable factor will produce less extra output than the previous unit." This is because the law of diminishing returns states that as more and more of a variable input is added to a fixed input, the additional output produced will eventually decrease. In other words, the marginal product of the variable input will diminish as more units are added, resulting in less extra output for each additional unit.Rate this question:
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- 19.
Average Physical Product
- A.
APP = TPP/QV
- B.
APP = TPP/QV
- C.
APP =MPP/Lb
- D.
APP = TTP/Lb
Correct Answer
A. APP = TPP/QVExplanation
The correct answer is APP = TPP/QV. This equation represents the average physical product (APP) which is calculated by dividing the total physical product (TPP) by the quantity of variable input (QV). The average physical product measures the average output produced by each unit of input.Rate this question:
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- 20.
What is - DTPP/DQV?
- A.
Total Revenue
- B.
Marginal Physical Product
- C.
Marginal Physical Costs
- D.
Total Fixed Costs
Correct Answer
B. Marginal Physical ProductExplanation
The correct answer, Marginal Physical Product, refers to the additional output that is generated by adding one more unit of input, while keeping all other inputs constant. It is a measure of the productivity of the input and helps in determining the optimal level of input usage.Rate this question:
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- 21.
Monopolies encourage risk taking.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Monopolies encourage risk taking because they have the power to control the market and eliminate competition. This lack of competition allows monopolies to take risks without the fear of losing market share or customers. They can invest in new technologies, research and development, and innovative ideas without the threat of being outperformed by competitors. This encourages monopolies to take risks in order to stay ahead and maintain their dominance in the market.Rate this question:
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- 22.
Companies in monopolistic competition markets can make supernormal profit in the long-term
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
In monopolistic competition markets, companies have some degree of market power due to product differentiation. However, in the long-term, other firms can enter the market and offer similar products, leading to increased competition. This competition reduces the market power of individual firms, making it difficult for them to maintain supernormal profits. Therefore, the statement that companies in monopolistic competition markets can make supernormal profit in the long-term is false.Rate this question:
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