The Study Of Economics

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This short quiz will help you verify whether you have understood the basic rudimentary concepts and definitions of this topic before you engage with the more demanding questions.

Questions and Answers

1.

What is Economics all about?
- A.
  
  It studies how firms work
- B.
  
  It is about increasing people's choices and wealth
- C.
  
  It is concerned with efficiency
- D.
  
  It determines at which price goods should be sold
Correct Answer
B. It is about increasing people's choices and wealth
2.

Resources can also be called ____________________________________

Correct Answer
factors of production

Explanation
make sure you remember that these resources can also be referred to as human, manmade and natural

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4
3.

The Basic Economic Problem is that of:
- A.
  
  Not having enough money
- B.
  
  Shortages of goods eg oil
- C.
  
  Scarcity
- D.
  
  Humans always want more
Correct Answer
C. Scarcity
4.

The Problem of Scarcity means that there are never enough resources to satisfy human needs and wants.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Be careful: Make sure tht you understand well the difference between a shortage and scarcity

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5.

Economists describe opportunity cost as the real price of a decision
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Remember that this means that they give the price of one choice in terms of the forgone alternative.

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6.

How do economicsts calculate opportunity cost?

Correct Answer
by dividing what you lose by what you gain
amount lost/amount gained
lost/gained
7.

An ________________________________ describes the way in which a society organises its scare resources

Correct Answer
economic system
8.

One of the main features of the Free Market Economy is the market mechanism
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
make sure that you understand what is meant by Market Mechanism

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9.

In a Command Economy the private entrepreneur owns most of the resources
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
What is then the main feature of a Command Economy

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10.

An Economic good is:
- A.
  
  A public good
- B.
  
  A merit good
- C.
  
  Scarce and desirable
- D.
  
  A free good
Correct Answer
C. Scarce and desirable

Explanation
Do you understand all the terms used here?

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11.

When a non linear function is concave to the origin it is exhibiting:
- A.
  
  Increasing marginal rate of substitution
- B.
  
  Decreasing marginal rate of substitution
- C.
  
  Constatn marginal rate of substitution
Correct Answer
A. Increasing marginal rate of substitution

Explanation
I suggest that you draw each of the options given so that you verify whether or not you understand what is being said.

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12.

The general equation of a straight line is ________________________________________

Correct Answer
y=mx+c
13.

The coordinates (2,3) means that you have a bundle ofthe following
- A.
  
  2x and 3y
- B.
  
  3x and 2 y
- C.
  
  5 x and y
- D.
  
  2x or 3 y
Correct Answer
A. 2x and 3y
14.

The function 50x + 80y =40 has:
- A.
  
  An intercept of 5 and a gradient of 8/5
- B.
  
  An intercept of -5 and a gradient of 5/8
- C.
  
  An intercept of 5 and a gradient of -5/8
- D.
  
  An intercept of 40 and a gradient of 8/5
Correct Answer
C. An intercept of 5 and a gradient of -5/8
15.

An efficient allocation of goods refers to a combination of output where it is not possible to increase the output of one good without reducting the output of at least one other good
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Do you remember that this is also called Pareto Efficiency?

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16.

The set of all productive allocations is called the Production Possibility Frontier
- A.
  
  True
- B.
  
  False
Correct Answer
A. True
17.

Choose the correct ones of the following statements
- A.
  
  An allocatively efficient combination is one where no resources are underutilised
- B.
  
  An allocative efficient combination is one where we also consider factors such as people's preferences and tastes.
- C.
  
  A productively efficient combination is one where you cannot have more of one good without also having more of a second good.
- D.
  
  A productive efficient combination implies that you will only have more of one good if you give up some units of the other good in the bundle
Correct Answer
D. A productive efficient combination implies that you will only have more of one good if you give up some units of the other good in the bundle
18.

The most important considertion to make when deciding which goods a firm or country must specialise in is the law of ________________________________

Correct Answer
Comparative Cost Advantage
Comparative Advantage
19.

For trade to take place between two parties which of the following condition must be respected:
- A.
  
  The Selling Price must be higher than the cost to the buyer
- B.
  
  The Selling Price must be higher than the cost to the seller
- C.
  
  The selling price must be higher than the cost to the seller and higher than the cost to the buyer
- D.
  
  The selling price must be higher than the cost to the seller and lower than the cost to the buyer
Correct Answer
D. The selling price must be higher than the cost to the seller and lower than the cost to the buyer

Explanation
Remember that in reality we say that the price must be greater than or equal to and less than or equal to

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20.

When specialisation is done according to the law of comparative advantage and the international price refelcts the domestic opportunity cost of the parties involved, trade will always benefit both parties
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

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Current Version
Mar 14, 2022

Quiz Edited by
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Sep 23, 2012

Quiz Created by
Atheuma

The Study Of Economics

What is Economics all about?

Resources can also be called ____________________________________

The Basic Economic Problem is that of:

The Problem of Scarcity means that there are never enough resources to satisfy human needs and wants.

Economists describe opportunity cost as the real price of a decision

How do economicsts calculate opportunity cost?

An ________________________________ describes the way in which a society organises its scare resources

One of the main features of the Free Market Economy is the market mechanism

In a Command Economy the private entrepreneur owns most of the resources

An Economic good is:

When a non linear function is concave to the origin it is exhibiting:

The general equation of a straight line is ________________________________________

The coordinates (2,3) means that you have a bundle ofthe following

The function 50x + 80y =40 has:

An efficient allocation of goods refers to a combination of output where it is not possible to increase the output of one good without reducting the output of at least one other good

The set of all productive allocations is called the Production Possibility Frontier

Choose the correct ones of the following statements

The most important considertion to make when deciding which goods a firm or country must specialise in is the law of ________________________________

For trade to take place between two parties which of the following condition must be respected:

When specialisation is done according to the law of comparative advantage and the international price refelcts the domestic opportunity cost of the parties involved, trade will always benefit both parties