Master Economics Basics: Supply, Demand, and More

Question 1

Which factor is most likely to make demand for a product inelastic?

Accepted Answer

The product is essential rather than a luxury.

Answer

There are many similar products available.

Answer

The product is inexpensive.

Answer

The product is often bought by consumers.

Question 2

Which of the following factors does NOT determine the demand for a good?

Accepted Answer

The supply of the good

Answer

The availability of substitutes

Answer

The income of consumers

Answer

The preferences of consumers

Question 3

What happens to consumer surplus when the price of a good decreases?

Accepted Answer

Consumer surplus increases

Answer

Producer surplus increases

Answer

Producer surplus decreases

Answer

Consumer surplus decreases

Question 4

What is the difference between marginal utility and total utility?

Accepted Answer

Marginal utility is the change in total utility from consuming one additional unit of a good, while total utility is the sum of the utility derived from all units consumed.

Answer

Total utility is the change in marginal utility from consuming one additional unit of a good.

Answer

Marginal utility is the same as total utility.

Answer

Marginal utility and total utility are not related concepts.

Question 5

Which of the following is a positive externality?

Accepted Answer

The education of one person benefits others in society

Answer

The consumption of alcohol leads to drunk driving

Answer

The construction of a new highway increases traffic congestion

Answer

The pollution from a factory harms the health of nearby residents

Question 6

What is the role of government in a mixed economy?

Accepted Answer

To regulate the economy to promote economic stability and fairness

Answer

To leave the economy completely unregulated

Answer

To control all prices and wages

Answer

To own and operate all major industries

Question 7

What is the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on the behavior of individual economic agents, while macroeconomics focuses on the economy as a whole.

Answer

Microeconomics and macroeconomics are not related concepts.

Answer

Macroeconomics is more applicable to businesses than microeconomics.

Answer

Microeconomics is more important than macroeconomics.

Question 8

Which of the following is NOT a factor that influences supply?

Accepted Answer

Consumer demand

Answer

Technology

Answer

Government subsidies

Answer

Cost of production

Question 9

When the demand for a good exceeds the supply, what is likely to happen?

Accepted Answer

Price will rise

Answer

Quantity supplied will increase

Answer

Quantity demanded will decrease

Answer

Price will fall

Question 10

Elasticity measures the responsiveness of:

Accepted Answer

Quantity demanded or supplied to a change in price

Answer

Price to a change in quantity demanded or supplied

Answer

Consumer surplus to a change in price

Question 11

What is the economic principle that states that as consumers purchase more of a good, the marginal utility gained from each additional unit of the good decreases?

Accepted Answer

Law of diminishing marginal utility

Answer

Law of supply

Answer

Law of comparative advantage

Answer

Law of demand

Question 12

Which of the following is a characteristic of a perfectly competitive market?

Accepted Answer

Many buyers and sellers

Answer

Government regulation

Answer

High barriers to entry

Answer

Price discrimination

Question 13

What is the opportunity cost of attending college?

Accepted Answer

Earnings or benefits foregone from not pursuing other endeavors

Answer

Tuition and fees paid

Answer

Time spent studying

Question 14

Which of the following is a microeconomic concept?

Accepted Answer

Consumer behavior

Answer

Fiscal policy

Answer

Monetary policy

Question 15

What is the role of the government in a mixed economy?

Accepted Answer

Provide public goods and services, regulate markets, and address market failures

Answer

Leave the economy completely unregulated

Answer

Own and operate all industries

Question 16

Which of the following is a widely recognized indicator of economic well-being, measuring the total value of goods and services produced within a country's borders in a given period?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Consumer Price Index (CPI)

Answer

Unemployment Rate

Answer

Balance of Trade

Question 17

Which of the following factors does NOT influence the quantity of a good that producers are willing and able to supply to the market?

Accepted Answer

Consumer preferences

Answer

Technology

Answer

Input costs

Question 18

When the amount of a product available in the market exceeds the amount consumers are willing to buy at the current price, the market is in a state of:

Accepted Answer

Surplus

Answer

Deficit

Answer

Equilibrium

Answer

Shortage

Question 19

According to the law of demand, assuming all other factors remain constant, what happens to the quantity of a good demanded as its price increases?

Accepted Answer

Decrease

Answer

Remain constant

Answer

Fluctuate randomly

Answer

Increase

Question 20

Which of the following is a key determinant of the elasticity of demand for a good?

Accepted Answer

Availability of substitutes

Answer

Consumer income

Answer

Government regulations

Answer

Price level

Question 21

In economics, the marginal utility of a good refers to:

Accepted Answer

The additional satisfaction gained from consuming one more unit of the good.

Answer

The total satisfaction derived from consuming the good.

Answer

The difference between the price of the good and the consumer's willingness to pay.

Question 22

Which of the following is an example of a positive externality, where the actions of one party create a benefit for others?

Accepted Answer

Education

Answer

Pollution

Answer

Traffic congestion

Answer

Crime

Question 23

In a mixed economic system, the government typically plays a multifaceted role that includes:

Accepted Answer

Providing public goods and services, regulating markets, and redistributing income.

Answer

Controlling all economic activity

Answer

Setting prices and wages

Question 24

Fiscal policy, a tool used by governments to influence the economy, primarily involves:

Accepted Answer

Government spending and taxation

Answer

Trade policy

Answer

Monetary policy

Answer

Environmental policy

Question 25

One of the potential benefits of international trade is:

Accepted Answer

Increased economic growth

Answer

Environmental degradation

Answer

Reduced consumer choice

Answer

Higher unemployment

Question 26

The concept of opportunity cost demonstrates that:

Accepted Answer

Every decision involves sacrificing an alternative.

Answer

Economic choices are made independently.

Answer

The worth of a good is determined by its market price.

Answer

The priciest option is always the best.

Question 27

Which of the following does NOT influence the supply of a product?

Accepted Answer

Consumer preferences

Answer

Cost of production

Answer

Availability of resources

Answer

Technological advancements

Question 28

At market equilibrium, the quantity supplied is equal to the:

Accepted Answer

Quantity demanded

Answer

Price of the product

Answer

Marginal cost of production

Question 29

The responsiveness of quantity demanded to price changes is measured by:

Accepted Answer

Price elasticity of demand

Answer

Cross elasticity of demand

Answer

Income elasticity of demand

Question 30

The point on the utility curve representing the smallest increase in satisfaction from consuming an additional unit of a good is called:

Accepted Answer

Marginal utility

Answer

Consumer surplus

Answer

Total utility

Answer

Average utility

Question 31

Which of the following assumptions is NOT true for perfect competition?

Accepted Answer

Producers hold market power

Answer

Consumers have full knowledge

Answer

Numerous buyers and sellers exist

Answer

Products offered are identical

Question 32

Identify a factor that influences consumer demand:

Accepted Answer

Income

Answer

Cost of production

Answer

Market equilibrium

Answer

Elasticity

Question 33

If a technological advancement reduces production costs, what happens to the quantity demanded of a product?

Accepted Answer

Increase

Answer

Stay the same

Answer

Decrease

Answer

Indeterminate

Question 34

Which of these is a government economic policy objective?

Accepted Answer

Encouraging economic growth

Answer

Limiting consumer choice

Answer

Increasing market volatility

Answer

Maximizing government revenue

Question 35

How can microeconomics and macroeconomics be differentiated?

Accepted Answer

Microeconomics focuses on individual markets and behaviors, while macroeconomics analyzes the entire economy

Answer

Microeconomics examines long-term trends, whereas macroeconomics studies short-term fluctuations

Question 36

Which of the following is NOT a characteristic of a command economy?

Accepted Answer

Freedom of choice

Answer

Central planning

Answer

Government control

Answer

Absence of private property

Question 37

The law of demand states that, other factors being constant, as the price of a good increases, its quantity demanded will:

Accepted Answer

Decrease

Answer

Remain unchanged

Answer

Increase and then decrease

Answer

Increase

Question 38

Market equilibrium occurs when:

Accepted Answer

Quantity supplied equals quantity demanded at a particular price

Answer

Demand is greater than supply

Answer

Price is at its highest level

Answer

Supply is greater than demand

Question 39

Which of the following is a measure of the responsiveness of quantity demanded to changes in price?

Accepted Answer

Elasticity of demand

Answer

Producer surplus

Answer

Marginal utility

Answer

Consumer surplus

Question 40

The concept that additional units of a good provide diminishing satisfaction is known as:

Accepted Answer

Marginal utility

Answer

Total utility

Answer

Average utility

Answer

Indifference curve

Question 41

Which of the following is a characteristic of a perfectly competitive market?

Accepted Answer

Many small firms with no market power

Answer

High barriers to entry

Answer

Dominance of a few large firms

Answer

Government price controls

Question 42

The main goal of positive economics is to:

Accepted Answer

Describe and explain economic phenomena

Answer

Judge the morality of economic outcomes

Answer

Prescribe economic remedies

Answer

Evaluate economic policies

Question 43

The GDP of a country is a measure of its:

Accepted Answer

Total value of goods and services produced domestically in a given period

Answer

Total consumer spending

Answer

Total government revenue

Answer

Total exports minus imports

Question 44

Which of the following is the primary goal of expansionary fiscal policy?

Accepted Answer

To stimulate economic growth by increasing government spending or decreasing taxes

Answer

To regulate the price of goods and services

Answer

To reduce government spending and/or increase taxes

Answer

To manipulate the money supply

Question 45

Which of the following is the best definition of economics?

Accepted Answer

The social science that studies how individuals, societies, and governments make choices under conditions of scarcity

Answer

The art of managing money

Answer

The study of business organizations

Question 46

Which of the following is NOT a factor that can influence the quantity supplied of a good or service?

Accepted Answer

Consumers' preferences

Answer

Technological advancements

Answer

Number of producers

Answer

Cost of production

Question 47

What is the equilibrium price in a perfectly competitive market?

Accepted Answer

The price at which the quantity supplied is equal to the quantity demanded

Answer

The highest price consumers are willing to pay

Answer

The lowest price producers are willing to accept

Question 48

Which of the following is NOT a type of elasticity?

Accepted Answer

Complementary elasticity

Answer

Price elasticity of demand

Answer

Cross-price elasticity of demand

Answer

Income elasticity of demand

Question 49

What is the law of diminishing marginal utility?

Accepted Answer

As more units of a good or service are consumed, the additional satisfaction derived from each additional unit decreases

Answer

As more units of a good or service are consumed, the total satisfaction derived increases

Answer

As more units of a good or service are consumed, the price of the good or service increases

Question 50

What is the primary role of government in a mixed economic system?

Accepted Answer

To intervene in markets to correct failures, promote economic growth, and provide essential services

Answer

To eliminate competition

Answer

To own and operate all major industries

Question 51

Which of the following is NOT a characteristic of a command economy?

Accepted Answer

Consumers have freedom of choice in the goods and services they purchase.

Answer

Prices are set by the government.

Answer

The government controls the allocation of resources.

Question 52

What is the distinction between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on the behavior of individual markets and economic agents, while macroeconomics examines the economy as a whole

Answer

Microeconomics is more complex than macroeconomics

Question 53

Which of the following is NOT a goal of economic policy?

Accepted Answer

To reduce pollution

Answer

To reduce unemployment

Answer

To control inflation

Answer

To promote economic growth